UNIT 4 - OUTCOME 1

Question 1

Define business change.

Answer 1

Business change is the adoption of a new idea or behaviour. Businesses change as a result from pressures from the businesses environments.

Question 2

Why must businesses change?

Answer 2

Businesses must adapt and respond to dynamic business environments by altering aspects of their business to ensure continued success. If change is not made, the business will drop below their competitors.

Question 3

Explain number of sales as a KPI.

Answer 3

Number of sales is a measure of the number of goods or services sold. A business will be satisfied with their performance if their number of sales increases over time.

Question 4

Explain percentage of market share as a KPI.

Answer 4

Percentage of market share refers to the total number of sales, often represented as a percentage the business has sold in a certain market, compared to competitors. A higher market share means the business is more of a force then their competitors.

Question 5

Explain net profit figures as a KPI.

Answer 5

Net profit figures is what remains when expenses are deducted from the revenue earned. It is the owners and shareholders return on investment. A positive net profit means the business is performing well, however a loss means the business is struggling.

Question 6

Explain rate of productivity growth as a KPI.

Answer 6

Rate of productivity growth measures the change in productivity in one year compared to the previous one. Productivity is a measure of performance that indicates how many inputs it takes to produce an output. Productivity will improve if less inputs are used to obtain the same level of outputs, or if more outputs are produced from the same level of inputs.

Question 7

Explain rate of staff absenteeism as a KPI.

Answer 7

Rate of staff absenteeism is a measure of the number of staff who neglect to turn up to work when they are scheduled to. A rising rate of staff absenteeism may indicate internal problems between employees and employers.

Question 8

Explain level of staff turnover as a KPI.

Answer 8

Level of staff turnover is the number of staff that have left the business for various reasons, indicating employee satisfaction. A high level means there are many dissatisfied employees, with turnover meaning a loss of money due to recruitment, training costs and a loss of productivity and knowledge.

Question 9

Explain number of workplace accidents as a KPI.

Answer 9

Number of workplace accidents indicates how safe the workplace is for employees. It measures the amount of injuries that occur on site in the workplace.

Question 10

Explain level of wastage as a KPI.

Answer 10

Level of wastage is the amount of resources that cannot be utilised and have to be discarded due to the inefficient use of the resources. If there is a large amount of waste, then the business is not using their resources efficiently.

Question 11

Explain number of customer complaints as a KPI.

Answer 11

Number of customer complaints is a measure of the satisfaction of customers with the product they have purchased. Complaints could indicate problems in quality and will lead to a loss of customers and profit. A business should aim for a low amount of customer complaints.

Question 12

What is the Force Field Analysis Theory?

Answer 12

The Force Field Analysis is the theory indicating that with any change, there are counterbalancing forces at play. Driving and restraining forces that assist the manager is deciding whether to pursue the change or not.

Question 13

What are the steps of a Force Field Analysis?

Answer 13

1. Define or state the change
2. Identify the driving and restraining forces for the change
3. Analyse the forces by ranking them from 1 (little effect) to 5 (large effect) on change
4. Create an action plan of strategies to strengthen the driving forces or weaken the restraining forces

Question 14

What are the principles of the Force Field Analysis Theory?

Answer 14

• When driving forces are more dominant than restraining forces, change is likely to be successful
• When driving forces and restraining forces are balanced, change is likely to be unsuccessful
• When restraining forces are dominant, the change is unlikely to be introduced

Question 15

Explain managers as a driving force.

Answer 15

As managers are in charge of important roles in the business, they are a major factor for driving forces. Managers will push for change that leads to a better outcome and more efficient achievement of business objectives.

Question 16

Explain employees as a driving force.

Answer 16

Ideas from employees are a driving force as these innovations can be gathered together to create change in how they operate. Giving employees option to express themselves benefits the business regarding change.

Question 17

Explain competitors as a driving force.

Answer 17

Competitors should always be watched because they might be doing something that is attracting more customers. They drive the business to follow suit and match the competitors as to maximise customers. price drop for competitors may influence the business to drop its price.

Question 18

Explain legislation as a driving force.

