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unit 4 aos1 Flashcards

Reviewing Performance - The need for change

1
Q

What is change?

A

when a business responds to pressures and adapts or alters its policies, procedures, work environment or structure in order to achieve an objective.
- it is inevitable and all businesses must face and adapt to change in a rapidly changing environment by proactively responding such pressures.

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2
Q

Incremental Change

A

small ongoing change,
e.g change in quality process or management style

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3
Q

Transformational Change

A

Major changes
e.g mergers or restructure.

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4
Q

proactive approach to change

A

involves a business carrying out a planned change before the business is directly affected by the pressures from its external or internal environments

  • this is preferred overall than a reactive approach to change
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5
Q

benefits of a proactive approach to change

A
  • business can move at its own pace = is prepared for change
  • less likely to have a negative impact on business than if unprepared for the change
  • if they carry out this change before their competitors = gain in competitive advantage
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6
Q

Reactive approach to change

A

occurs if a business is carrying out an unplanned change in response to the business being DIRECTLY affected by the pressures from its external and/or internal environment

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7
Q

benefits of a reactive approach to change

A
  • allows business to wait for other businesses to drive change and learn from their mistakes
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8
Q

What are key performance indicators?

A

specific criteria a business can use to evaluate the performance of a particular area of the business by measuring this area’s efficiency and/or effectiveness.
- often they are used to measure the success of change
- they MUST BE: relevant, comparable and measurable
- they provide data that can drive (encourage) business change

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9
Q

what are the KPI’s (10)

A
  • percentage of market share
  • net profit figures
  • rate of productivity growth
  • number of sales
  • rates of staff absenteeism
  • level of staff turnover
  • level of wastage
  • number of customer complaints
  • number of website hits
  • number of workplace accidents
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10
Q

KPI (1) percentage of market share

A

the business’ proportion of total sales in a specific market or industry in relation to its competitors - expressed as a percentage

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11
Q

KPI (1) percentage of market share - INCREASE

A

an increase would show a business that its products/services are more popular with customers who are prepared to buy more
(sales are increasing relative to competitors) or the competitors are selling less

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12
Q

KPI (1) percentage of market share - DECREASE

A

a decrease would show a business that its competitors are improving thus have a higher market share
OR
the customers are not happy with the quality or price of the products/services
OR
delivery or customer service levels could be poor, thus reducing sales

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13
Q

KPI (2) net profit figures

A

are a financial indicator that measures the difference between revenue and expenses over a particular period of time.

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14
Q

KPI (2) net profit figures - INCREASE

A

an increase would show that the businesses revenue is greater than expenses or expenses are decreasing (increase efficiency)

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15
Q

KPI (2) net profit figures - DECREASE

A

a decrease would show that a business’s revenue is lower or expenses are higher and therefore the business is losing efficiency

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16
Q

KPI (3) rate of productivity growth

A

a measure of performance that indicates how many inputs (resources) it takes to produce an output (good or service).

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17
Q

KPI (3) rate of productivity growth - INCREASE

A

an increase would mean that more goods/services are produced (outputs) using fewer (decrease) materials, labor, time, costs (increase efficiency). THEREFORE the businesses operations are more efficient when compared to previous performance

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18
Q

KPI (3) rate of productivity growth - DECREASE

A

a decrease would mean that there is fewer outputs or rising production costs or it may be taking a longer time to create goods/services.
THIS MEANS the business will fall behind competitors if they do not maintain/improve productivity growth

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19
Q

KPI (4) number of sales

A

the measure of the number of products sold or services provided to customers within a given period of time.

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20
Q

KPI (4) number of sales - INCREASE

A

an increase would mean that there are more customers purchasing products/services = the business has improved product quality has improved OR marketing more successful

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21
Q

KPI (4) number of sales - DECREASE

A

a decrease would mean that the business has poor quality, lack of availability of goods, poor marketing, non-competitive pricing OR there is a new successful competitor who steals market share OR a change in customer preferences

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22
Q

KPI (5) number of customer complaints

A

the number of negative written comments made by the purchaser of goods or services and reported to management to indicate their level of dissatisfaction with the performance of the business.

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23
Q

KPI (5) number of customer complaints - INCREASE

A

an increase would mean that there is dissatisfaction with the goods/services of the business.
THIS could be due to poor quality or poor service. Eventually it could impact by decreased sales and damage to reputation.

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24
Q

KPI (5) number of customer complaints - DECREASE

A

a decrease would mean that there is greater customer satisfaction with the quality of goods and services which could/should lead to increased sales and market share

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25
Q

KPI (6) rate of staff absenteeism

A

measures the number of days that employees are scheduled for work but do not attend.

