Unit 4: AOS 1 Flashcards
What is business change?
- Adoption of new idea or behaviour
- Business’ feel the need to change as a result of business environment pressures
What are business environment pressures?
- Economy
- Employee’s
- Customers
- Competitors
- Technology
What are incremental changes?
- Small continuous changes
- Occur regularly in the business
e. g. new process to improve efficiency
What are transformational changes?
- Significant changes
- Impact whole business
e. g. merger
What is proactive management?
- Foreseeing changes in the environment and taking advantage
What is reactive management?
- Letting business pressure impact the business before making a change
What is effectiveness?
- Degree in which a business achieves set objectives
What is efficiency?
- Degree in which the business best uses resources to achieve set objectives
What is percentage of market share?
- Business’ share of total sales in an industry for a particular good or service
- Expressed as a percentage
What is net profit?
- Money left over after expenses have been deducted from revenue earned
What is rate of productivity growth?
- Amount of outputs produced compared to the amount of inputs used
AND - The rate in which it increases over time
What is number of sales?
- Amount of goods/services sold in a specific period of time
What is rate of staff absenteeism?
- Number of employee’s that do not turn up to work when they are expected to be there
What is level of staff turnover?
- Rate in which people leave the business and need to be replaced
What is level of wastage?
- Amount of resources and finished goods discarded throughout the production process
What is number of customer complaints?
- Amount of people dissatisfied with the business and/or its products
- Have notified the business
What is number of workplace accidents?
- Amount of people injured or nearly injured at work
- Due to unplanned events
What is the force-field analysis?
- Process of identifying and analysing the forces that will drive and those that will resist proposed changes
Benefits of force-field analysis?
- Managers can identifying and analyse the for/against change
- Helps determine whether change is worth pursuing
- Allows managers to develop ways of reducing restraining forces
Driving force for change: Managers
- Managers make decisions about the future direction of the business
- Managers that are strong leaders can drive the business toward change
Driving forces for change: Employees
- Can drive change through innovation
- Can place demands on the business to change conditions, policies and processes
Driving forces for change: Competitors
- Many industries are highly competitive
- Competition can drive a business to implement changes to gain a competitive advantage
Driving forces for change: Legislation
- Changes to laws can force a business to implement change
Driving forces for change: Pursuit of profit
- Businesses looking to increase profits may implement business change
e. g. marketing campaigns
Driving forces for change: Reduction of costs
- Reducing costs can help a business to become more profitable
- A business that has high costs can initiate change
Driving forces for change: Globalisation
- Allows business to take control of international markets
- Increases global competition
Driving forces for change: Technology
- Businesses may need to implement technology to remain competitive
Driving forces for change: Innovation
- Adopting something new or something that already exists
e. g. new production processes
Driving forces for change: Societal attitude
- Societal attitudes are constantly changing
- Businesses that fail to keep up with these attitudes risk falling behind
Restraining forces for change: Managers
- Managers may not be able to lead a business through change
- Middle/lower managers may not support changes proposed by senior managers
Restraining forces for change: Employees
- Change can bring on fear or anxiety causing resistance
- If employees haven’t been consulted or do not feel appreciated they may resist change
Restraining forces for change: Time
- Businesses may find a lack of time to successfully implement change
- May be under pressure by competitors and need to act quickly
Restraining forces for change: Organisational inertia
- Management that is unenthusiastic to change make it difficult to gather momentum toward change
- Business’ lack of ability to respond to pressures and embrace change
Restraining forces for change: Legislation
- May block or make it difficult to implement change
- ACCC may block a proposed merger if it feels it will reduce competition in the market
Restraining forces for change: Financial considerations
- Immediate or long term costs of a proposed change may make it difficult for change to be implemented successfully
What is a restraining force?
- Those that work against change and aim to create resistance.
- A range of different forces which work against change
- Such as time and financial considerations
What is a driving force?
- Those that work toward encouraging and initiate change
- A range of different forces aim to push change such as managers, employee’s and legislation
5 Competitive Forces
- Supplier power: how easy it is for suppliers to rive costs up
- Buyer power: how powerful buyers are in driving prices down
- Competitive rivalry: looks at te number and capability of competitors
- Threat of substitution: how easy it is for customers to find a similar good or service
- Threat of new entry: how easy it is for new competitors to enter the market
What is lower cost strategy?
- Business looks to gain a competitive advantage by reducing costs in primary and support activities
- Business’ will look at all activities and determine where costs can be reduced
What is differentiation?
- Business looks to offer something unique to its customers
- By creating unique goods/service it will increase demand within consumers as they will not be able to get the features elsewhere