Answer 18

Legislation must be complied with as it is the law. certain taxes and boundaries may result in a loss of customers and these rules need to be followed else risk the government getting involved.

Question 19

Explain pursuit of profit as a driving force.

Answer 19

All businesses want to maximise their profit and if the profit levels aren’t at the desired amount, the changes will need to be implemented as to generate revenue or decrease costs.

Question 20

Explain reduction of costs as a driving force.

Answer 20

Reduction of costs is where the business may need to purchase different supplies as the costs are affecting their profit too much. Businesses may need to source cheaper supplies, replace labour with technology or reduce wages.

Question 21

Explain globalisation as a driving force.

Answer 21

Globalisation enables a business to sell their goods to all places in the world. This opens the business up to many new customers, but also more competition. A business may not be competing in the world level and may be left behind, thus increasing the drive to globalise.

Question 22

Explain technology as a driving force.

Answer 22

Technology allow for businesses to eliminate the need for labour and increase convenience of the work. Competitors may maximise market share if the business does not take advantage of technological developments. Technology allows the business to improve its efficiency and effectiveness.

Question 23

Explain innovation as a driving force.

Answer 23

Innovations can open up smaller niche markets that the business may only be selling too. Innovations open the business to customers they didn’t sell to before.

Question 24

Explain societal attitudes as a driving force.

Answer 24

What is right and wrong plays a role in the operations of a business as they want to be respected and admired by their customers. Pressures from society have resulted in businesses focusing more on the natural environment, and protecting the rights of employees.

Question 25

Explain managers as a restraining force.

Answer 25

Managers may restrain change and they may be indecisive and put off making a decision, creating uncertainty. Employees may eventually lose confidence in the decision-making skill of managers.

Question 26

Explain employees as a restraining force.

Answer 26

Employees may feel that they cannot adapt to new procedures - maybe worse if training not supplied. Changes can bring on fear and anxiety in employees.

Question 27

Explain time as a restraining force.

Answer 27

In certain circumstances, pressures occur quickly and don’t leave much time to plan change effectively. Sometimes not enough time is given to plan, implement and accept change. Sometimes too much time is given to plan and the environment may have changed.

Question 28

Explain organisational inertia as a restraining force.

Answer 28

Organisational inertia refers to an unenthusiastic response from management to proposed change. They might resist as it requires moving away from their comfort zones.

Question 29

Explain legislation as a restraining force.

Answer 29

Legislation must be complied with - therefore can act as a restraining force. Laws such as OHS can prevent businesses from undertaking change that could potentially injure workers.

Question 30

Explain financial considerations as a restraining force.

Answer 30

A business contemplating change must weigh up the costs and benefits of the change before implementation. The business may not be able to afford the proposed change, until revenue is generated.

Question 31

Define competitive advantage.

Answer 31

Competitive advantage is the event where a firm, industry, economy has a lower cost price structure then its rivals. In this case, goods and services can be sold more cheaply, undercutting competitors and expanding sales.

Question 32

Describe the lower cost strategy.

Answer 32

Lower cost strategy is where the business is able to gain a competitive advantage by becoming the low-cost producer in its industry. This can be achieved by ..

• Implementing technology
• Preferential access to raw materials

Question 33

What is the value chain?

Answer 33

Value chain is the set of activities a business performs to add value. Costs can be reduced by accessing each activity and making changes.

Question 34

Describe the differentiation strategy.

Answer 34

Differentiation strategy is where the business aims to be unique in its industry in some way that is valued by its customers. This allows the business to charge a premium price for the product. This is achieved by ..

• Innovations
• High quality materials
• Patents

Question 35

What are some similarities and differences between the Force Field Analysis Theory and Porter’s Generic Strategies?

Answer 35

Similarities - both have external forces that have an influence on change
-both look at more then one factor when deciding on change
-both tools managers can use regarding change
Differences - Force Field is reactive approach, whereas Porter’s is a proactive approach
-Force Field focuses on driving and restraining forces whereas Porter’s focuses on competitive advantage and the 5 competitive forces
-Porters just lists the factors for change whereas Force Field ranks them