U4A1 (b) business change Flashcards
10 driving forces
managers
employees
competitors
legislation
pursuit of profit
reduction of costs
globalisation
technology
innovation
societal attitudes
how managers drive change
personal desire to intiate and maintain the momentum of change. inspire others to change.
how employees drive change
can influence others and have an active role in change.
how competitors drive change
respond to the actions of competitors so they can respond quickly to avoid losing market share.
how legislation drives change
businesses must change based on local, state and federal governments who may bring in legislation to address.
how pursuit of profit drives change
profit is a key objective of a business and must be sustained over time.
how reduction of costs drive change
reducing costs is often the quickest way to improve profitability.
how globalisation drives change
allows for increased access to markets. faster business growth due to more trading relationships.
how technology drives change
technology changes at an increasing rate, putting pressure on businesses to initiate change.
how innovation drives change
when something already established is improved upon, the business gains competitive advantage.
how societal attitudes drive change
society moves at a fast pace, so businesses must continuously re-examine the workforce and change accordingly.
6 restraining forces
managers
employees
time
organisational inertia
legislation
financial considerations
how managers restrict change
managers may not believe change is in the best interest of the business. prevent change occuring if it threatens their position.
how employees restrict change
employees who do not feel appreciated in the business may oppose the change.
how time restricts change
businesses that have not planned change will be unable to respond quickly.
how organisational inertia restricts change
businesses that are not open or receptive to change. change cannot be introduced easily.
how legislation restricts change
government body can stop change happening, or businesses may struggle managing and adjusting to change.
how financial considerations restrict change
change may be too expensive. financial instutions reluctant to lend without strong security.
porter’s 2 generic strategies
lower cost strategy
differentiation strategy
summarise lower cost strategy
business goal is to become the lowest-cost producer of a product.
advantages of lower-cost strategy
- competitive advantage in markets with price conscious consumers
- beneficial for large businesses who can buy in bulk
disadvantages of lower-cost strategy
- customer may associate lower cost with lower quality
- standardised goods will not meet unique demands of customers.
summarise differentiation strategy
business goal is to make their good/service have a unique point of difference from competitors.
advantages of differentiation strategy
- competitive advantage in markets with brand loyalty
- beneficial for large businesses looking to create an image
