Unit 4 - AOS1 Business Change and KPIS (Chapter 4)

Question 1

Business change

Answer 1

Is the alteration of behaviors, policies and practices of a business

Question 2

Key performance indicators

Answer 2

Are criteria that measure how efficient and effective a business is at achieving different objectives.

Question 3

Percentage of market share

Answer 3

Measure a business’s proportion of total sales in a specific industry, expressed as a percentage

Question 4

Net profit figures

Answer 4

Are calculated by deducting total expenses incurred from total revenues earned over a period of time.

Question 5

Number of Sales

Answer 5

Is the amount of goods and services sold by a business within a specific time period

Question 6

Number of customer complaints

Answer 6

Is the amount of customers who have notified the business of their dissatisfaction

Question 7

Rates of staff absenteeism

Answer 7

Is the average number of days employees are not present when scheduled to be at work, for a specific period of time

Question 8

Staff morale

Answer 8

Is the collected attitudes, satisfaction and overall outlook that employees have of the workplace. Staff morale can influence a business’s productivity, workplace safety, attendance and staff turnover

Question 9

Level of staff turnover

Answer 9

Is the percentage of employees that leave a business in a year and have to be replaced

Question 10

Productivity

Answer 10

Is how efficient a business is at converting inputs into outputs.

Question 11

Number of Workplace Accidents

Answer 11

Measures the amount of injuries and unsafe incidents that occur at a work location over a period of time.

Question 12

Level of Wastage

Answer 12

Is the amount of inputs and outputs that are discarded during the production process.

Question 13

Rate of Productivity Growth

Answer 13

Is the increase in outputs produced from a given level of inputs over time

Question 14

Force Field Analysis

Answer 14

Is a model that determines if businesses should proceed with a proposed change. This model identifies and examines factors which promote or hinder the change from being successful.

Question 15

Lewin’s Force Field Analysis Process

Answer 15

Step 1: Identify need for change
Businesses face internal or external pressures to change. What must be altered to fulfil
business objectives and reduce these pressures?
Step 2: Identify driving forces
Which internal and external factors promote the proposed change?
Step 3: Identify restraining forces
Which factors resist the proposed change?
Step 4: Assign scores
Determine the strength of each driving and restraining force by assigning numerical scores
that are based on their level of influence on the proposed change.
Step 5: Analyse and apply

Question 16

Internal Environment

Answer 16

Is the specific factors within a business which impact its performance.

Question 17

Driving Forces

Answer 17

Are the factors within or outside the business environment which promote change.

Question 18

Managers as a Driving Force

Answer 18

Managers can take two forms within a business. In some cases, the manager is also the owner. In others, the manager is separate to the owner. In both cases, the primary focus of a manager is to ensure that the business is achieving its objective

Question 19

Employees as a Driving Force

Answer 19

In return for their contribution to the business, employees have their own expectations. These include competitive wages, supportive working conditions,
and training. As such, any proposed change that can improve the working conditions of employees will see them become a driving force.

Question 20

Pursuit of Profit as a Driving Force

Answer 20

Consequently, opportunities to improve
financial performance will often encourage a business to change. Additionally, this will make
a business better able to fulfil its obligations, such as providing a return to shareholders.

Question 21

Reduction of Costs as a Driving Force

Answer 21

Businesses always seek to be as efficient and effective as possible. A business may be able to source materials from a cheaper supplier or move their
locations to benefit from cheaper rent as a means of reducing costs and improving profits.

Question 22

External Environment

Answer 22

Is the factors existing outside the business environment that have an impact on the operation of a business

Question 23

Competitors

Answer 23

Are other businesses within the same industry that sell similar goods or services to a business.

Question 24

Competitors as a Driving Force

Answer 24

Competitors changing price, using new technology or running advertising campaigns can affect the performance of other businesses in the market. This makes competitors a driving force for change as a business must always adapt to remain competitive.

Question 25

Technology as a Driving Force

Answer 25

If a business fails to adopt suitable technology, it may impact their ability to compete and survive. As technology is constantly progressing, it will always act as a driving force for change.

Question 26

Societal Attitudes as a Driving Force

Answer 26

Increased societal concerns about being eco friendly have also caused business’s to reduce their impact on the environment. Constantly evolving, societal attitudes will always be a driving force for business change.

Question 27

Societal Attitudes

Answer 27

Are the collective values, beliefs, and views of the general public.

