Unit 4 AOS 2 SAC Part 1 Flashcards
Define business change
Business change is the alteration and adaption of behaviours, policies and practices of a business.
Types of response to business change and its importance
Proactive change: Refers to the business predicting alterations and future adaptions within a business in order to take advantage. A business may research in future trends, innovations and other change in order to competitive advantage.
Reactive change: Refers to the business being impacted and forced to make business alterations and change in order to protect and preserve market position. Being reactive causes a business to be forced to follow change and is therefore is deemed less desirable that proactive change due to possible risk of losing market position and being disadvantaged.
Key Performance indicators (KPI’s)
Key performance indicators (KPIs) are criteria that measure how efficient and effective a business is at achieving different objectives.
Financial KPI’s
- Net profit figures
- Number of sales
- Percentage of market share
Non-Financial KPI’s
- Level of staff turnover
- Rates of staff absenteeism
- Levels of wastage
- Number of customer complaints (check)
- Number of workplace accidents
- Rate of productivity growth
Percentage of market shares and what can a manager identify from this KPI?
Percentage of market share measures a business’s proportion of total sales in a specific industry, expressed as a percentage.
Percentage of market share highlights how well a business is performing within their industry and how competitiveness the business is in regards to the specif industry.
high market share –> high competitiveness
low market share –> low competitiveness
Net profit figures and what can a manager identify from this KPI?
Net profit figures are calculated by deducting total expenses incurred from total revenues earned over a period of time.
It can indicate the health of the business and the levels of profits being produced in order for future business growth.
Number of sales and what can a manager identify from this KPI?
Number of sales is the amount of goods and services sold by a business within a specific time period.
The number of sales can identify the amount of sales of products or services within a year at a business which the growth of a business growing per annum.
Specifically the number of sales can also identify the products of services of a business which are most popular to least popular in sales, This can then also identify if business change is needed in order to increase sales.
Number of customer complaints and what can a manager identify from this KPI?
Number of customer complaints is the amount of customers who have notified the business of their dissatisfaction
A manager may examine the number of customer complaints at a business to assess the level of customer satisfaction and identify if business change needs to occur in order to increase customer satisfaction.
Rates of staff absenteeism and what can a manager identify from this KPI?
Rates of staff absenteeism is the average number of days employees are not present when scheduled to be at work, for a specific period of time.
A manager can use this as an indicator of staff morale where a high staff absenteeism can indicate less motivated and unsatisfied working conditions. This can result in additional expenses and halts in business operations due to lack of staff therefore a manager can then find methods and strategies to reduce staff absenteeism in order to improve the business.
Level of staff turnover and what can a manager identify from this KPI?
Level of staff turnover is the percentage of employees that leave a business in a year and have to be replaced.
A manager can assess the levels of staff turnover which can indicate levels of morale within a business. A business with low levels of staff turnover can display levels of satisfaction within the business, work conditions and management styles.
Likewise high levels of staff turnover can indicate employee dissatisfaction which can increase business expenses through replacing and recruiting new employees and reduce productivity through having insignificant employees within a business.
Number of workplace accidents and what can a manager identify from this KPI?
Number of workplace accidents measures the amount of injuries and unsafe incidents that occur at a work location over a period of time.
A human resources manager is concerned with the number of workplace accidents occurring at a business since it is their responsibility to ensure the
safety and well being of employees
Level of wastage and what can a manager identify from this KPI?
Level of wastage is the amount of inputs and outputs that are discarded during the production process.
An operations manager would be concerned with a high level of waste at any stage of the production process. High levels of wastage often increases the
amount of raw materials or time required to produce a product or service. This waste then increases the expenses of the business which reduces the
profit of the business.
Rate of productivity growth and what can a manager identify from this KPI?
Rate of productivity growth is the rate of the conversion of inputs produced and converted into outputs within a given time period
A manager can identify the efficiency and effectiveness of resources within operations from the sourcing of inputs that are processed into outputs which are then sold to customers.
Attributes of KPI’s **
A KPI must be:
Relevant- provide data and information required to analyse business performance.
Reliable- The data and information is from trustworthy and reliable sources
Comparable- The data and information can be easily compared to an objective or a period of time.
Measurable- data is in quantitative or qualitative format