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26
Q

KPI (6) rate of staff absenteeism - INCREASE

A

an increase would mean that there is poor staff satisfaction, morale/corporate culture (poor) no loyalty to the business, poor staff selection, poor relationships between management and employees, poor quality and poor customer service.

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27
Q

KPI (6) rate of staff absenteeism - DECREASE

A

a decrease would mean that there is success as staff are happier, more loyal to the business, improved relationships with management and available to work which increases productivity, increase morale and increase corporate culture, improved customer service and quality in production.

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28
Q

KPI (7) level of staff turnover

A

measures the number of staff who leave the business and are replaced over a given period of time.

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29
Q

KPI (7) level of staff turnover - INCREASE

A

an increase would mean that there is poor staff satisfaction, better pay or conditions in a rival business, morale/corporate culture (poor) no loyalty to the business and it is very costly to rehire staff constantly.

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30
Q

KPI (7) level of staff turnover - DECREASE

A

a decrease would mean that there is success as staff do not wish to leave and are happier and loyal to work which increase productivity, increase morale and increase corporate culture and decreases re-employment costs

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31
Q

KPI (8) number of workplace accidents

A

the number of interruptions to workflow caused by injuries or property damage sustained during the production process.
this could occur because of:
- old or faulty equipment
- poorly trained employees
- dangerous nature of work tasks
- unsafe working practices

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32
Q

KPI (8) number of workplace accidents - INCREASE

A

an increase would mean that there is lack of safety, danger and lower morale and decreased loyalty from employee’s and lower productivity and increase costs (medical, legal and staff turnover costs)

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33
Q

KPI (8) number of workplace accidents - DECREASE

A

a decrease may mean that there is better care by management for their employees that increases morale and productivity and lowers costs

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34
Q

KPI (9) level of wastage (operations)

A

measures the amount of unusable materials created that are not converted to outputs during the production process.

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35
Q

KPI (9) level of wastage (operations) - INCREASE

A

an increase may mean that business has poor use of resources, decrease of productivity and costs will increase.
SO Raw materials are wasted and disposal costs increase potentially harming the environment

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36
Q

KPI (9) level of wastage (operations) - DECREASE

A

a decrease would mean that there is an improved use of resources, lower costs or time to produce goods and services and a decrease in disposal costs and reduced harm to the environment.

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37
Q

KPI (10) number of website hits

A

the amount of customer visit that a business’s online platform receives for a specific period of time

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38
Q

KPI (10) number of website hits - INCREASE

A

an increase would likely model their online presence so that customers can navigate it comfortably and efficiently, which may provide greater opportunities for sales.

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39
Q

KPI (10) number of workplace hits - DECREASE

A

a decrease may mean that a business has a poorly developed online platform that does not entice customers to engage with the business or in online purchasing.

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40
Q

Lewin’s Force Field Analysis Theory

A

model that outlines a process for determining the forces that drive and resist a proposed business change, and thus affect the success of the change.

41
Q

What are driving forces?

A

these are the factors that initiate, encourage and support change, allowing the organization to move towards its desired state.

42
Q

What are restraining forces?

A

factors that oppose change and restrict/hinder the business from moving forward towards its desired state.

43
Q

Benefits of Lewin’s Force Field Analysis

A
  • by comparing ‘for and against’ the business allows the ability to determine whether change is work undertaking
  • allows business to prepare strategies
  • allows stakeholders to be aware of change
44
Q

disadvantages of Lewin’s Force Field Analysis

A
  • employees may be unhappy if driving forces exceed restraining forces and the change still occurs
  • loss of productivity as management and employees are focused on the analysis and not their core activities
  • change can be time consuming, especially if the business must go ahead with the change. for example a change may be required by legislation
45
Q

Step’s taken for Lewin’s Force Field Analysis

A

1) identify need for change
2) identify the driving forces
3) identify the restraining forces
4) weight/rank those forces/assign scores
5) analyze and apply
- analyze the forces which can be changed
- develop an action plan listing the strategies or actions to deal with what can be changed in order to allow the driving forces to break through and change to be successful

46
Q

Driving forces: owner

A

bc they are Interested in the Business’s success due to financial and personal reputation reasons.
- a major driving force for change bc they want to improve their return on investment.

47
Q

Why are MANAGERS driving forces?

