U4AOS1 - Reviewing Performance Flashcards
Lewin’s Force Field Analysis
looks at the forces that are either driving movement towards a goal or change or blocking movement towards a goal or change
driving force
forces affecting a situation that are pushing in a particular direction and are supporting the goal or personal change
restraining force
personal and organisational resistance to change that acts against the driving forces and could include management, employees, cost, legislation and competitors
steps of Lewins’ model
- define the target of change 2. identify the driving forces and the restraining forces 3. analyse the forces that can be changed 4. develop an action plan based on what can be changed
harnessing forces for change
the ability of a business to successfully implement changes can be influenced by the comparative strength of driving and restraining forces
key points Lewin
- when driving forces are more dominant the change will be successful 2. if the driving forces are met by the restraining forces at a similar level it is likely the change won’t be successful 3. if the restraining forces are more powerful than driving forces it is unlikely the change will be successful
driving forces
managers
employees
competitors
legislation
pursuit of profit
reduction in costs
globalisation
technology
innovation
societal attitudes
managers
- act as an important driving force - either have influence on the business and provide direction for change or be involved in a hands on approach to ensure the change is implemented successfully
employees
- critical as they may support the change and make it easy to successfully implement it - a few key staff members may be able to influence others - employees may come up with new ideas and innovation one of the biggest reasons for success or failure of change
competitors
- some industry sectors in the economy are highly competitive and business’ need to be able to respond to changes quickly - competitors can come from anywhere in the world making management more complex - if a business is able to keep up with their competitors and comes up with the right changes before businesses are likely to keep ahead of its rivals
legislation
- businesses have to deal with three levels of government in Australia, federal, state and local - legislation controls what a business can or can’t do within the business
pursuit of profit
- profit drives many businesses to change / profit needs to be sustained over time
- may preserve profit by cutting expenses and costs
reduction in costs
- quick way to increase profitability
globalisation
can be defined as the process of increasing increasing business between countries gives increased access to markets around the world
- providing opportunity for customs to improve their standard of living through increased access to goods and service
- provides potential for future business growth or companies develop more trading relationships with other countries
technology
- tech impacts on all areas of a business and is a major driver for change
- businesses now have potential to be online only
innovation
- generally refers to changing or creating more effective processes, products and ideas and can increase the likelihood of a business succeeding
societal attitudes
- society constantly occurs and views change all the time
- demographic makeup of the population impacts on society
- new policies based on this may affect communication, language etc.
restraining forces
- managers
- employees
- time
- organisational inertia
- legislation
- financial considerations
managers
- crucial and may stop a change from being introduced
- managers may not support policies which makes them feel as though their role or position is threatened
- the levels of management may also add complexity
employees
- employees who feel left out or unheard are less likely to support change
- fear of change can prevent moving forward for a business
time
- lack of time can impact a business adversely and not leave them enough time to get change completed
- this can also be an issue if a business drags behind its competitors
organisational inertia
- lack of a business’ ability to react to internal and external pressures for change, as it tends to continue on its well entrenched way
- made up of: resource rigidity nature rigidity
resource rigidity
unwilling to invest resources or time
nature rigidity
inability to change patterns
legislation
- a business may find it hard to adapt or change for new laws
- other laws may affect the operation of the business
financial considerations
- lack of access to finance can inhibit a business (especially smaller businesses)
- inability to obtain necessary funds can restrain a business
generic strategies
- in 1979 Michael Porter developed a framework to outline the three main strategy options open to a business that wishes to achieve a sustainable competitive advantage
generic strategies need to be considered in terms of
- competitive advantage (differentiation or low cost)
- competitive scope (to determine if the business should target a wide or niche market)
steps to determine suitability
- SWOT analysis
- five force analysis
SWOT analysis
strengths weaknesses opportunities threats
- carry out this analysis at regular intervals to guage a business’ current position
five force analysis
a tool that focuses on give important determinants of competitive power
- supplier power
- buyer power
- competitive rivalry
- threat of substitution
- threat of new entry
supplier power
a business should assess how easy it is for suppliers to drive prices up. These more help a business needs from suppliers the more power a supplier has
buyer power
how easy it is for buyers to drive down prices, if there are a few powerful buyers the power lies with them
- driven by the number of buyers, importance of each buyer and the cost of sourcing fro each business compared to each other
competitive rivalry
the number and capability of competitors
- the business may have limited power as suppliers and customers can get elsewhere
- a unique product gives the business a great deal of power
threat of substitution
this is affected by the ability of customers to find a product or service similar to one provided the business
