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3/4 Business > U4AOS1 > Flashcards

U4AOS1 Flashcards

1
Q

Explain change in the context of Business Management.

A

Business change is the adoption of a new behaviour or idea by a business. Businesses change as a result from pressure from the business environments, such as economy, customers, employees, technology, competitors.
A business manager must be proactive, rather than reactive, about change.

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2
Q

What is the difference between incremental and transformational change?

A

Incremental change is small continuous changes that occur regularly in the business, whereas transformational change is significant changes that often impact the whole business.

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3
Q

What is the relationship between KPIs and business objectives?

A

A business measures their performance through KPIs. Data gathered from KPIs informs managers about the effectiveness and efficiency of different areas of the business. If the business is not performing to their highest standard, the manager can use KPIs to make informed decisions about how to increase their efficiency and effectiveness.

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4
Q

Define effectivness.

A

The degree to which a business achieve objectives.

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5
Q

Define efficiency.

A

How well a business uses resources to achieve objectives.

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6
Q

Give nine examples of KPIs.

A
  • Percentage of a market share
  • Net profit
  • Rate of productivity growth
  • Number of sales
  • Rate of staff absenteeism
  • Level of staff turnover
  • Level of wastage
  • Number of customer complaints
  • Number of workplace accidents
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7
Q

Why is it important to benchmark your data?

A

Benchmarking refers to having a standard to compare collected data to. It is important that a business has a benchmark based on previous data to compare to the new data collected. If the business has no benchmark standard, it cannot be determined if the data collected is contributing to the progression towards the achievement of business objectives.

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8
Q

What is the force field analysis theory?

A

Force field analysis is the process of identifying and analysing the forces that will drive and those that will resist a proposal change.

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9
Q

What is a driving force?

A

A force that supports change OR a force that pushes the business towards a new desired state.

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10
Q

What is a resisting force?

A

A force that works against change OR a force that makes it difficult for a business to implement change successfully.

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11
Q

What are the benefits of using force field analysis?

A
  • managers are able to identify and analyse the forces for and against change
  • helps determine if the change is worth pursuing
  • allows managers to develop ways of reducing the restraining forces eg. training in processes.
  • allows actions and timelines to be for the above to be developed and implemented
  • identifies stakeholders that will be supportive
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12
Q

What are some driving forces? (we looked at 10)

A
  • managers
  • employees
  • competitors
  • legislation
  • pursuit of profit
  • reduction of costs
  • globalisation
  • technology
  • innovation
  • societal attitudes.
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13
Q

What are some restricting forces? (we looked at 6)

A
  • managers
  • employees
  • time
  • organisational inertia
  • financil considerations
  • legislation
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14
Q

How can managers be a driving force for a business?

A

Managers make decisions about the future of the business. They can do this for a range of reasons:
-after reviewing KPI’s
-they might have learnt about a new process
-they might change their minds
IF YOU ARE CLEVER, CAN BE APPLIED TO ANY CASE STUDY

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15
Q

How can employees be a driving force for a business?

A
  • Employees can drive changes through innovation.
  • One of the ways they might implement this is placing demands on a business to change conditions, policies and processes.
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16
Q

How can competitors be a driving force for a business?

A

Competitors are often highly competitive. Competitors can drive a business to implement changes to gain a sustainable competitive advantage.
COMPETITORS ARE OFTEN DRIVING FROCES FOR REACTIVE CHANGE

17
Q

How can legislation be a driving force for a business?

A

Changes to laws can force a business to implement change. Laws can change at a federal, state or local level. eg. changes to penalty rates

18
Q

How can the pursuit of profit be a driving force for a business?

A

Looking to increase profits may mean implementing changes to the business. eg product line expansion, making changes to employee contracts.

19
Q

How can the reduction of costs be a driving force for a business?

A

The costs of a business eat into the profit margins. Reducing costs can help a business become more profitable. A business might feel this change is necessary because of high costs.

20
Q

How can globalisation be a driving force for a business?

A

Globalisation is the process where economic boundaries are removed and businesses begin operating on an international scale. The challenges of globalisation (increased competition) may drive change.
- Global outsourcing
- Global sourcing
These present opportunities that can drive a business to change

21
Q

How can technology be a driving force for a business?

