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business revision 2018 > Unit 4 AOS 1 sac 1 > Flashcards

Unit 4 AOS 1 sac 1 Flashcards

1
Q

The key concept of business change

A
  • Business change is the adoption of a new idea or behaviour
  • It’s a result of pressures in the business environment
  • include factors like economy, customers, technology, employees and competitors
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2
Q

Efficiency and effectiveness are important in an organisation

A

To ensure that there is enough resources to produce goods or provide a
service

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3
Q

Efficiency and effectiveness are important in an organisation
These can include: (7)

A
  1. Financial resources : Cash and loans
  2. Material resources : Raw material and components
  3. Human resources : skills and contribution by all staff
  4. Information resources : Knowledge including product and market
  5. Technology
  6. Records of time to complete a process
  7. Strategies to improve and aid production
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4
Q

Effectiveness

A

The ability of a business to achieve its stated goals

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5
Q

Why do businesses need to evaluate performance?

A
  • It helps them understand how they are performing against their stated objectives
  • See if they are efficient
  • To see if any changes need to be made
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6
Q

When you evaluate your business

A
  • Use a range of data
  • Make sure KPI’s are relevant, accurate, reliable and timely to staff and organisation, are they realistic
  • Look at financial information carefully
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7
Q

KPI ( Key performance indicators )

A

A KPI is defined as a measure or set of data that allows a business to determine whether its meeting its business objectives

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8
Q

A KPI or data source must be (if not it will not be efficient) (5)

A
  1. Relevant
  2. Valid
  3. Reliable
  4. Deliver valuable information
  5. Comparative - compare with previous data
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9
Q

Areas of consideration include… (know all of them) (9)

A
  1. Percentage of market share
  2. Net profit figures
  3. Number of sales
  4. Rate of productivity growth
  5. Rates of staff absenteeism
  6. Level of staff turnover
  7. Level of wastage
  8. Customer complaints
  9. Number of workplace accidents
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10
Q
  1. Percentage of market share
A
  • Percentage of sales or business that one company has compared with its competitors in the same market
  • If a company’s market share increases, the business has a greater percentage
    of the market/ sales
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11
Q
  1. Net Profit Figures
A

The amount of income left when expenses are deducted from a business revenue

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12
Q
  1. Rate of productivity growth
A

This is a measure of the increases in the amount of outputs given the amount of inputs for a certain period of time

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13
Q
  1. Number of sales
A
  • The total quantity of sales of a particular product or service
  • Helps a business understand if they are achieving sales forecasts
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14
Q
  1. Rate of staff absenteeism
A

measures the number of times a staff member is not at work, who is using sick and personal leave over a period of time.

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15
Q

Ways to reduce the cost of employee absences

3

A
  1. Track staff absences
  2. Development of an employee wellness program
  3. Eliminate workplace stress
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16
Q
  1. Staff turnover
A
  • Measures the number of employees that leave a business in a given period
  • If staff turnover is high there may be an underlying problem in the workplace which needs to be identified
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17
Q

Ways a business can reduce staff turnover (3)

A
  1. Choosing good managers with excellent interpersonal skills
  2. Provide employees with clear expectations, goals, vision, an understanding of expected behaviour and work requirements
  3. Provide support and feedback for employees when required
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18
Q
  1. Level of wastage
A
  • The amount of wastage a business has in the production process gives an indication of efficiency
  • also provides a measure of resources (inputs) that have not been converted into outputs
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19
Q
  1. Number of customer complaints
A

Is an indicator of how your customers feel about your business and the quality of the product/ service they have received

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20
Q
  1. Number of workplace accidents
A
  • The rate and number of workplace accidents can show how a business values an employees safety
  • the less accidents a business has shows that they value their employees well being
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21
Q

Benefits of decreasing the number of accidents (3)

A
  1. Reduction in the number of disruptions to work and production
  2. Reduction in lost production
  3. Reduction in management reporting time of the accident
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22
Q

Force Field Analysis

A
  • Developed in 1969 by Kurt Lewin
  • Looks at the forces that are either driving movement towards a goal or change OR blocking movements towards a goal or change
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23
Q

