Unit 4; Outcome 1- Reviewing Performance

Question 1

Business Change

Answer 1

The process of making alterations by adopting a new idea or behaviour.

Question 2

Proactive Change

Answer 2

1) Conducting regular market research
2) Encouraging innovation
3) Strategic planning
4) Identifying potential issues early

Question 3

Reactive Change

Answer 3

1) Crisis management
2) Being flexible
3) Reacting to competitors

Question 4

Key Performance Indicators (KPI’s)

Answer 4

The criteria used to measure the success of a business’s ability to achieve business objectives.

Question 5

KPI- Percentage of Market Share

Answer 5

The business’s share of the total industry sales for a particular good or service expressed as a percentage.

Question 6

KPI- Net Profit

Answer 6

The measurement of a company’s profit once operating costs, taxes, interest and depreciation have all been subtracted from its total revenues.

Question 7

KPI- Rate of Productivity Growth

Answer 7

The amount of outputs produced compared to the amount of inputs used and the rate in which it increases over time.

Question 8

KPI- Number of Sales

Answer 8

The amount of goods or services sold in a specified period of time.

Question 9

KPI- Rates of Staff Absenteeism

Answer 9

The number of workers who do not turn up for work when they are scheduled to do so.

Question 10

KPI- Level of Staff Turnover

Answer 10

The rate in which people leave the business and need to be replaced.

Question 11

KPI- Level of Wastage

Answer 11

The amount of unwanted or unusable material created by the production process of a business.

Question 12

KPI- Number of Customer Complaints

Answer 12

The number of customers expressing their dissatisfaction with the business, in either spoken or written form.

Question 13

KPI- Number of Workplace Accidents

Answer 13

The amount of unplanned or uncontrolled events that result in personal injury or property damage at a business.

Question 14

KPI- Number of Website Hits

Answer 14

Website hits monitor website activity.

Question 15

Driving Forces (DF)

Answer 15

Forces that encourage and support a proposed change, push the business towards a new desired state.

Question 16

DF- Owners

Answer 16

Looking for a return on investment. As they pursue profits, they can be initiating changes within the business.

Question 17

DF- Managers

Answer 17

May review KPI’s and initiate changes to improve.

Question 18

DF- Employees

Answer 18

Can place demand on owners to improve conditions.

Question 19

DF- Competitors

Answer 19

Rival businesses that are competing for market share.

Question 20

DF- Legislation

Answer 20

Laws can be brought in that can force businesses to implement change.

Question 21

DF- Pursuit of Profit

Answer 21

Changes with the aim of improving profits.

Question 22

DF- Reduction of Costs

Answer 22

Businesses look to implement changes in order to reduce costs.

Question 23

DF- Globalisation

Answer 23

The process where economic boundaries are removed and businesses begin operating on an international scale.

Question 24

DF- Technology

Answer 24

Technological advancements can drive change as it can improve processes and efficiency.

Question 25

DF- Innovation

Answer 25

Adopting something new or improving on what already exists.

Question 26

DF- Social Attitudes

Answer 26

Values, ideas, beliefs and expectations of members of society. Can change over time.

Question 27

Restraining Forces

Answer 27

Those that work against the change, creating resistance.

Question 28

RF- Managers

Answer 28

May make poorly timed and unclear decisions, or put off making decisions creating uncertainty. Also act as a restraining force if they lack capacity to deal with change, through lack of experience or skills to oversee transformation.

Question 29

RF- Employees

Answer 29

All changes will eventually impact employees. Changes can bring on fear and anxiety amongst employees around corporate culture changing or loss of job security

Question 30

RF- Time

Answer 30

Not having sufficient time can make implementation challenging. In some cases there may not be enough time allowed for people to think about change, accept it and implement it.

Question 31

RF- Organisational Inertia

Answer 31

The organizations inability to make internal changes or lack of response when faced with significant external changes.

Question 32

RF- Legislation

Answer 32

Legislation or changes in legislation can prevent or make it difficult for businesses to implement desired changes

Question 33

RF- Financial Considerations

Answer 33

Managers need to consider the short term and long term costs of implementing a proposed change

Question 34

Force Field Analysis

Answer 34

A model that outlines the process of determining which forces drive and which forces resist a proposed change.

Question 35

Force Field Analysis- Steps

Answer 35

1) Identify; the DF and RF of a proposed change 2) Weighting; allocated a score to each force to represent its strength 3) Rank; the top 3-5 D/RF 4) Response; develop an action plan to reduce strength of RF and increase DF 5) Evaluate; the response to determine its effectiveness.

Question 36

Force Field Analysis- Pros

Answer 36

+ Provides clear indication of forces for and against change. + Help determine if change is worth pursuing. + Allows a timeline to be developed and additional resource requirements be identified.

Question 37

Porter's Generic Strategies

Answer 37

Businesses choose to pursue one of two types of competitive advantage; lower cost or differentiation.

Question 38

Lower-Cost Strategy

Answer 38

Where a business gains a competitive advantage by being the low cost producer.

Question 39

Lower-Cost Strategy- Pros/Cons

Answer 39

+ Can withstand price wars longer than competitors, potential for improved profitability. - May cause reduced quality perception in the market, sales volume needs to increase to make substantial profits.

Question 40

Differentiation Strategy

Answer 40

Where a business gains a competitive advantage by being unique in some way that is valued by customers.

Question 41

Differentiation Strategy- Pros/Cons

Answer 41

+ May be able to increase profit margin with the premium price, can develop brand loyalty. - Possibility of being replicated by competitors, premium price may narrow customer base.