UNIT 4 AOS 1 - BUSINESS CHANGE

Internal

• Managers

• Employees

• Owners

• Culture

• Policies

Operating

• Customers

• Competitors

• Unions

• Suppliers

• Special interest groups

Macro

• Economic conditions

• Societal attitudes

• Environment

• Globalisation

• Tech

• Economy

• Legislation

ESEGTEL

Change

Any alteration in the internal or external environments of a business

Business change

The adoption of a new idea or behaviour resulting in a difference in the form of an operation of a business overtime

eg. modified corporate culture, new management structure

Some changes are planned, some are forced. Ability to adapt and change ensures survival

Proactive

Situation where change is planned and occurs before a business is impacted by pressures of the environment

Reactive

Change is unplanned and takes place after business is affected by environmental pressures

Key Performance Indicators

Specific criteria used to measure the efficiency and effectiveness of the business’ performance (a tool used to measure whether objectives are met)

• Should be comparative

KPIS

• Percentage of market share

• Net profit figures

• Rate of productivity growth

• Level of staff turnover

• Number of sales

• Rates of staff absenteeism

• Level of wastage

• Number of customer complaints

• Number of workplace accidents

Percentage of market share

The business’ proportion of the total industry sales for a particular good or service, expressed as a percentage

Net profit figure

What remains when expenses related to operating the business are deducted from the revenue earned

Rate of productivity growth

The change in productivity in one year compared to the previous year
(Indicates efficiency)

Productivity

A measure of performance that indicates how many inputs (resources) it takes to produce an output (goods or services)

Number of sales

A measure of the number of goods or services sold

(Allows to determine if they are meeting forecasts and how to increase sales short and long term)

Level of staff absenteeism

The number of workers who neglect to turn up for work they are schedule to do so

Level of staff turnover

The measure of the number of employees who have left a business and need to be replaced within a given period time

Level of wastage

Measures the amount of unused/unwanted resources created by the production process

(indicates efficiency)

Number of customer complaints

The number of written or verbal expressions of dissatisfaction from customers about an organisations products or services

Number of workplace accidents

Number of unplanned events interrupting the workflow that may or may not include property damage or injury

Driving forces

Forces affecting a situation that are pushing in a particular direction and supporting the goal or proposed change

Restraining forces

Personal and organisational resistance to change that acts against driving forces and could involve management, employees, cost, legislation, and competitors

Lewin

1. Identify goals for change

2. Identify forces for change/against change

3. Assign scores

4. Analyse and apply

Lewins key principles

1. Weighting

2. Ranking

3. Implementing the response

4. Evaluating the response

LKP - Weighting

Assigning a numerical value to each driving and restraining force, indicating its relative strength or importance

• Allows prioritisation of resources and attention

LKP - Ranking

Arranging the driving and restraining forces in order of their weighted scores and calculated the total score for each category

LKP - Evaluating the response

Assessing the effectiveness of the implemented strategies and determining whether change has been successfully implemented

Driving forces examples

• Managers

• Employees

• Competitors

• Legislation

• Pursuit of profit

• Reduction of costs

• Globalisation

Restraining forces examples

• Managers

• Employees

• Time

• Legislation

• Financial considerations

Globalisation

The movement across nations of trade, investment, technology, finance and labour brought about by removal of trade barriers

Porter’s key approaches

• Low Cost

• Differentiation

Low Cost (internal)

Seeking to become the business with the lowest cost in the industry

AD: Competitive advantage, more sales, increase profit margins

DI: customer loyalty, buy in bulk, may perceive as low quality

Differentiation (external)

Method used to develop uniqueness to attract customers

AD: competitive advantage, loyalty
DI: unattract price conscious people