Lewin believes

A
  • In any situation it is the ‘way it is, because counterbalancing forces are keeping it that way’
  • identified two types of forces driving or restraining
  • When restraining forces are stronger it stops the change
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24
Q

Driving forces

A
  • Pushing the change to happen and support the goal or proposed change
  • tend to initiate a change and keep it going
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25
Q

Restraining Force

A

The forces that restrain or decrease the driving forces

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26
Q

How does it work?

driving/restraining fources

A

The driving forces must outweigh the restraining forces for the change to happen

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27
Q

Benefits of Force Field Analysis

A
  • Lewin’s Force Field Analysis helps companies decide if they should make a change.
  • Managers are able to identify and analyse the forces for and against the change
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28
Q

Factors that need to be present for change to be successful (3)

A
  1. If driving forces are more dominant in the business the change is likely to be successful
  2. If driving and restraining forces are at a similar level it is likely that the change won’t be successful
  3. If the restraining forces are more powerful than the
    driving forces , it is unlikely the change will be introduced
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29
Q

Driving forces

Mangers

A
  • Managers are key drivers of change, they are the catalyst for change
  • Managers have two function
    1. provide the strategic direction for change
    2. are involved in a ‘hands on’ role - is the responsibility for implementing that change in the business
30
Q

Driving forces

Employees

A
  • If employees support the business change it is likely the change will be successful
  • When managers use a participative or consultative management style it is more likely change will be implemented as they feel part of the process
  • If employees are unhappy with the change they may go on strike, create a bullying and unhealthy environment at their workforce
31
Q

Driving forces

Competitors

A

Competition between companies ensures that business are always aware of what their competitors are doing and they can respond to change quickly

and

to ensure they don’t lose customers or reduce market share

32
Q

Driving forces

Legislation

A

All levels of government can impact businesses and the level of change

  1. Federal law
    Focus on laws that relate to employment, equal opportunity, anti discrimination and privacy laws
  2. State law
    Focus on payroll tax
  3. Local council
    Permits, licence, parking restrictions, by law
33
Q

Driving forces

Pursuit of profit

A
  • can drive businesses to introduce change

- is focused on a business wanting a greater profit

34
Q

The pursuit of profit means different things to different companies

A
  1. One company may cut back on expenses and costs

2. Another may look at launching a new range of products and services

35
Q

Driving forces

Reduction in costs (4)

A

Businesses can reduce costs in a variety of areas…

  1. Purchasing : global outsourcing
  2. Production : automations/ waste minimisation
  3. Sales : look at the discount given to customers
  4. Finance : icloud, staff number
36
Q

Driving forces

Globalisation

A
  • Gives greater access to markets around the world

- Gives customers the opportunity to better goods and services

37
Q

Driving forces

Technology

A

Technology impacts all types of businesses

examples:
online bookings
eftpos machines
robotics

38
Q

Driving forces

Innovation

A

is the introduction of new things and methods in a business

technology

39
Q

Ways businesses can innovate (3)

A
  1. Conduct research about the market, customers needs and wants and competitors
  2. Train and empower employees to lead
  3. Connect with customer to generate ideas to improve process
40
Q

Driving forces

Societies attitudes

A

Its impacted by a changing demographic, age of the workforce, more women in the workforce, more women than men at university, migration trends

41
Q

Restraining forces

Managers

A

Managers can act as a driving and restraining force when change happens

42
Q

Reasons why managers resist change (3)

A
  1. They may be afraid
  2. They may not have the skills or experience
  3. It may threaten their current role
43
Q

Restraining forces

Employees

A
  • They are scared to learn new skills or move into new territory
  • Change is difficult and they may not be emotionally equipped to deal with changes
44
Q

Restraining forces

Time (most important for restraining)

A
  • Business may find that a lack of time can impact the business and may stop it from making a change
  • if they don’t make a change they will fall way behind their competitors
45
Q 
Restraining forces 
Organisational inertia (important for restraining)
A

The lack of ability for a business to react to internal and external pressures for change

46
Q

Two elements to organisational inertia

A
  1. Resource rigidity
    Limited/don’t want to invest - relates to motivation to respond
  2. Routine rigidity
    Inability to change the pattern and logic that underlines this - relates to the structure of response
47
Q

Restraining forces

Legislation

A

If a business can’t manage the changes required due to legislation it can cause major problems in the running of the organisation