A

New technologies can be implemented to improve efficiency and productivity in a business. The opportunities that new technologies can present may drive change.

22
Q

How can innovation be a driving force for a business?

A

Innovation is adopting something new or improving on what already exists. A new concept or idea can be exciting enough to drive change.

23
Q

How can societal attitudes be a driving force for a business?

A

Societal attitudes are what society accepts as normal. Businesses that fail to keep up with these attitudes risk falling behind (reactive instead of proactive is a risk). The necessity to keep being proactive drives businesses to regularly change.

24
Q

How can managers be a restraining force for a business?

A

Managers on all levels can act as a restraining force against change for any reason that they see fit.

25
Q

How can employees be a restraining force for a business?

A

Employees are often the stakeholders most impacted by a change to the business. If employees feel they haven’t been consulted or if they are afraid/nervous they may resist change.

26
Q

How can time be a restraining force for a business?

A

Businesses may find that a lack of time will impact on their ability to implement change successfully.

27
Q

How can organisational inertia be a restraining force for a business?

A

Organisational inertia is a business’s lack of ability to respond to pressures and embrace changes. Cultures or management that are unenthusiastic to change can make it difficult to gather momentum to change.

28
Q

How can financial considerations be a restraining force for a business?

A

The immediate and long term cost of a proposed change may make it difficult to change. (In layman’s terms: If you can’t afford it, it probably won’t go well). Businesses should perform a cost/benefit analysis before implementing any change.

29
Q

How can legislation be a restraining force for a business?

A

Legislation may block or make it difficult to make a change. (It could increase the costs of implementing change)

30
Q

Explain Porter’s Generic Strategies.

A

Porter found that businesses are able to gain a competitive advantage by implementing simple strategies that could work for any business. The two strategies are lower cost and differentiation.
Porter states that businesses should select on strategy and focus on it, rather than risk being mediocre at both
(A business that is “stuck in the middle” will struggle to remain competitive)

31
Q

Explain the Lower Cost strategy.

A

The lower cost strategy is where a business gains a competitive advantage by becoming the low-cost producer in its industry.
This can be achieved by:
- Achieving economies of scale
- Implementing technology
- Preferential access to raw materials
It is common that businesses look to the value chain as ways to reduce costs
- Value chain is the set of activities a business performs to add value to a good
or service
- Superfluous activity should be reduced or eliminated (lean management)

32
Q

How can the Lower Cost strategy help a business gain a competitive advantage?

A

Become a ‘cost leader’ in the market and do one of these:

  1. Sell the goods/services at or near the industry average, increasing profit attained for each sale, and increasing profit margins of the business
  2. Prices can be reduced to become more attractive to the price sensitive consumer
33
Q

What are some disadvantages of the Lower Cost strategy?

A
  • Lowering costs in the operations may result in lowering the quality of the product and the value to the customers
  • The business may need to increase the number of sales to maintain profits
  • Customers may perceive lower costs as lower quality products
34
Q

Explain the Differentiation strategy.

A 
The Differentiation strategy is where a business aims to be unique in its industry. 
This can be achieved by:
- High quality materials 
- Patents 
- Training
- Marketing
- Relationships (celebrity endorsements)
- Distribution
35
Q

What are some advantages of the Differentiation strategy?

A
  • Allows the business to charge their goods/services at a premium price
  • Attracts customers
36
Q

What are some disadvantages of the Differentiation strategy?

A
  • Increased costs of production
  • Narrows the market based on whether customers can afford to purchase at premium rates
  • Unique attributes may be easily copied
37
Q

List the 5 competitive forces.

A
  • Supplier Power: how easy is it for suppliers to drive costs up
  • Buyer Power: how powerful are buyers in driving prices down
  • Competitive Rivalry: look at the number and capability of competitors
  • Threat of Substitution: how easy it is for customers to find a similar good or service elsewhere
  • Threat of New Entry: how easy it is for new competitors to enter the market
38
Q

What is the process when deciding which generic strategy to implement?

A
  1. Analyse the competitive forces
  2. Determine what the businesses strengths are
  3. Compare the strengths and competitive forces
  4. Decide the most appropriate strategy

3/4 Business (5 decks)

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