Business Unit 4 AOS 1

What is business change?

Business change refers to a business adopting a new idea or

behaviour that results in a business modifying and altering the way

in which they operate.

What causes business changes

Can be caused by internal and external factors, such as changing consumer tastes, changing employee expectations, competitors, changes in laws/legislation, and technology

What is proactive change?

Proactive change occurs when a business anticipates, initiates and embraces change before it is forced to.

What are advantages of proactive change?

It can help a business stay ahead of competitors and gives managers more time to plan and implement the change effectively.

What is a disadvantage of proactive change?

The business may misjudge what needs to change, which can negatively affect performance.

What is reactive change?

Reactive change occurs when a business responds to change only after it becomes necessary.

What are advantages of reactive change?

The business may learn from competitors’ mistakes and may have clearer evidence for change, especially through poor KPI results.

What are disadvantages of reactive change?

The business may fall behind competitors, lose competitive advantage, and be forced to change quickly, which can unsettle employees.

Why must businesses embrace change?

Because change is inevitable, and successfully adapting to change can improve competitiveness, survival, productivity, staff satisfaction and motivation.

Distinguish between proactive and reactive change.

Proactive change is when a business anticipates and initiates change before being forced to, while reactive change is when a business responds only after pressure or poor performance makes change necessary.

Analyse one benefit and one limitation of proactive change.

Benefit: it can create competitive advantage by keeping the business ahead of competitors. Limitation: the business may misread the market and implement unnecessary or ineffective change.

Analyse one benefit and one limitation of reactive change.

Benefit: the business can use evidence such as KPIs or competitor mistakes to guide change. Limitation: the business may be slower than competitors and may have to rush change, causing employee resistance or disruption.

Why are KPIs linked to reactive change?

KPIs provide measurable evidence of poor performance, helping managers identify areas where change is needed.

Why can change improve staff satisfaction?

If change improves systems, communication, working conditions or efficiency, employees may feel more supported and motivated.

What is a KPI?

A key performance indicator is a criterion used to measure a specific aspect of a business’s performance.

What are KPIs used for

KPIs are used to analyse business performance and identify areas where change may be needed.

What areas of business can KPIs assess?

Financial performance, operations, human resource management, and marketing.

How can KPIs lead to business change?

Poor KPI results can show that a business is underperforming, creating a need for change.

What are the 10 KPIs

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, and number of workplace accidents.

What does percentage of market share measure?

It measures the proportion of total industry sales held by a business.

Is an increase in market share positive or negative?

Positive, because it suggests the business is becoming more competitive compared to rivals.

What area of business does market share relate to?

Marketing and overall competitiveness.

How can a decrease in market share indicate the need for change?

It may show that competitors are attracting more customers, so the business may need to change its marketing, products, prices or customer service.

What do net profit figures measure?

They measure the amount of profit remaining after expenses have been deducted from revenue.

Is an increase in net profit positive or negative?

Positive, because the business is becoming more profitable.

What area of business do net profit figures relate to?

Financial performance.

How can a decrease in net profit indicate the need for change?

It may show that revenue is falling or costs are too high, so the business may need to cut costs, increase sales or improve efficiency.

What does rate of productivity growth measure?

It measures how efficiently resources are being used to produce output.

Is an increase in productivity growth positive or negative?

Positive, because the business is producing more output from its resources.

What area of business does productivity growth relate to?

Operations.

How can a decrease in productivity growth indicate the need for change?

It may show that resources, employees or processes are being used inefficiently, so the business may need to improve training, technology or production methods.

What does number of sales measure?

It measures the quantity of goods or services sold by the business.

Is an increase in number of sales positive or negative?

Usually positive, because it suggests stronger customer demand and possibly higher revenue.

What area of business does number of sales relate to?

Marketing and financial performance.

How can a decrease in sales indicate the need for change?

It may show falling customer demand, so the business may need to change its marketing, pricing, products or customer experience.

What do rates of staff absenteeism measure?

They measure the percentage of work time lost due to employees being absent.

Is an increase in staff absenteeism positive or negative?

Negative, because it may suggest low motivation, poor working conditions or workplace dissatisfaction.

What area of business does staff absenteeism relate to?

Human resource management.

How can high absenteeism indicate the need for change?

It may show that employees are dissatisfied or unmotivated, so the business may need to improve workplace culture, motivation strategies or management practices.

What does level of staff turnover measure?

It measures the rate at which employees leave the business.

Is an increase in staff turnover positive or negative?

Negative, because it may suggest employee dissatisfaction and can increase recruitment and training costs.

What area of business does staff turnover relate to?

Human resource management.

How can high staff turnover indicate the need for change?

It may show that employees are unhappy with pay, conditions, management or workplace culture, so the business may need to improve HR practices.

What does level of wastage measure?

It measures the amount of resources wasted during production.

Is an increase in wastage positive or negative?

Negative, because it increases costs and reduces efficiency.

What area of business does wastage relate to?

Operations

How can high wastage indicate the need for change?

It may show inefficient production processes, so the business may need to improve quality control, technology, training or resource management.

What does number of customer complaints measure?

It measures the level of customer dissatisfaction reported to the business.

Is an increase in customer complaints positive or negative?

Negative, because it suggests customers are dissatisfied with quality, service or value.

What area of business do customer complaints relate to?

Operations and marketing.

How can an increase in customer complaints indicate the need for change?

It may show problems with product quality, service or delivery, so the business may need to improve operations, quality control or staff training.

What does number of website hits measure?

It measures the number of visits to a business’s website.

Is an increase in website hits positive or negative?

Usually positive, because it may show increased customer interest or successful marketing.

What area of business do website hits relate to?

Marketing

How can a decrease in website hits indicate the need for change?

It may show reduced customer interest or ineffective online marketing, so the business may need to improve its website, advertising or digital strategy.

What does number of workplace accidents measure?

It measures the number of injuries or accidents occurring in the workplace.

Is an increase in workplace accidents positive or negative?

Negative, because it suggests poor workplace safety and can reduce productivity.

What area of business do workplace accidents relate to?

Operations and human resource management.

How can an increase in workplace accidents indicate the need for change?

It may show unsafe work practices, so the business may need to improve training, safety procedures or equipment.

Explain how KPIs help managers review business performance.

KPIs provide measurable data about areas such as finance, operations, HR and marketing. Managers can use this data to identify strengths, weaknesses and areas requiring change.

Explain how poor KPI results can create the need for change.

Poor KPI results show that a business is not meeting desired performance standards. This can pressure managers to introduce change to improve performance.