Unit 4 AOS 1 BM Flashcards
What is effectiveness, efficiency and KPI’s
Effectiveness- The degree to which a business had achieved its stated objectives
Efficiency- How well a business uses resources to achieve objective
KPI- Specific criteria used to measure the efficiency and/ot effectiveness of a business performance performance
What are the KPI’s
- Percentage of market share
- Net profit figure
- Rate of productivity growth
- Number of sales
- Rate of staff absenteeism
- Level of staff turnover
- Level of wastage
- Number of customer complaints
- Number of websites hits
- Number of workplace accident
What is the force field analysis as well as driving and restraining forces
Force field analysis- Outlines the process if determining which forces drive and which resist a proposed change
Driving force- Forces that support change
Restraining force- Forces working against change
Notes on Lewin force field analysis
Made the model to understand the factors/ forces that will influence a situation, the FFA determines which forces will drive and resist proposed change
Driving factors are what make change happens/ will enforce change will restraining forces are forces which work against any change/ want everything to stay the same
list of driving forces
- Owners and managers
- Employees
- Competitors
- Legislation
- Pursuit of profit
- Reduction of costs
- Globalization
- Tech
9.Innovation - Societal attitudes
list of restraining forces
- Managers
- Employees
- Time
4.Organisational inertia - Legislation
- Financial consideration
Key principles of a force field analysis
If a business wants to implement change they must
1st Give weighting to current driving and restraining forces
2nd Rank the top restraining and driving forces to eliminate or strengthen them
3. List actions required and implement a response
4. Evaluate
Strengths and weaknesses of a force field analysis
Benefits
- It allows the business to identify those people within the business who are supportive of the change and those restraining the change
- FFA allows stakeholders to identify the change as a positive or negative change from their perspective
- Businesses are able to weigh up the factors ‘for and against’ and whether the change is worth undertaking
Weaknesses
- The weighing of the forces are subjective, biases can emerge when determining the importance of a particular force
- The identification of driving and restraining forces may omit some forces, they may not be clearly identifiable at the and may emerge during the change or the person completing the analysis may not have identified the source
What is the driving force of owners and managers
The role of a owner or manager makes them a driving force because the business is the owners livelihood and therefore changes may be needed to ensure that the business runs to its best ability, change must also happen to make sure stakeholders are happy
How are employees a driving force
Employees working in an innovative environment where ideas are shared and acted on, employees will also want changes in pay and working conditions
How are competitors driving forces
Competitors can drive businesses to make such changes as
- opening of a new business that will compete with an existing business may cause the existing business to undergo change stay current and relatable to customers
- Advertising campaign online presence can lead to change
- the adoption of new tech
How is legislation a driving force
Laws can be passed tat can lead to a business needing to make a change in its operations, such as the ban of single use plastic bags
How is pursuit of profit and reduction of costs
Pursuit of profit
- Profit is essential and the business may change itself to ensure that profit will stay high the business may need to make changes to ensure that oit does happen
REDUCTION OF COSTS
A business will naturally have costs that occur when it is running and change may have to occur within the business to make sure these changes can be kept as low as possible this can happen through
- Source Materiels and suppliers from cheaper suppliers
source some local suppliers to avoid import costs
- reduce wages
Innovation and societal attitudes and driving forces
Innovation (A process that occurs when something already established is improved upon) Innovation can be driven by tech advancement and globalization and it can be done through technological developments or through individual identifiable areas for improvement, it can also result from the identification of a niche market leading to change
Societal attitudes
Business are constantly confronted by how society changes and how society may change will determine how the business will change
What is the restraining force of managers
Managers can restrain or stop change from occurring a manager could make hasty decisions that are poorly timed and unclear also if thye ack capacity to deal with change or lack the experience and skill to oversee a transformation pr may not be able to deal with resistance from stakeholders
Employees as restraining forces
Any type of change will effect employees and this can lead to employees being restraining because employees may lose there job or job security or they may not like new procedures that are in the business
What is time as a restraining force
some pressures for change occur quickly and so the business do not have the time to plan the change as efficiently and effectively as they would like, in some cases there is not enough time to think and implement change
What is the restraining force of organizational inertia
(A unenthusiastic response from a business to a proposed change, inability to make internal change) This can happen because of how successful a business is because they do not want to change was has worked in the past
What is legislation as a restraining force
Legislation can be a restraining force because it must be comlied with this happens when legislation places restriction in certain operation process
What is fiancial considerations as a restraining force
Financial consideration could be a restraining force because changes may not be able to happen because of the costs associated with making a change such as
- Purchasing new equipment
- Retraining the workforce
- Reorganizing plant layout
- Redundancy payment
What are the 2 main parts of porters generic strategy
- Cost advantage (A competitive advantage is gained through reducing the costs of the business, allowing it to operate with larger profit margins compared to market rivals
- Differentiation- Business gain a competitive advantage through differentiating their good or service from others in the market
What is porters lower cost strategy
Cosr leadership involves a business seeking to become the business with the lowest cost in the industry, both the production and the cost of the product should be as low as possible
Reducing the direct and indirect cost- By reducing wages reducing cost of interest or reducing cost of supply’s/stock the company can cut down its costs
Improving efficiency- By minimizing idle stock on shelves using assists more efficiently or by operating at economics of sales
Controlling areas of management responsibility - A business might check and review areas if the business such as fiancé operations HR sales marketing and info tech.
Strengths and weaknesses of low cost
Strengths
- Businesses may become more profitable as profit per unit can increase
-A business may be able to prevent competitors from increasing market share if they ant match cost or price
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What is porters differentiation strategy
The use of factors such as brand names, delivery methods and advertising to establish difference between sustainable products
A business will ensure that there product is different and unique to gain a competitive edge and therefore they can charge a higher cost.
Some strategy’s to differentiate a product
High quality products- By ensuring that quality is better than others such as being more reliable, more durable, extended warranties better support for customers
Multiple branding- By providing different brands or more brands in the same market this would involve providing similar products with a very subtle difference that would appeal to different customers
Innovation/research and development- Developing a product that is different that no other businesses have helped differentiate a product, this involves identifying a market that is not yet filled and provide a product to the market that no competitor does
Advantages and disadvantages of differentiation strategy
Advantages
- Differentiations is a way to improve the way a business connects with customers and can develop customer loyalty
- If able to charge premium price business will make revenue gain
- By developing customer loyalty marker share can be increased
Disadvantages
- Rival businesses can copy the differentiation approach, negating any gain
- Differentiation has an initial cost that must not outweigh the benefits
- Differentiation can be time consuming process and during that time consumers taste or preference may change