A

interested in success of job for:
- financial reasons
- job security
- personal reputations (looks good on them)

48
Q

how can MANAGERS be the driving force? (examples)

A

1) because they can initiate a business change after reviewing KPI data
2) because they may have strong leadership skills that can help increase support for a business change within the business’ internal environment

49
Q

Why are EMPLOYEES driving forces?

A

interested in success of job for:
- financial reasons
- job security
- personal reputations (looks good on them)
- career development.
the change could better meet their needs (higher revenue = higher salary)
OR be broadly sucessful so they can take pride in being associated with the sucess

50
Q

how can EMPLOYEES be the driving force? (examples)

A

1) by driving change through the sharing of their innovative ideas with management
2) by increasing support for a business change

51
Q

Why are COMPETITIORS driving forces?

A

The actions taken by a business’ competitors can drive the business to change.

52
Q

how can COMPETITORS be the driving force? (examples)

A

1) because if a new business opens, they can drive existing businesses that are competing with the new business to change to continue to be current and relevant. have level of competitiveness
2)if competitor changes its policies, this can drive the business to change the business’ policies in a similar manner
3) if a business adopts new tech in its production process, they can drive others to do so too

53
Q

Why are LEGISLATION driving forces?

A

BECAUSE it can legally require a business to carry out a particular business change.

54
Q

how can LEGISLATION be the driving force? (examples)

A

(1) Various pieces of federal and state legislation have forced businesses to change the way in which they operate during the COVID-19 pandemic.
(2) Federal and state legislation can change taxation requirements for businesses.
(3) Federal legislation can require businesses to change their policies relating to employment, equal opportunity, anti-discrimination and/or privacy.
(4) Local councils can pass delegated legislation that requires businesses to change their operations.

55
Q

Why are PURSUIT OF PROFIT driving forces?

A

Because of the benefits associated with businesses pursuing profit(expansion. high salary. returns etc.). businesses have a strong incentive to push for business changes that will increase the businesses’ net profit figures.
- for social enterprises: higher profits = more funds being allocated to a social cause
- neets shareholder expectations too

56
Q

how can PURSUIT OF PROFIT be the driving force? (examples)

A

1) The business can implement a business change that will help increase the business’ revenue.
2) The business can implement a business change that will help decrease the business’ expenses.

57
Q

Why are REDUCTION OF COSTS driving forces?

A

Because of the benefits (similar to pursuit of profit) associated with businesses reducing their costs (like higher costs), businesses have a strong incentive to push for business changes that will reduce the businesses’ costs (ie, decrease the business’ expenses).

58
Q

how can REDUCTION OF COSTS be the driving force? (examples)

A

1) The business can implement strategies that will help minimize waste in the production process.
2) The business can implement strategies that will result in the business’ labour costs being reduced.
3) The business can implement strategies that will result in the business’ cost of materials being reduced.

59
Q

Why is GLOBALISATION driving forces?

A

Globalization is the movement of trade, investment, technology, finance and labour across nations throughout the world as a result of the removal of trade barriers.
- if business doesn’t take into account this, they would find it unable to compete with businesses from around the world

60
Q

how can GLOBALISATION be the driving force? (examples)

A

1) The actions taken by a business’ global competitors can drive the business to change.
2) Globalisation creates opportunities for a business to increase its net profit figures. The existence of these opportunities can drive the business to change.

61
Q

Why is TECHNOLOGY a driving force?

A

In modern businesses, technology has overtaken many of the tasks that used to be performed by employees.
- One reason for this overtaking is technology being able to complete tasks more quickly and accurately than human beings. + no breaks, absent days or wages being paid

62
Q

how can TECHNOLOGY be a driving force? (examples)

A

1) without tech, the business cannot compete with competitors
2) if it doesn’t make technological developments fast enough, competitors can overt take them and create for themselves a greater market share
3) introducing EFTPOS, couriers using electronic signatures, clothing stores using electronic security tags, self checkout

63
Q

Why is INNOVATION a driving force?

A

innovation is a process where something already established is improved upon
- it can allow businesses to develop products more attractive to customers = growing market share. meeting the needs of a niche market

64
Q

how can INNOVATION be a driving force? (examples)

A

if business doesn’t make innovative business changes, it wouldn’t survive be it cannot compete with other businesses that are making changes

65
Q

Why is SOCIETAL ATTITUDES a driving force?

A

it is the collective views and values of the general public + they change constantly
1) If a business is conducting itself in a manner that upholds a particular societal attitude, it’s likely that the business’ reputation amongst members of society who have this attitude will be maintained or improved.
2) If a business is conducting itself in a manner that infringes a particular societal attitude, it’s likely that the business’ reputation amongst members of society who have this attitude will be damaged.

