unit 4 AOS 1 Flashcards
reviewing performance - the need for change
what is a business change?
Business change is the process of making alterations of behaviours, polices and practices of a business
any alteration in the internal or external environments
why is change important?
to achieve business objectives
to remain competitive
what is a proactive approach?
a situation where a change is planned and occurs before a business is affected by pressures in their environment.
what is a reactive approach?
when a change is unplanned, and takes place after the business had been affected by the pressures from its environment
what are key performance indicators?
specific criteria used to measure the efficiency and/or effectiveness of a business’s performance
used to analyse a businesses performance
what are the KPS?
Percentage of market share
Net profit figures
Rate of productivity growth
Number of sales
Rate of staff absenteeism
Level of staff turnover
Level of wastage
Number of customer complaints
Number of website hits
Number of workplace accidents
what is the KPI Percentage of market share?
The businesses share of the total industry sales for a particular good or service, expressed as a percentage
what is the KPI Net profit figures
The amount of money left over after all expenses have been deducted from revenue earned
what is teh KPI Rate of productivity growth
The amount of outputs produced compared to the amount of inputs used and the rate in which it increases overtime
what is the KPI Number of sales
A measure of the amount of goods or services (products) sold in a specified period of time
what is the KPI Rate of staff absenteeism
The number of staff who do not turn up for work when they are scheduled to do so
what is the KPI Level of staff turnover
The number or the rate, of employees who are leaving the business over a specific period of time, and need to be replaced by new employees
what is the KPI Level of wastage
The amount of unwanted or unusable material created by the production process of a business
what is the KPI Number of workplace accidents
The amount of unplanned or uncontrolled events that result in personal injury or property damage at a business
what is the KPI Number of website hits
Measures the amount of times individuals visit a businesses website
what is Lewin’s force field analysis about?
Kert Lewin developed a model that helped managers understand the factors that worked in support of a change and those that worked against the change
what is the KPI Number of customer complaints
The number of customers expressing their dissatisfaction with the business, in either spoken or written form
what is driving forces
Forces that encourage and support a change
▪ Customers ▪ Legislations ▪ Changes in technology
Driving factors are factors affecting the business environment that promote and support business change - they work to encourage, and initiate change
Successful change is more likely to occur when driving forces outweigh the restraining forces of a proposed change
what is restraining forces?
Forces that work against the change
▪ Financial considerations
▪ Employee resistance
▪ Time
▪ Managers
Restraining forces are those that work against a change. They make it difficult to implement a change successfully.
what are the four key principals of the force field analysis?
- weighting
- ranking
- Implementing a response
- Evaluating the response
what is the weighting principal about?
the process of scoring and attributing a value to the driving and restraining forces
· Identify the driving forces that promote the change and restraining forces that resist the change
· For each force, a weight is assigned to it to determine the level of impact each force can potentially have on the change
what is the ranking principal about?
arranging the forces in order of value and determining the total score of driving and restraining forces
Ranking helps determine which driving forces could be strengthen and which restraining forces could be removed or minimised
what is the Implementing a response principal about
developing an action plan to reduce the strength of the restraining forces and increase the strength of the driving forces
· The action plan details what needs to be done, who is responsible, the resources required and deadlines for task completion
what is the evaluating the response principal about
determining whether or not the change has been successfully implemented
Evaluate the response to determine its effectiveness.
A business can use KPIs to measure the success of the change in achieving business objectives
what are some disadvantages of the force field analysis
The weightings of the forces are subjective. Biases can emerge when determining the importance of a particular force.
Assigning responsibility to people to manage aspects of the change may result in a need for training as the skills of people may be lacking or overestimated.
what are some advantages of the force field analysis
Businesses are able to weigh up the factors ‘for and against’ and whether the change is worth undertaking.
It allows a business to identify and strengthen the driving forces supporting the change and to take action to reduce or eliminate the restraining forces.
Force Field Analysis allows stakeholders to identify the change as a positive or negative change from their perspective.
how can owners act as a driving force?
Owners act as a driving force for change if they believe it will be beneficial to future business performance
Owners have a vested interest in the ability of their business to meet objectives and continue to adapt
owners can initiate change in a business
how can managers act as a driving force
- Managers act as a driving force for change when the proposed change will enhance the business ability to meet objectives
When a manager is in support of a change, they can encourage successful change implementation
Managers ensure that business performance is being optimised and objectives are being achieved
how can employees act as driving force
Employees can instigate change in a business by driving improvements in processes, product features..etc
Employees can act as a driving force for proposed changes that would improve their work environment
Employees are responsible for achieving business objectives
how can competitors act as a driving force
- Competitors can drive change through: opening a new business; pricing policies; use of new technology; marketing
The competitive nature of a business can initiate change in a business as they compete for customers
how can managers act as a restraining force
Managers can be a restraining force when they are unwilling to introduce a business change if they do not support the change
how can employees act as a restraining froce
employees can be a restraining force if the outcome is uncertain, they fear they cannot adapt or if it impacts job security of work routine
fear of the unknown
how can time act as a restraining force
Business change often had to be completed before, after or within a certain time period
what is Porter generic strategies
Porter’s Generic Strategies can help determine the strategic direction required for business change
porters generic staregies is an approach where a business can gain a competitive advantage by implementing the lower cost or differenetiation strategy
what are the two startegies of porters startegic manageent
Porter proposed that businesses can gain a competitive advantage by adopting:
- Lower costs - Differentiation
what is the lower cost staregy
The lower costs strategy is where a business gains a competitive advantage by being the low cost producer in the industry
- This strategy is suitable where industries have a large number of cost-conscious customers who have little brand loyalty and will choose to purchase from the cheapest supplier - A competitive advantage is gained through reducing the costs of the business, allowing it to operate with larger profit margins compared to market rivals
what are some advabatges of the low cost staregy
- A business may become more profitable, as profit per unit can increase
- Gains competitive advantage
- A business may save money on some costs to allow expansion or development of new lines
- Savings can be put towards differentiation at a later date
what are some disadvantages of the low cost staregy
- Sales may fall as customers may perceive a product as being of poor quality
A business may lose its market share if other businesses copy the low-cost approach
what is the differention strategy
Differentiation is where a business gains a competitive advantage by being unique in some way that is valued by customers
- Offering customers unique services or product features that are of perceived value to customers, which can then be sold at a higher price than competitors - Through differentiation, a business will make their product different, unique or superior in some way to gain a competitive advantage - This strategy is suitable for customers who are not price sensitive and/or customers who have specific needs that are currently either unmet or under-served
what are some advantages of the differentiation straetgy
- Differentiation is way to improve the way a business connects with customers, and can develop customer loyalty
- By developing customer loyalty, market share can be increased
- Gains competitive advantage
what are some disadvantages of the differentiation strategy
- Rival businesses can copy differentiated approach, negating any gains
- Differentiation has an initial cost that must not outweigh the benefits
- Differentiation can be a time-consuming process, and, during that time, consumer tastes or preferences may change
- Often more expensive to be unique
