U4 AOS1: Reviewing performance - the need for change Flashcards
What is change?
Any alteration in the internal or external environments
Proactive change
Initiating change rather than simply reacting to events
What does proactive change involve?
- Observing business performance to predict future problems
- Forecasting likely events and trends in market
- Consulting with customers, employees and analysts to maximise opportunities to increase efficiency and effectiveness
Business change
The adoption of a new idea or behaviour by a business
Percentage of market share
The business’s share of the total industry sales for a particular good or service, expressed as a percentage
Higher % = outperform competitors
Reactive change
Waiting for a change to occur and then responding to it
What does reactive change involve?
- Observing competitors and copying their products/strats
- Dealing with a crisis and creating policies to prevent re-occurance
- Waiting for customers or employees to demand change
What are the two approaches to change?
Proactive and reactive
Rates of staff absenteeism
The number of workers who don’t turn up for work when they are scheduled
- High rates may be due to toxic work environment, dissatisfaction or demotivation
- Low rates may be indicative of a +ve relationship between employee and employer
Key performance indicators (KPIs)
Specific criteria used to measure the efficiency and/or effectiveness of a business’s performance
What are the 10 main KPIs?
- percentage of market share
- net profit figures
- rate of productivity growth
- number of sales
- rates of staff absenteeism
- level of staff turnover
- level of wastage
- number of customer complaints
- number of website hits
- number of workplace accidents
Number of sales
A measure of the amount of goods or services (products) sold
- Helps business evaluate performance and marketing strategies
Level of staff turnover
The rate of employees who are leaving the business over a specific period of time, and need to be replaced by new employees
- Indicator of the degree of staff satisfaction
Proactive vs reactive management
Proactive
- More likely business will benefit and be in position to gain comp adv
- Business objectives and profitability are less likely to be -vely impacted
Reactive
- More likely to experience drops in productivity, sales and profits
- Lose brand rep and market share as other businesses change faster
Number of workplace accidents
Indicates how safe the workplace is for employees
Net profit figures
The measurement of a company’s profit once business expenses have been subtracted from its total revenues
Why are KPIs used
Used to evaluate business’s performance before and after implementing to change to see if business is meeting its objectives
Rate of productivity growth
The change in productivity in one year compared to the previous year
Productivity = a measure of performance that indicates how many inputs (resources) it takes to produce an output (goods or services)
Growth indicates that the business is using resources more efficiently
Force field analysis (FFA)
Outlines the process of determining which forces drive and which forces resist a proposed change
Status quo
The way things have been in the past
Level of wastage
The amount of unwanted or unusable material created by the production process of a business
Can be measured via…
- Units, weight, unit per amount of outputs (1 defect or 12kgs waste per 1000 units)
Number of customer complaints
The number of customers expressing their dissatisfaction with the business, in either spoken or written form
- Indicates satisfaction of business performance
- More complaints = less satisfaction = loss in performance
Equilibrium
A state where opposing forces are in balance
Number of website hits
Records how many potential customers visit its site or engage with the site. A business can track how many of these ‘hits’ result in a purchase