66
Q

how can SOCIETAL ATTITUDES be a driving force? (examples)

A

1) If a business fails to make business changes that take into account societal attitudes, the business may be unable to survive, due to the business being unable to compete with businesses that have made these changes.
2) A business may also be unable to survive if it’s slow to make business changes related to societal attitudes because, by the time the business does make these changes, its competitors likely will have already used these attitudes:
- (1) to capture a greater market share than the business
- (2) develop a sustainable competitive
advantage.

67
Q

Why are MANAGERS a restraining force?

A

if all managers are against this change = no implantation

if some are against it = change may be implemented but less likely to be sucessful

68
Q

how can MANAGERS be a restraining force? (examples)

A

1) may lack the the management skills necessary to successfully implement a business change, THUS cannot lead business successfully though the change
2) they may not favor the change
3) manager may insist on using the autocratic and/or persuasive management style, this insistence can decreases the likelihood of the business change being implemented successfully.

69
Q

Why are EMPLOYEES a restraining force?

A

if influential employees are against the particular business change, the change is unlikely to be successful BC they are less likely to be motivated when completing the tasks to determine the changes success or failure

1) they may lack info about change: outcome uncertain or don’t know the reasoning behind the change

70
Q

how can EMPLOYEES be a restraining force? (examples)

A

(2) Employees who are against a business change can discourage other employees from supporting the
change.
(3) Employees can use industrial action – eg, a strike – to discourage the business for which the employees work
from implementing the business change.

71
Q

Why is TIME a restraining force?

A

bc you can never get it back + poor timing or lack of time can lead to an increase in the amount of resistance to change a business needs to overcome to successfully implement a business change

72
Q

how can TIME be a restraining force? (examples)

A

1) lack of time
2) poor timing (wrong time to implement change)

73
Q

Why is ORGANISATIONAL INERTIA a restraining force?

A

def: when a business responds unenthusiastically to proposed business changes due to the business’ tendency to maintain its established ways of operating.

  • A business’ stakeholders resist a business change because the change will require the stakeholders to move outside of their ‘comfort zones’ (ie, move away from the safe and predictable status quo).
74
Q

how can ORGANISTIONAL INERTIA be a restraining force? (examples)

A

Managers and/or employees resist a business change because the change will require the managers and/or the employees to move outside of their ‘comfort zones’ (ie, move away from the safe and predictable status quo).

75
Q

Why are LEGISLATION a restraining force?

A

Legislation can legally require a business not to carry out a particular business change.

if business doesn’t comply with those legal requirements, it may be subject to great fines + punishments

76
Q

how can LEGISLATION be a restraining force? (examples)

A

(1) Occupational health and safety (OH&S) legislation can prevent a business from carrying out a particular business change because doing so may cause injury to the business’ employees.
(2) Under legislation, the Australian Competition and Consumer Commission (ACCC) has the power to prevent
businesses from carrying out particular business changes.
(3) Environmental protection legislation restricts business changes.

77
Q

Why are FINANCIAL CONSIDERATIONS a restraining force?

A

Financial considerations will restrain change because a business will struggle to move forward with change if it hasn’t budgeted for the change or if it does not have enough resources to move forward with change.

78
Q

What is competitive advantage?

A

it is the attributes and/or conditions that place a business in a superior position compared
to its rival businesses.
(e.g) lowering costs, offering higher quality, adapting to trends

79
Q

Porter’s Generic strategies : what is it?

A

it looks to enable businesses to attain a competitive advantage. its a proactive approach with two underlying strategies
- lower cost
- differentiation

80
Q

STEPS to choosing an appropriate generic strategy

A

1) SWOT analysis
2) Porter’s Five Forces analysis
3) compare the SWOT analysis with the Five Forces analysis

81
Q

STEP 1: SWOT analysis

A

Carry out a SWOT analysis (strengths, weaknesses, opportunities and strengths) for each strategy (i.e. cost leadership and differentiation).

82
Q

STEP 2: Porter’s Five Forces analysis (1st step)

A

SUPPLIER POWER:
- a business should assess how easy it is for suppliers to drive up prices. The smaller the number of potential suppliers for a business or the more unique the supplier’s product, the more power suppliers tend to have over the business.

83
Q

STEP 2: Porter’s Five Forces analysis (2nd step)

A

BUYER POWER:
- this looks at how easy it is for buyers to drive down prices. It is driven by the number of buyers, the importance of each individual buyer and the cost to them of switching from the business’ product to another. If there are a few powerful buyers, then the power lies with them not the business.