48
Q

Restraining forces

Financial considerations

A

Lack of finances can impact businesses especially small ones

- the cost of making changes are real considerations that businesses need to consider

49
Q

Porter’s three steps

A
  1. Carry out a SWOT analysis
  2. Use Porter’s Five Forces analysis
  3. Compare the results of the two
50
Q

Step one - SWOT Analysis

A
  • Strengths
  • Weaknesses
  • Opportunities
  • Threats
51
Q

Step 2 - Porters 5 force analysis

A
  • supplier power
  • buyer power
  • competitive rivalry
  • threat of substation
  • threat of new entry
52
Q

Supplier power

A
  • a business should assess how easy it is for suppliers to drive up prices
  • The more a business needs help from suppliers the more power a supplier has
53
Q

Buyer power

A
  • this looks at how easy it is for buyers to drive down prices.
  • If there are a few powerful buyers, then the power lies with them not the business
54
Q

Competitive rivalry

A
  • focuses on the number and capability of competitors.

- If the product is unique then the business has a great deal of power.

55
Q

Threat of substitution

A
  • this is affected by the ability of customers to find a product or service similar to the one provided by the business.
  • If substitution is easy then power and influence is reduced

Samsung/iPhone

56
Q

Threat of new entry

A
  • a business’ influence and power is affected by the ability of other businesses entering the same market and competing.
  • If there are few products and little protection of ideas it’s easier for new competitors to quickly enter the market and take away customers.
57
Q

Step 3 - compare the SWOT and Porter’s analysis

A

Once you understand the competitive forces that you compete in… You can identify your competitive advantage

58
Q

Two types of competitive advantage

2

A
  1. Cost advantage

2. Differentiation advantage

59
Q

Cost Leadership Strategy

A
  • Competitive advantage is gained by decreasing or altering costs of the business
  • Focus on:
    low cost production, investing in new technology, pressing supplier for better products
  • when a business aims to have the lowest costs in the industry this increases PROFIT and MARGIN
60
Q

Two ways to implement a cost leadership strategy

A
  1. Increase profit by reducing costs at the same time charging similar prices to your competitors
  2. Increasing market share through charging lower prices but still making a profit due to savings made in reducing costs and other expenses
61
Q

ways to achieve a cost leadership strategy (7)

A
  1. Use assets efficiently
  2. Run low cost operations
  3. Control the supply chain
  4. Cheaper suppliers
  5. JIT
  6. Technology
  7. Downsizing labour force
62
Q

Advantages and disadvantages of a cost leadership strategy

A

advantages

  • Increased market share
  • Increased profit
  • Increased productivity

disadvantages

  • Low customer loyalty
  • May cause changes in reputation
63
Q

Differentiation strategies

A

Businesses must make their product unique, to gain a competitive advantage it also allows them to market themselves as a leader/ innovator in the industry

64
Q

Differentiation strategies It may include (6)

A
  1. Durability
  2. Use
  3. Support
  4. After sales service
  5. Brand image
  6. It provides a connection to the brand
65
Q

What to include when you plan to implement a differentiation strategy
(3)

A
  1. Develop an effective marketing and promotional plan
  2. Deliver a high quality product
  3. Have a focus on R and D and innovation
66
Q

When to use a differentiation strategy (2)

A
  • The market is competitive

- Business has the resources and capabilities to satisfy customer needs, intellectual property needs and employee needs

67
Q

Porter’s generic strategies in terms of strategic management

A
  • If a business is starting from scratch : the business needs to decide if it is going to follow the low cost or differentiation strategy
  • Porters strategies are ideal in a large business as they have more influence and power than a small one
68
Q

Porter’s generic strategies is

A

a decision making tool/measure for management about how best to bring in effect of change.

this theory contends that there are two major pathways for an enterprise to choose but not both.

69
Q

Proactive vs. Reactive

proactive

A
  • thinking about change before occurs

- businesses can seek to “shape their own destiny” and plan for the future they want to position themselves in.

70
Q

Proactive vs. Reactive

Reactive

A
  • Reacting post change

- Businesses can wait to see how driving and restraining forces build around them and respond to them in a reactive way

business revision 2018 (10 decks)

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