unit 4 aos 1 Flashcards
what is a business change?
the alteration of behaviors, policies, and practices of a business
what are the 2 types of approaches a business can have to business change
proactive and reactive approaches
proactive approach to business change definition
A proactive approach to business change involves a business changing to avoid future problems or take advantage of future opportunities.
reactive change to business change definition
A reactive approach to business change involves a business changing in response to a situation or crisis.
what are the 2 similarities between a proactive approach and a reactive approach to business change?
They are utilized by a manager or business to implement change
they involve the business undertaking change for future benefits, such as growth, and progression, and to improve or restore its brand image
What are the 3 main differences between a proactive and reactive response to business change?
- why they occur (in response or to take advantage of the future)
-the use of risk strategies (reactive = high risk, proactive = low)
-the planning or timing of the response
what are key performance indicators
are the criteria that measure a business’s efficiency and the effectiveness in achieving it’s different objectives
KPI percentage of market share
def- measures the proportion of a businesses total sales, compared to the total sales in the industry, expresses as a percentage figure
-high percentage of market share indicated a large share of total industry sales
KPI net profit figures
are calculated by subtracting total expenses incurred from total business revenue earned, over a specific period of time
-high net profit are beneficial for business as financial resources can be used for investment in development and growth
-used as means to evaluate a business success in achieving its objective and its financial performance
KPI rate of productivity growth
def- is the change in the total output produced from a given level of inputs over time, expressed as a percentage figure
-high rates of productivity growth indicated that a business has become more efficient over time and able able to utilise its resources
KPI number of sales
def- is the total quantity of goods and services sold by a business over a specific period of time
KPI number of customer complaints
def- is the number of customers who notified the business of their dissatisfaction over a specific period of time
-should receive and act on feedback given
KPI rates of self absenteeism
def- are the average number of days employees are not present when scheduled to be at work, for a specific period of time
-may be due to illness, work at another place
-high rate means employees are dissatisfied
KPI level of staff turnover
def-is the percentage of employees that leave a business over a specific period of time and must be replaced
-some level of staff turnover are healthy however high levels indicates dissatisfaction and poorly reflect the businesses reputation
-effects productivity as they lose experienced and qualified employees and also will cost them to train new employees
KPI number of workplace accidents
def- measures the amount of injuries and unsafe incidents that occur at work location over a specific period of time
-high level can increase staff turnover and decrease employee motivation
can occur due to:
old or faulty equipment
poorly trained employees
KPI level of wastage
def- is the amount of inputs and outputs that are discarded during the production process
-high level of wastage increase the costs and raw materials which can reduce profits
KPI number of website hits
def- is the amount of customer visits that a business’s online platform receives for a specific period of time
- this can be useful indicator for a business’s customer engagement
-high number means indicated that a business has a strong relationship with their customers and has effectively marketed a new product
force field analysis
def-is a theoretical model that determines if businesses should proceed with a proposed change based on weights of driving and restraining forces. It also involves four principles to follow
driving forces
def- are factors affecting the business environment that promote and support business change
restraining forces
are factors that resist a business change or actively try and stop it
what is involved in a force field analysis
weighting
ranking
implementing a response
evaluating the response
first principle of force field analysis- weighting
def- is the process of scoring and attributing a value to the driving and restraining forces
- on a scale 1 to 5 (5 being the highest score)
2nd principle force field analysis- ranking
def-involves arranging the forces in order of value and determining the total score of driving and restraining forces
-in this stage, it will be determined whether the driving forces outweigh the restraining forces and vice versa
-if restraining forces outweigh, action will need to be taken to ensure success of the proposed change
3rd principle force field analysis-implementing a response
-a business should implement a response dependant on whether driving forces or restraining forces are stronger
-successful change occurs when driving forces are stronger
4th principle force field analysis-evaluating a response
involves determining whether or not the change has been successfully implemented.
- if change was unsuccessful, the business may review the force field analysis and seek to reduce the restraining forces and future strengthen the driving forces
owners as driving forces
-they have vested interest in the ability for their business to meet it’s objective
-owners may actively seek out and support change in order to remain competitive in the businesses rapidly and continuously changing environment
-may have interest in financial performance of the business bc they receive income from it’s operations
managers as a driving force
they ensure business performance is optimised and objective are being achieved
-Managers can act as a driving force for change when the proposed change will enhance the business ability to meet objectives
-sets examples for other employees which will increase productivity
employees driving force
-personal interest in the business as it provides them income
-want to improve their work environment
pursuit of profit as a driving force
-after undertaking change, a business may be better able to fulfil other obligations, such as providing return to it’s shareholder
-want to make changes to better improve their financial performance
reduction of costs as a driving force
- strategies that are used to reduce wastage can reduce a businesses cost and this often lead to an increase in the businesses net profit figures
-may be able to source cheaper supplier or relocate to benefit less expensive rent
competitors as a driving force
-when competitors change prices, use new technology, this can affect the performance of other businesses in the market.