84
Q

STEP 2: Porter’s Five Forces analysis (3rd step)

A

THREAT OF SUBSTITUTION:
- this is affected by the ability of customers to find a similar product or service. If substitution is easy then power and influence is reduced.

85
Q

STEP 2: Porter’s Five Forces analysis (4th step)

A

THREAT OF NEW ENTRY:
- a business’ influence and power is affected by the ability of other businesses to enter the same market and competing. If entry costs are relatively low (e.g. to physically set up the business and minimal regulatory requirements), new competitors can quickly enter the market and take away customers. This limits the ability of a business to raise prices without losing customers.

86
Q

STEP 2: Porter’s Five Forces analysis (5th step)

A

COMPETATIVE RIVALRY:
- this area focuses on the number and capability of competitors. If there are many competitors with equally attractive products and services, then the business will have limited power and customers can go elsewhere. If the product is unique then the business has a great deal of power and can raise their prices without fear of losing significant market share.

87
Q

STEP 3: Compare the SWOT analysis with the Five Forces analysis

A

When the two analyses are compared, a business should be considering whether they can:
- Reduce or manage supplier power.
- Reduce or manage buyer/customer power.
- Come out on top of the competitive rivalry.
- Reduce or eliminate the threat of substitution.
- Reduce or eliminate the threat of new entry.

88
Q

Porter’s LOWER COST strategy

A

where business aims to achieve a competitive advantage by reducing production or delivery costs to become the lowest cost producer.
- often do this by appealing to cost-conscious customers BUT the resulting rivalry can result in a lack of profitability
- There are three main ways of achieving low costs:
(1)Use assets efficiently.
(2)Reducing internal operating costs.
(3)Reducing the cost of supplies.

88
Q

Strategies to implement Porter’s LOWER COST strategy

A

1) COST LEADERSHIP: involves a business seeking to become the business with the lowest costs in its industry (only one business in a industry in any given time)
- cost leader only will result in a business being an above-average performer in its industry if its sales price is at or near the industry average.
- The sales price of the business’ products needs to be at or near the industry average because doing so will result in the business’ net profit margin increasing.
2) COST FOCUS: involves a business seeking to be the cost leader in a segment of an industry (ie, in a niche market), rather than in an entire industry.
3) REDUCING BUSINESS COSTS

89
Q

ADVANTAGES of the lower cost strategy

A
  • attracts cost-conscious customers
  • creates barriers to entry for new competitors as it is often challenging for them to march lower prices whilst remaining profitable
  • reduce expense of operations
90
Q

DISADVANTAGES of the lower cost strategy

A
  • the products may be too standardized or basic thus may not meet the needs of customers with specific needs
  • ## lower prices may result in customers questioning quality of ethicality of product
91
Q

Porter’s DIFERENTIATION strategy: what

A

the aim to achieve a competitive advantage by selling a UNIQUE PRODUCT targeted towards satisfying one or more attributes that customers consider important to increase its perceived value and can therefore charge a price premium.

92
Q

point of differentiation

A

A point of differentiation is the unique selling features or elements that positively distinguishes a businesses product or service from its competitors.

93
Q

Porter’s DIFERENTIATION strategy

A
  • appropriate when the target customer segment or market is not price sensitive, where the market is competitive and where customers have specific needs which are not being met or addressed as well as they could be.
  • is successful when a business is able to achieve a premium price for its product or service
  • business will also have the resources and capabilities to satisfy the customer needs in ways that other businesses cannot copy.
  • Successful brand management also results in a perceived uniqueness that supports sales of the product or service.
94
Q

Strategies to achieve differentiation

A
  • marketing: establishing a brand or reputation that is highly desirable
  • Focus on high quality products or services to customers (highly skilled, creative employees)
  • Research, development and innovation. Be a leader of products that are unique and cannot be copied.
  • strong research and development skills, advanced technology
  • advanced product engineering skills
  • a culture of continuous improvement and innovation
95
Q

ADVANTAGES of the differentiation strategy

A
  • loyal customers bc of unique product features or services not offered by others
  • quicker sales from loyal customers when new product/service is introduced
  • can charge premium price bc customers cannot buy product elsewhere
96
Q

ADVANTAGES of the differentiation strategy

A
  • difficult to prevent customers from replicating points of differentiation
  • new employees may need additional training
  • higher selling prices can deter cost-conscious customers
97
Q

DONEEE

A

BM (5 decks)

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