- if substitution is easy power is reduced
threat of new entry
affected by new businesses entering the same market and competing
- this is also affected by product and ideas and their protection
when the two analysis are compared…
the business needs to consider the following
- reducing or manage supplier power
- reduce or manage buyer/customer power
- come out on top of the competitive rivalry
- reduce or eliminate the threat of substitution
- reduce or eliminate the threat of entry
cost leadership
a strategy that allows a business to achieve a competitive edge by reducing production or delivery costs // there are two ways to do a cost leadership strategy:
- reducing costs to increase profits
- increase market share charging lower prices and still making a profit
ways to achieve cost leadership
- asset utilisation
- low direct and indirect operating costs
- control over all departments or groups of the business
asset utilisation
- means being able to use a business’ resources efficiently
- this may mean producing in high volumes of outputs / serving a high number of customers at once
lower direct and indirect operating costs
- this may mean producing in high volumes of standardised products, limiting customisation and personalisation of service
- costs are kept low by using fewer parts, using standardised components and limiting the number of models produced to make sure there are large production runs
control over all departments or groups of the business
- this approach includes checking and reviewing all areas of the business
- finance, operations, supply chain management, marketing and information technology
- just in time may also be used to save costs
viability - cost leadership
- viable for large businesses are they are able to get bulk order discounts / create large production volumes
differentiation
emphasises the difference between a particular product / service and those that are similar by developing the attributes that customers find appealing
- based on a number of different factors inc. durability, after sales support and brand loyalty
- if a business successfully differentiates they can charge a premium price
to implement differentiation a business must
- develop effective marketing and promotion strategies
- deliver high quality products
- there is a focus on ongoing research, development and innovation
viability - differentiation
- appropriate where the target segment isn’t price sensitive
- can build strong brand loyalty
impact of strategies
- a strategy needs to be chosen (can’t be both or the business will be stuck in the middle and they won’t succeed)
- if a large business successfully uses one of the strategies it will have more power and influence than a small business
forces for change
- change occurs because of pressured placed on the business to make adjustments to its departments or divisions, operations and activities, jobs and tasks, policies, management styles and corporate culture - can be widespread or micro level
number of workplace accidents
number of unplanned events interrupting the workflow they may or may not include injury or product damage
number of customer complaints
the number of written or verbal expressions of dissatisfaction from customers about an organisations products or services
level of wastage
in a production process it will give an indication of business’ efficiency
reducing workplace accidents has the following advantages
- reduction in the number of disruptions to work and production - reduction in time lost due to accidents and consequent disruption - reduction in lost production - reduction in management time required to manage the effect of accidents and disruptions - enhancement of the business reputation - improvement in staff morale and loyalty
ways to reduce staff turnover
- choosing good managers who have well-developed interpersonal and communication skills - providing employees with clear expectations, including, vision, goals, expected behaviours, standards, priorities and agreed actions - encouraging employees to use their skills - providing support for employees when needed - encouraging employees to get involved in decision-making - providing opportunities for employees to provide feedback - encouraging employees to upgrade their skills
level of staff turnover
- the number of people or employees leaving the business - there is a cost to the business when staff leave as they take experience and knowledge with them
ways to reduce staff absences
- track staff absences
- make sure the employee has wellness programs
- help employees to return to work
- eliminate workplace stress
- offer flexible working hours and holidays
rates of staff absenteeism
a percentage indicating the number of workdays lost due to unscheduled staff absence from work especially without a good reason
- rates of productivity may reduce
- businesses need to monitor rates and address them if they are an issue
number of sales
the total quantity of sales of a particular product or service
- taking note of trends can help a business plan, budget and change their products and services as required
rate of productivity growth
measures the business’ ability to transform inputs into outputs; the ability of a business to increase outputs for a given level of inputs gives an indication of growth
net profit figures
the amount left over after all expenses have been paid (referred to as the bottom line)
percentage of market share
the proportion of sales (units or measure) of a product that a company achieves in relation to the sales of the same product that other companies achieved
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 workplace accidents
efficiency
the best use of resources in the production of goods/services
- being able to accomplish a task with minimum expenditure of time and effort
effectiveness
how well the business achieves its stated objectives; ‘doing the right things’
- the ability of a business strategy to achieve an intended or expected outcome
KPIs need to be
- relevant
- valid
- reliable
- deliver valuable information
key performance indicators
measures or a set of data that allows a business to determine whether it is meeting its business objectives