- this is driving force for a change as a business must always adapt to remain competitive
legislation as a driving force
-laws and regulations
- a buisness may be forced to change new legislation is introduced if current operations breach new legislation
globalisation as a driving force
- means more business are operating on a global scale due to the removal of trade barriers.
-provides opportunities for businesses to expand to new countries and take advantage of economies of scale by finding more efficient and cheaper ways to produce their products
innovation as driving force
-with constant pressure from the competition, innovating new products and services will act as a driving force and will also increase their market share and increase sales
societal attitudes as a driving forces
attitudes and beliefs are always changing and the failure to adapt to the changing environment can result in the business losing sales as the internet has made it easier for people to see how they operate
restraining forces
managers
employees
legislation
organisational inertia
time
financial considerations
managers as a restraining force
-managers may be unwilling to introduce a business change if they do now support the change and may not support change if it threatens their position
employees as restraining forces
-may resist if the outcome is uncertain, they fear they can not adapt or it affects their job security
legislation as a restraining force
legislisations can prevent a business implement change and thus act as a retraining force
organisational inertia as a restraining force
- as staff become familiar with current procedures and strucutres, attempting to change can be difficult due to resource and routine rigidity within the business
-to overcome business may have to change leadership
time as restraining force
business change often has to be before, within or after a time period
time restrictions may be due to legislations deadlines and financial pressures
porters lower cost strategy
def- involves a business offering customers similar or lower priced products compared to the industry average, while remaining profitable by achieving the lowest cost of operations among competitors
competitive advantage
is the conditions or attributes that place a business in a superior position compared to its immediate competitors
advantages of porters lower cost strategy
-attractive to cost conscious customers
-reduces the expenses of operations
disadvantages of porters lower cost strategy
-standardised or basic products may not meet the needs of customers who have specific needs
-low prices may result in customer perceptions that the good or service is of lower quality
porters differentiation strategy
def-involves offering customers unique services or product features that are of perceived value to customers, which can then be sold at a higher price then competitors
-suitable for not cost conscious customers
how can a business create a point of differentiation for it’s product (porters differentiation strategy
- introduce new technology
-innovating it’s original good or service
advantages of porters differentiation strategy
-customers are often loyal to the business because of unique product features or services not offered by competitors
-quicker sales from loyal customer when new products or service from the business are introduced
disadvantages of porters differentiation strategy
- can be difficult to prevent competitors from the replicating points of differentiation
-higher selling prices can deter cost-conscious customers
similarities between lower cost strategy and differentiation strategy
-increase a business’s profitability by providing a competitive advantage
-
differences between lower cost strategy and differentiation strategy
lower cost
-sells at similar or lower prices then competitors
-targets cost-conscious customers
differentiation
-sells at premium price
-targets customer that are not price sensitive
how to guide for force field analysis
describe force field analysis
begin with a brief explanation of force field analysis
points to include:
- define force field analysis
demonstrate understanding of what dirivng forces and restraining forces are and they interact with and influence a proposed change
how to guide for force field analysis
apply the principles to situation (weighting)
define weighting and briefy descirbe
points to include:
this principle as it applies to the contemporary case study
- assign score to each force based on its perceived strength and influence on change and briefly outline why you assigned each score
how to guide for force field analysis
apply the principles to situation (ranking)
define ranking and describe this principle as it applies to the case study
points to include:
-include the statement: “a successful change is typically implemented when driving forces outweigh restraining forces”
how to guide for force field analysis
apply the principles to situation (implementing the change)
define implementing a response and describe principle to the case study
points to include: provide an example of how a strategy the business could use to strengthen driving forces or reduce the impact of restraining forces
how to guide for force field analysis
apply the principles to situation (evaluating response)
define evaluating and describe how principle applies to case study
points to include:
-provide an example of how the business might evaluate the success of the change, such as by using KPIs mentioned in the case study
-
- include statement: if change objectives are achieve, the change is considered successful. If not, the force field analysis may need to be revised and repeated
