Business Management Unit 4 AOS 1

Business Change (Definition)

is the altercation of behaviours, policies, and practices of a business.

Proactive Approach (Definition)

is when a business changes to avoid future problems or take advantage of an opportunity to gain a competitive advantage.

Reactive change (Definition)

is when a business undertakes change in response to a situation or crisis.

Similarities between Proactive and Reactive Change

- Both approaches are utilised by a manager or business to implement change.

- Both approaches involve the business undertaking change for future benefits

- Both approaches require the support of the manager

Differences between Proactive and Reactive Change

- Proactive change is taking advantage of an opportunity and avoiding future problems, Reactive change is response to a situation or crisis.

- Low risk and High risk strategies

- Proactive change is more planned, coordinated, and controlled. Reactive change is more spontaneous, urgent, and pressured.

Key Performance Indicators (Definition)

are criteria that measure a business's efficiency and effectiveness in achieving its different objectives.

Percentage of Market Share (Definition)

measures the proportion of a business's total sales, compared to the total sales in the industry, expressed as a percentage figure.

Net Profit Figures (Definition)

are calculated by subtracting total expenses incurred from total business revenue earned, over a specific period of time.

Rate of Productivity Growth (Definition)

is the change in the total output produced from a given level of inputs over time, expressed as a percentage figure.

Number of Sales (Definition)

is the total quantity of goods and services sold by a business over a specific period of time.

Number of Customer Complaints (Definition)

is the number of customers who notified the business of their dissatisfaction over a specific period of time.

Rate of Staff Absenteeism (Definition)

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

Level of Staff Turnover (Definition)

is the percentage of employees that leave a business over a specific period of time and must be replaced.

Number of Workplace Accidents (Definition)

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

Level of Wastage (Definition)

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

Number of Website Hits (Definition)

is the amount of customer visits that a business's online platform receives for a specific period of time.

Force Field Analysis (Definition)

is a theoretical model that determines if businesses should proceed with a proposed change.

Ads of Force Field Analysis

- Weighs up for and against's

- Identify and strengthen driving forces

- Stakeholders can identify whether its positive or negative

- Allows a timeline to be created

- Allows identification of individuals driving and restraining the force

Disads of Force Field Analysis

- Time consuming

- Requires business resources at a cost to the business

Driving Forces (Definition)

are factors affecting the business environment that promote and support business change.

Restraining Forces (Definition)

are factors that resist a business change or actively try to stop it.

Weighting (Definition)

is the process of scoring and attributing a value to the driving and restraining forces.

Ranking (Definition)

involves arranging the forces in order of value and determining the total score of driving and restraining forces.

Implementing a Response (Definition)

refers to the action that can be taken to strengthen the driving forces, reduce or eliminate the restraining forces, and/or implement the actual change.

Evaluating a Response (Definition)

is the process of the business determining whether the change has been successfully implemented or not.

Driving Force - Owners

Drive change because they have a personal and financial interest in the business's long-term success and competitiveness.

Driving Force - Managers

Drive change by supporting initiatives that improve performance, using their leadership and attitude to influence others.

Driving Force - Employees

Driving force for change when it leads to better working conditions, wages, or benefits.

Driving Force - Pursuit of Profit

When profits decline or market conditions shift, businesses are motivated to adapt and explore new strategies.

Driving Force - Reduction of Costs

Drives change as businesses seek to improve efficiency and eliminate unnecessary expenses.

Driving Force - Competitors

Competitors act as a driving force for change because businesses must adapt to stay competitive in their market.

Driving Force - Legislation

Legislation is a driving force for change because businesses must comply with laws to avoid penalties or closure.

Driving Force - Globalisation

Drives change as businesses face increased international competition and must adapt to a global market.

Driving Force - Technology

Drives change as it allows businesses to improve efficiency, reduce costs, and increase productivity through advancements like automation and AI.

Driving Force - Innovation

Drives change by pushing businesses to improve or develop new products and services to stay ahead of competitors.

Driving Force - Societal Attitudes

Drive change because businesses must adapt their operations to align with evolving values and expectations to maintain customer trust and sales.

Restraining Force - Managers

Can restrain if they don't believe it benefits the business or if it threatens their authority.

Restraining Force - Employees

Employees may restrain change due to fear of job loss, uncertainty, or disruption to routines, sometimes even using industrial action to oppose it.

Restraining Force - Legislation

Laws can restrict or prevent changes if new regulations don't allow them, forcing businesses to comply or risk penalties.

Restraining Force - Organisational Inertia

Established routines and processes can make businesses resistant to change because staff are comfortable with the status quo.

Restraining Force - Time

Deadlines or timing pressures can limit when and how quickly changes are made, sometimes delaying progress.

Restraining Force - Financial Considerations

Change usually costs money for things like new equipment, training, or redundancies, so insufficient funds can block or delay change.

Porter's Lower Cost Strategy (Definition)

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

Ads of Lower Cost Strategy

- Attractive to cost conscious customers

- Creates barriers to entry for new competitors

- Reduces the expense of operations

Disads of Lower Cost Strategy

- Standardised or basic product may not meet customer needs

- No customer loyalty

- Low prices may cause negative perceptions

Porter's Differentiation Strategy (Definition)

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

Ads of Differentiation Strategy

- Customers are loyal because of unique product

- Quicker sales from loyal customers

- Can charge premium prices

Disads of Differentiation Strategy

- Competitors can replicate points of differentiation

- High sell price deters cost conscious customers

- More time and money required

Sims Between Porter's Strategies

- Increase a business's profitability by providing a competitive advantage

Diffs Between Porter's Strategies

- Price of product sold (Lower or the same as competitors/Premium)

- Customer target (Cost-conscious customers/ Not price sensitive customers)

- Business focus (Internal on operating process/ External on meeting customer demands)