Business Management Unit 4 AOS 1 Business Change

Change

Any alteration in the internal or external environments

Business Change

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

Competitive Advantage

Occurs when a form, industry or economy has a lower cost price structure than its rivals. In this situation, goods and services can be sold more cheaply undercutting competitors, and expanding domestic and foreign sales. The concept can also be extended to product quality range and flexibility in adapting to new trends in the market

Proactive Approach to Change

Where a change is planned and occurs before a business is affected by pressures in their environment. More effective in managing change as it allows the business to gain a competitive advantage.

Reactive change

Occurs when a change is unplanned and takes place after the business has been affected by the pressures from its environment. Less effective in managing change as the business has already been affected, potentially causing some sort of loss

Effectiveness

the degree to which a business has achieved its stated objective

Efficiency

How well a business uses its resources to achieve its objectives

Key Performance Indicators (KPI)

Specific criteria used to measure the efficiency and/or effectiveness of a business’s performance

Percentage of market share

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

Net Profit Figures

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

Productivity

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

Rate of productivity growth

The change in productivity in one period of time to the previous period, expressed as a percentage.

Number of sales

A measure of the amount of goods or service (products) sold by the business in a given period of time

Rate of staff absenteeism

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

Level of staff turnover

The number, or rate, of employees who are leaving the business over a specific period of time, and need to be replaced by new employees. Also used as an indicator of the degree of staff satisfaction

Level of wastage

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

Number of customer complaints

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

Number of website hits

A ‘hit’ on website is a request to a web server for a file such as a web page or image. A business records how many potential customers visit or engage with its platform over time

Number of workplace accidents

Measures number of injuries and unsafe incidents that occur over a period of time. Indicates how safe the workplace is for employees

Force Field Analysis

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

Driving Forces

The forces that initiate, encourage and support change in the business. They work to assist the business in achieving its goal

Restraining Forces

The forces that work against the engage, creating resistance. They hinder the achievement of the goal

Force Field Analysis Step 1 - Identify

Identify the forces that are driving or restraining the change

Force Field Analysis Step 2 - Weighting

Allocate a score (out of 5) to each force to represent its weighting/strength

Force Field Analysis Step 3 - Rank

Rank/prioritise the top 3-5 driving and restraining forces. Helps understand key drivers and resistors

Force Field Analysis Step 4 - Response

Develop an action plan to reduce the strength of the restraining forces and increasing strength of driving forces

Force Field Analysis Step 5 - Evaluate

Evaluate the response to determine its effectiveness. The managers can then plan for successful change

Benefits of Force Field Analysis

• Businesses can weigh up factors ‘for’ and ‘against’ the change

• Allows a business to identify and strengthen the driving forces supporting the change

• Allows stakeholders to identify the change as positive or negative from their perspective

• Can identify if skills are are restraining change and what training may be required

• Can identify inadequate systems so a re-design of systems can be undertaken

• Visual aid that can support communication and reduce communication barriers

• Allows the business to identify those people within the business who are supportive of the change and those restraining the change

Limitations of a Force Field Analysis

• The identification of the driving and restraining forces may omit some forces and may not be clearly identifiable at the time and may emerge during the change

• The weightings of the forces are subjective so biases can emerge

• Timelines can be subjective and may not consider unexpected events

• Assigning responsibility to people to manage aspects of the change may result in a need for training as the skills of people may be lacking or overestimated

Types of restraining forces

• Owners and managers

• Employees

• Competitors

• Legislation

• Pursuit of profit

• Reduction of costs

• Globalisation

• Technology

• Innovation

• Societal attitudes