Unit 4 AOS1 Flashcards
what is a business change?
the alteration of behaviours, policies, and practices of a business.
what are the 2 types of approaches a business can have to business change
- reactive
- proactive
proactive approach to business change definition
A proactive approach is when a business changes to avoid future problems or take advantage of an opportunity to gain a competitive advantage.
reactive approach to business change definition
A reactive approach is when a business undertakes change in response to a situation or crisis.
what is 2 similarities between a proactive approach and a reactive approach to business change
- They are utilised by a manager or business to implement change
- they involve the business undertaking change for future benefits, such as growth, progression, and to improve or restore its brand image
What are 3 main differences between a proactive and reactive response to business change
- why they occur (in response or to take advantage of future)
- the use of risk strategies (reactive = high risk, proactive = low)
- the planning or timing of response
What are the 10 KPI’s
- percentage of market share
- net profit figures
- rate of productivity growth
- number of sales
- number of customer complaints
- rates of staff absenteeism
- level of staff turnover
- number of workplace accidents
- level of wastage
- number of website hits
What are key performance indicators
Key performance indicators (KPIs) are criteria that measure a business’s efficiency and effectiveness in achieving its different objectives
percentage of market share definition
Percentage of market share measures the proportion of a business’s total sales, compared to the total sales in the industry, expressed as a percentage figure
net profit figures definition
net profit figures are calculated by subtracting total expenses incurred from total business revenue earned, over a specific period of time
rate of productivity growth definition
Rate of productivity growth is the change in the total output produced from a given level of inputs over time, expressed as a percentage figure.
number of sales definition
Number of sales is the total quantity of goods and services sold by a business over a specific period of time.
number of customer complaints definition
Number of customer complaints is the number of customers who notified the business of their dissatisfaction over a specific period of time.
rates of staff absenteeism definition
Rates of staff absenteeism are the average number of days employees are not present when scheduled to be at work, for a specific period of time.
level of staff turnover definition
Level of staff turnover is the percentage of employees that leave a business over a specific period of time and must be replaced
number of workplace accidents definition
Number of workplace accidents measures the amount of injuries and unsafe incidents that occur at a work location over a specific period of time.
level of wastage definition
Level of wastage is the amount of inputs and outputs that are discarded during the production process.
number of website hits definition
Number of website hits is the amount of customer visits that a business’s online platform receives for a specific period of time
how to calculate rate of productivity growth
(new productivity - old productivity) / old productivity
times 100
force field analysis definition
Force Field Analysis is a theoretical model that determines if businesses should proceed with a proposed change.
what are driving forces
Driving forces are the factors affecting the business environment that promote and support business change
what are restraining forces
restraining forces are factors that resist a business change or actively try to stop it.
what are the 4 processes in a force field analysis
- weighting
- ranking
- implementing a response
- evaluating a response
weighting (force field analysis) definition
Weighting is the process of scoring and attributing a value to the driving and restraining forces.
in simple what happens in weighting (Force Field Analysis)
Business will identify driving and restraining forces and then rank them based on importance
Mostly 1-5 rank
what ranking tells us in terms of driving vs restraining (FFA)
- If driving higher likely to succeed
- If driving equal or lower it is unlikely to succeed
In simple what is implementing a response (FFA)
Implementing an action that can be taken to strengthen the driving forces, reduce or eliminate the restraining forces, and/or the actual execution of the change.
what happens in ranking (FFA)
each driving and restraining forces ranks are added together to see if the driving outweighs, are equal to, or less than the restraining forces
in simple what is happening in evaluating a response
comparing the actual change to the anticipated change and determining whether further action needs to be taken.
This can be done by using KPI’s to measure the success
what are the 11 driving forces we have to remember
- owners
- managers
- employees
- pursuit of profit
- reduction of cost
- competitors
- legislation
- globalisation
- technology
- innovation
- societal attitudes
what is globalisation
the process by which governments, businesses, and people across the globe are becoming more interconnected, allowing for increased international trade and cultural exchange
innovation definition
Innovation is the process of altering and improving or creating new products or procedures.
societal attitudes definition
Societal attitudes are the collective values, beliefs, and views of the general public.
what are the 6 restraining forces we need to know
- managers
- employees
- legislation
- organisational inertia
- time
- financial considerations
organisational inertia definition
Organisational inertia is an unenthusiastic response from the people within the business to the proposed change.
What are Porter’s two generic strategies
- lower cost
- differentiation
Porter’s lower cost strategy definition
Porter’s lower cost strategy involves a business offering customers similar or lower-priced products compared to the industry average, while remaining profitable by achieving the lowest cost of operations among competitors.
what are 3 advantages of businesses using Porter’s lower cost strategy
- Attractive to cost-conscious customers
- Reduces the expense of operations
- barriers to entry for new competitors as it is often challenging for them to match lower prices
what are 3 disadvantages of businesses using Porter’s lower cost strategy
- Customers are not loyal to particular brands
- Low prices may result in customer perceptions that the good or service is of lower quality
- Thin profit margins and reliance on low operating costs can leave a business vulnerable to unexpected increases in expenses
porter’s differentiation strategy definition
Porter’s differentiation strategy involves offering customers unique services or product features that are of perceived value to customers, which can then be sold at a higher price than competitors.
what are 3 advantages of Porter’s differentiation strategy
- Customers are often loyal to the business because of unique product features or services not offered by competitors.
- Quicker sales from loyal customers when new products or services from the business are introduced
- Can charge premium prices for products as customers cannot purchase the product elsewhere.
what are 3 disadvantages of Porter’s differentiation strategy
- Can be difficult to prevent competitors from replicating points of differentiation.
- Higher selling prices can deter cost-conscious consumers.
- New employees may require additional training to adapt their skills to match the business’s point of difference.
what is a similarity between Porter’s lower cost and differentiation strategies
They both increase a business’s profitability by providing a competitive advantage
competitive advantage definition
Competitive advantage is the conditions or attributes that place a business in a superior position compared to its immediate competitors.