Question 28

Legislation as a Driving Force

Answer 28

Businesses will always need to comply with legislation, making it a constant driving force for change. A business may be forced to change if new legislation is introduced. If current operations breach the new legislation, a business will have no choice but to change the way they operate.

Question 29

Legislation

Answer 29

Are the laws and legal regulations that a business has to follow.

Question 30

Innovation as a Driving Force

Answer 30

Many businesses will continuously innovate their products or procedures in order to maintain sales and market share.

Question 31

Innovation

Answer 31

Is the process of altering and improving or creating new products or procedures.

Question 32

Globalisation as a Driving Force

Answer 32

More businesses are operating on a global scale due to trade barriers being removed. Businesses are now operating in a single global market, which means that all businesses face the pressure of international competition. Increased international competition means that businesses need to find more efficient ways to operate.

Question 33

Globalisation

Answer 33

Is increased trade between countries due to reduced trade barriers. Globalisations has increased due advancements in technology, particularly in communication and transport.

Question 34

Restraining Forces

Answer 34

Are internal and external factors that resist a business change or actively try to stop it.

Question 35

Chief Executive Officer

Answer 35

Is the highest ranked individual in a private or public company and is in charge of making major business decisions.

Question 36

Managers as a Restraining Force

Answer 36

Managers may be unwilling to introduce a business change if they do not support the change or it threatens their position.

Question 37

Employees as a Restraining Force

Answer 37

Employees may resist a business change if the outcome is certain, it affects their job security or they fail to see a reason for the change. Employees may even actively oppose these changes by carrying out industrial action.

Question 38

Industrial Action

Answer 38

Is steps taken by employees or employers to settle a workplace dispute about working conditions. Employees can delay, limit or refuse to work. In contrast, employers can lock employees out of a workplace.

Question 39

Legislation as a Restraining Force

Answer 39

Businesses need to comply with laws and regulations to avoid fines, suspensions or even closure. Therefore, a business must consider the types of legislation that apply to any proposed business change.

Question 40

Time as a Restraining Force

Answer 40

Business changes often have to be completed before, after or within a certain time period. The time restrictions may be due to other restraining forces such as legislation deadlines or financial pressures.

Question 41

Financial Considerations as a Restraining Force

Answer 41

When a business can’t finance the change, it will need to explore different ways of obtaining the required funds. In some cases, it may even have to alter the proposed change due to financial restrictions.

Question 42

Organisational Inertia as a Restraining Force

Answer 42

A business may have been operating in a certain way for such a long time that it can become difficult for change to occur. As staff become familiar and comfortable with these structures, attempts to make changes can be difficult.

Question 43

Organisational Inertia

Answer 43

Is the tendency for a business to maintain established ways of operating.

Question 44

Competitive Advantage

Answer 44

Is the conditions or attributes that places a business in a superior position compared to its immediate competitors.

Question 45

Cost Conscious Customers

Answer 45

Purchase products or services primarily based on price. If another business offered a cheaper alternative, these customers would switch immediately.

Question 46

Porter’s Lower Cost Strategy

Answer 46

Is a business offering customers similar or lower priced products compared to the industry average while remaining profitable by achieving the lower cost of operations among competitors.

Question 47

Profitability

Answer 47

Measures the profit of a business relative to the size of its revenue. A business may generate profit but may not be successful as other businesses in the same industry.

Question 48

Profit Margin

Answer 48

Calculates and expresses the profitability of a business.

Formula= Net Profit/Total Revenue

Question 49

Economies of Scale

Answer 49

Is the cost savings a business experiences when it produces a large number of goods. The cost savings typically come from spreading fixed expenses over the larger number of goods or receiving discounts from suppliers when purchasing in bulk.

Question 50

Barriers to Entry

Answer 50

Are obstacles or high costs that prevent new competitors from entering an industry. Typical barriers include government regulations, intellectual patents or high capital investment.

Question 51

Perceived Value

Answer 51

Is a customer’s opinion on the benefits they receive when they purchase a product or a service. For example, a customer decides to purchase a more expensive product over a cheaper product because they believes that the business reputation, the quality of materials used or the unique features of the product are worth the higher price.

Question 52

Porter’s Differentiation Strategy

Answer 52

Offers customers unique services or product features that are of perceived value to customers which can then be sold at a higher price than competitors.

Question 53

Point of Differentiation

Answer 53

Is the unique selling features or elements that positively distinguishes a business’s product or service from its competitors.