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Business Management Unit 3/4 > U4: AOS1: Reviewing Performance – The Need For Change > Flashcards

U4: AOS1: Reviewing Performance – The Need For Change Flashcards

1
Q

Business change

A

An alteration to a business in behaviours, policies and practice and work environment.

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2
Q

Why do businesses change?

A

Due to alterations in their internal or external environments such as the economy, customers, employees, competitors and technology.

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3
Q

Scales of business change

A

Incremental and Transformational

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4
Q

Proactive change

A

Foreseeing change and making alterations before external impacts effect business

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5
Q

Reactive Change

A

Letting the business environment impact the business and making changes afterwards.

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6
Q

Key Performance Indicators

A

Set of data that allows a business to determine whether it is meeting its business objectives

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7
Q

How can a KPI be used?

A

Can be used to evaluate the success of the change

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8
Q

What must a KPI be to be useful?

A

Relevant, Valid, Reliable, Deliever useful information and comparative

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9
Q

List all 10 KPIs

A

-Percentage of market share
-Net profit
-Rate of productivity growth
-Number of sales
-Number of website hits
-Rate of staff absenteeism
-Level of staff turnover
-Level of wastage
-Number of customer complaints
-Number of workplace accidents

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10
Q

List all 5 Financial and Marketing KPIs (Unit 2)

A

-Percentage of market share
-Net profit
-Rate of productivity growth
-Number of sales
-Number of website hits

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11
Q

List all 2 HR KPIs (Unit 3 AOS2)

A

-Rate of staff absenteeism
-Level of staff turnover

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12
Q

List all 3 operations KPIs (Unit 3 AOS3)

A

-Level of wastage
-Number of customer complaints
-Number of workplace accidents

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13
Q

Why do businesses use KPIs?

A

-To evaluate how they have been performing against their set business objectives
-Allows the business to determine whether resources are being used properly
-To see if budgets and forecasts are being met or exceeded.

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14
Q

KPI 1: Percentage of Market Share

A

-A business’s total sales in the industry
-Some industry sectors dominated by a few large companies
-A niche industry may have a large % of the market

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15
Q

KPI 2: Net Profit

A

-Total revenue minus total expenses over a period of time
-Used to access if expenses are too high or revenue too low

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16
Q

KPI 3: Rate of Productivity Growth

A

-Productivity is ability to increase outputs from given level of inputs over a period of time
-Based on productivity increase from year to year

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17
Q

KPI 4: Number of Sales

A

-Amount of goods and services sold in a specific time frame
-The number of sales will enable business to know if its meeting sales forecasts and if change decisions are needed in the short or long term

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18
Q

KPI 5: Rate of Staff Absenteeism

A

-Number of days staff not present when scheduled at work for a specific period
-Absent staff is a cost for the business.
-May indicate declining morale, poor corporate culture

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19
Q

How to reduce staff absenteeism

A

-Track absences
-Include support programs
-Strong return to work policy and programs
-Eliminate workplace stress
-Offer workplace flexibility

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20
Q

KPI 6: Level of Staff Turnover

A

-Number of staff leaving per year and have to be replaced
-Means cost for business
-This can impact productivity and business reputation
-Staff often the difference in competitive edge of a business

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21
Q

Ways to reduce staff turnover

A

-Competent and highly trained managers
-Provide clear expectations and KPIs
-Provide support
-Utilisation of management styles and strategies that include people in decision making
-Provide training

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22
Q

KPI 7: Level of Wastage

A

-Amounts of inputs and outputs discarded during production process
-Indicates lean and effective processes and business efficiency
-Remember TIMWOOD
-Low waste will decrease costs and use of non-renewable resources
-High waste increases time and amount of raw materials required.

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23
Q

KPI 8: Number of Customer Complaints

A

**-Amount of customers who have notified the business of disatisfaction
**-Indicates how customers view the business and the quality of the product or service
-May reduce reputation of business and effect future sales and revenue
-High complaints would indicate business not meeting market needs and expectations
-Complaints can come from various sources such as social media

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24
Q

KPI 9: Number of website hits

A

-How many people and potential customers have sent a request to a web server
-There are a number of analytical tools businesses can use to measure website traffic
-Data that can be collected:
Vistitors, % of new vs returning vistitors, how did they find out, av. time spent

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25
Q

KPI 10: Number of Workplace Accidents

A

-Amount of injuries and unsafe incidents over a period.
-An insight if a business view OH&S as important.
-Can occur because of: Poor equipment, poor staff training, unsafe work practices

26
Q

Benefits of increasing safety

A

-Decrease in work disruptions
-Derease time and production lost
-Enhance reputation of business
-Increase morale and loyalty

27
Q

Lewin’s Force Field Analysis Theory

A

A model to promote discussion and planning to determine if a business should proceed with a proposed change.
-Driving and restraining forces: when driving forces are more dominant or balanced, change is more likely to be successful.
-4 Principles

28
Q

Principles of Lewin’s Force Field Analysis Theory

A

Weighting, Ranking, Implementing a response, Evaluating a decision

29
Q

Weighting (Lewin’s Force Field Analysis Theory)

A

Leaders or managers may need to identify driving and restraining forces and provide them with a number according to how important they are percieved to be

30
Q

Ranking (Lewin’s Force Field Analysis Theory)

A

The considerations or forces are placed in order from the most important to least important

