Unit 4 AOS 1 Business Management

Benefits of a Force Field Analysis

• Businesses are able to weigh up the 'for's and against' and whether the change is worth undertaking
• Allows a business to identify and strengthen the driving forces supporting the change and to take action to reduce/eliminate restraining forces

Business Change

The adoption of a new idea or behaviour resulting in a difference in the form or operation of a business over time

Competitive Advantage

Occurs when a business has a lower cost price structure than its rivals. The concept can also be extended to product quality, range and flexibility adopting to new market trends

Driving Forces - Competitors

Competition can drive a business to implement changes to gain a sustainable competitive advantage

Driving Forces - Employees

Can drive change through innovation, place demands on the business to change conditions, policies and processes

Driving Forces - Globalisation

This process of operating has been strengthened by globalisation and so businesses that don't recognise they are competing in a world market may find themselves left behind

Driving Forces - Innovation

Adopting something new or improving what already exists, is a major source of competitive advantage for businesses and therefore a strong driving force for change

Driving Forces - Legislation

Changes to laws can force a business to implement change, legislation can change at federal, state or local level. E.g. new penalty rates, wages

Driving Forces - Managers

Managers make decisions about the future direction of the business. They share their vision and try to get others inspired to change by being role models

Driving Forces - Pursuit of Profit

If profit levels of a business are not as high as its goal, they need to make changes to either generate more revenue or decrease their costs to earn more profit

Driving Forces - Reduction of Costs

If costs are rising then profit will be negatively impacted and may drive the business to change

Driving Forces - Societal Attitudes

Society's attitudes are constantly changing, businesses that fail to keep up with these attitudes risk falling behind. E.g. ageing workforce, increased participation of women in the workforce

Driving Forces - Technology

Technology allows a business to operate its processes and practices more efficiently and effectively, cutting costs and improving productivity.

Driving Forces

Those forces that initiate, encourage and support the change - they work to assist the business in achieving its goal. E.g. increase revenue, increase market share

Force Field Analysis - Action Plan

The forces listed are allocated a numerical score. The score ranges from 1-5, with 5 being more important forces.
Allows forces to be prioritised, so it can be decided which restraining forces to remove first and which driving forces to promote and encourage.

Force Field Analysis

Kurt Lewin. Outlines the process of determining which forces drive and which resist a proposed change

KPIs - Level of Staff Turnover

The amount of employees leaving the business in a period of time as a percentage of the total number of employees in that business

KPIs - Level of Wastage

The amount of stock either as a raw material or during processing is discarded

KPIs - Net Profit

What the company has earned after all expenses are deducted

KPIs - Number of Customer Complaints

The recorded number of individuals who report a defect, fault, or issue in the good or service they purchased

KPIs - Number of Sales

Refers to the measure of the total customers that bought a good or service in a given reporting period

KPIs - Number of Workplace Accidents

The recorded number of worker or customer related injuries that occur in a business

KPIs - Percentage of Market Share

The percentage of an industry or markets total sales that is earned by a particular company over a specified time period

KPIs - Rate of Productivity Growth

Measures the efficiency of a production process; the percentage increase in productivity over time

Porter's Generic Strategies - 5 Forces

• The entry of new competitors
• The threat of substitutes
• The bargaining power of buyers
• The bargaining power of suppliers
• The rivalry among existing competitors

Porter's Generic Strategies - Theory

The theory is that to gain a competitive advantage, businesses need to evaluate their strengths and act upon those strengths.

Porter's Generic Strategies

Is a theory that attempts to explain how businesses may manage change as they attempt to achieve a competitive advantage

Proactive Change

To initiate change rather than simply to react to events

Reactive Change

To wait for a change to occur and then respond to it

Restraining Forces - Employees

Any change to a business and its operating procedures will eventually impact on the level and type of staffing. The introduction of a major change, such as a merge or acquisition, may result in a complete breakdown of existing corporate culture

Restraining Forces - Financial Considerations

Include cost and revenue issues for a business. Financial costs of change include: purchasing new equipment, redundancy payments, retraining the workforce

Restraining Forces - Legislation

Must be complied with. This occurs when the legislation places restrictions on certain operational practices and procedures. E.g. mining company wanting to exploit a new mineral resource, must do so within limitations of current environmental protection legislation

Restraining Forces - Managers

Changes that threaten to eliminate jobs usually face strong resistance. E.g. most business restructuring involves the elimination of middle management positions

Restraining Forces - Organisational Inertia

Refers to the management's inactivity or lack of response when faced with proposed changes. Some managers resist change as it requires moving outside their 'comfort zones'

Restraining Forces - Time

Sometimes there is not enough time allowed for people to think about the change, accept it, and implement it

Restraining Forces

Those that work against the change, creating resistance - they hinder the achievement of the goal. E.g. damage corporate image, upset business partners