31
Q

Implementing a response (Lewin’s Force Field Analysis Theory)

A

Once a business has weighed up the factor, it then makes a decision

32
Q

Evaluating a response (Lewin’s Force Field Analysis Theory)

A

Once a decision has been made, the business must continue to monitor the situation to ensure that the decision was correct

33
Q

Advantages of Force Field Analysis

A

-Helps identify forces for and against change
-Provides a clear path to reduce restraining forces
-Assists with planning
-Encourages stakeholder involvement

34
Q

Disadvantages of Force Field Analysis

A

-Relies on individual perceptions and judgements, which can introduce subjectivity and bias, potentially skewing the results
-Difficult to effectively assign values to each of the forces
-May not identify all forces, causing unforeseeable effects during implementation of the change

35
Q

List Driving Forces for Change

A

Competitiors
Managers
Employees
Legislation
Pursuit of profit
Reduction in cost
Globalisation
Technology
Innovation
Societal attitudes

36
Q

Owners (Driving force for change)

A

-Have a vested interest in business
-Anticipate and act upon trends or change that could impact the business

37
Q

Managers (Driving force for change)

A

-Have influence and provide strategic direction for the change or implement the change themselves
-Must be prepared and prepare the leadership team for proactive change.

38
Q

Employees (Driving force for change)

A

-Change is more successful is employees support and are willing to implement it
-A participative management style can encourage employees to suggest change themselves

39
Q

Competitors (Driving force for change)

A

-Businesses must be aware of what their competitor is doing, and be ready to respond.
-If the business proactively changes before competitors, this can give them a competitive advantage

40
Q

Legislation (Driving force for change)

A

-Businesses have to change their operations based on laws passed.
-Cannot be ignored

41
Q

Pursuit of Profit (Driving force for change)

A

-Implementing changes in an effort to increase sales/profit
-May include improving quality, or creating a strategy to cut back on expenses.

42
Q

Reduction of Costs (Driving force for change)

A

-Pressure of costs can lead to change
-Outsourcing, reviewing loans

43
Q

Globalisation (Driving force for change)

A

-Process of increasing interdependence between countries
-New markets, resources influence change

44
Q

Technology (Driving force for change)

A

-A business needs to adapt to new technology
-Must have updated technology to ensure efficiency.

45
Q

Innovation (Driving force for change)

A

-If a business fails to innovate it is likely to be left behind
-Developing a niche or competitive edge lets a business reach markets that haven’t been monopolised by large corporations

46
Q

Societal Attitudes (Driving force for change)

A

-Changes in attitudes can drive changes in businesses to keep up with opinions, values and lifestyles

47
Q

Restraining Forces for Change

A

Managers
Employees
Time
Organisational Inertia
Legislation
Financial Considerations

48
Q

Managers (Restraining Force for Change)

A

-May be a blocker or may stop change
-Active resistance: refusing to implement it
-Passive resistance: Failing to actively support it
-May be concerned about resistance from employees or understand the change

49
Q

Employees (Restraining Force for Change)

A

-Some employees are likely to resist the changes suggested by management
-Business must make sure to properly explain the changes
-Employees may have emotional reactions

50
Q

Time (Restraining Force for Change)

A

-Business may not have enough time to respond to a change

51
Q

Organisational Inertia

A

-Stable businesses with little change are less likely to respond to changes.
-Resource regidity: unwillingness to invest
-Routine Rigidity: an inability to change the patterns and logic of the business

52
Q

Legislation (Restraining Force for Change)

A

-Unexpected, expensive or difficult to implement law changes can impact a business’s response.

53
Q

Financial Considerations (Restraining Force for Change)

A

-lack of money can impact the changes of a business

54
Q

Porter’s Generic Strategies

A

Frameworks for strategic business planning
-low cost and product differentiation
-One main strategy, but not just one

55
Q

How to choose a generic strategy

A

1- Carry out SWOT
2- Carry out five force analysis
3- Compare both and determine which strategy could reduce or manage powers
4- Decide on which approach is most appropriate

56
Q

Five Force Analysis

A

Supplier power, buyer power, competitive rivalry, threat of substitution, threat of new entry

57
Q

Reduced Cost Strategy

A

Where a business has minimised its expenses, resulting in customers being attracted by the cheaper price.
1- Reduce production costs
2- Charge lower prices

58
Q

Steps to achieve Lower Cost

A

**1- Assest Utilisation **(using resources more efficiently)
2- Reducing Operating Costs
3- Reducing costs of supplies
4- Control all department costs (Admin, Marketing, Logistics)

59
Q

Lower Cost Strengths

A

-Strong competitive advantage in markets with ‘price conscious’ customers
-Price flexibility
-Economies of sale
-Barrier to entry

60
Q

Lower Cost Weaknesses

A

-Potentially lower customer loyalty
-Customers may associate lower price with lower quality
-Standardised goods not unique goods

61
Q

Differentiation

A

Where a business selects one or more features that customers in the market consider important and develops a uniqueness in order to attract and keep customers
-Research, development, innovation
-Effective marketing promotion
-High-quality, products and service

62
Q

Differentiation Strengths

A

-Strong competitive advantage in markets with ‘brand loyalty’.
-Can change premium pricing as the cost is not such an important consideration to customers
-Can work with large businesses who have money to create a brand image.
-Can work with small businesses who create a unique point of difference

Business Management Unit 3/4 (6 decks)

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