Business Management U4 AOS1

Business Change

is the alterations of behaviours, policies, and practices of a business

Proactive Change

involves a business changing to avoid future problems or take advantage of future opportunities

Reactive change

involves a business changing in response to a situation or crisis.

Reactive vs Proactive (SIMS)

-Both are used by a manager to implement change

-Both involve the biz undertaking change for future benefits, such as growth, progression or to improve brand image

-Both require the support of a manager who must utilise their skills to implement the change successfully

Reactive vs Proactive (DIFFS)

-Proactive is where the biz takes advantage of an opportunity avoiding future problems, reactive change occurs in response to a crisis

-proactive uses low risk strategies, reactive uses high risk

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

Key performance indicators

are criteria that measure a businesses efficiency and effectiveness in achieving its different objectives

Percentage of market share

measures the proportion of a businesses total sales, compared to the total sales in the industry, expressed as a percentage figure

Net profit figures

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

Rate of productivity growth

the change in the total output produced from a given level of inputs overtime, expressed as a percentage figure

Number of sales

the total quanitity of goods and services sold by a business over a specific period of time

Number of customer complaints

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

Rates of staff absentation

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

Level of staff turnover

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

Number of workplace accidents

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

Level of wastage

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

Number of website hits

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

Force field analysis

is a theoretical model that determines if businesses should proceed with a proposed change. this model identifies and examines factors that promote or hinder the change from being successful. Factors can be classified as driving forces or restraining forces.

Driving forces

are factors affecting the business environment that prompt and support business change

Restraining forces

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

Weighting

The process of scoring and attributing a value to the driving and restraining forces. The biz first identifies the driving forces that promote the proposed change. Then the biz identifies the restraining forces that resist the proposed change

Ranking

involves arranging the force sin order of value and determining the total score of driving and restraining forces

Implementing a response

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

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

Force field analysis (ADS)

-biz can weigh up whether the change is worth undertaking

-allows a timeline to be developed and additional resource requirements to be identified

-allows the biz to identify those people within the biz who are supportive of the change and those restraining the change

Force Field analysis (DISADS)

-Time consuming

-Conducting the analysis will require a business resources, at a cost to the business

Owners as a driving force

drive chnage because they have a personal and financial interest in the businesses long term success and competitiveness

Managers as a driving force

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

Employees as a driving force

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

Pursuit of profit as a driving force

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

Reduction of costs as a driving force

drives chane as businesses seek to imporve efficiency and eliminate unnecessary expenses

Competitors as a driving force

because businesses must adapt to stay competitive in their market, changes in pricing, technology, or marketing rivals can impact on businesses performance, prompting a response

Legislation as a driving force

because businesses must comply with laws to avoid penalties or closure

Globalisation as a driving force

drives change as businesses face increased international competition and must adapt to a global market. It enables access to cheaper production methods and new markets, encouraging businesses to lower prices and improve efficency.

Technology as a driving force

as it allows businesses to imrpove efficency, reduce cost, and increase productivity through advancements like automation and AI

Innovation as a driving force

drives change by pushing businesses to improve or develop new products and services to stay ahead of competitors, continuous innovation helps increase sales, market share, and customer satisfaction

Societal attitudes as a driving force

drives chnage because businesses must adapt their operations to align with evolving values and expectations to maintain customer trust and sales

All driving forces

- owners

- managers

- employees

- competitors

- legislation

- pursuit of profit

- reduction of costs

- globalisation

- technology

- innovation

- societal attitudes

Managers as a restraining force

can restrain if they don't believe it benefits the business pr if it threatens their authority. Because they hold power, overcoming their resistance usually requires negotiation or modifying the change proposal

Employees as a restraining force

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

Legislation as a restraining force

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

Organisational inertia as a restraining force

Establishing routines and processes can make businesses resistant to change because staff are comfortable with the status quo. Overcoming this may require leadership changes, restructuring or creating a culture that encourages innovation

Time as a restraining force

deadlines or timing pressure can limit when and how quickly changes are made, sometimes delaying progress

Financial considerations as a restraining force

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

All restraining forces

Managers

Employees

Time

Organisational Inertia

Legislation

Financial Considerations

Porters lower cost strategy

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

Porters lower cost pricing approaches

1 - Charging a similar price to competitors

2 - charging slightly lower prices than competitors

3 - charging much lower price then competitors

Porters lower cost methods of reducing operation costs

Reducing ops cost:

-Basic no frill products

-Reducing expenditure on marketing and advertising

-lowering costs of labour and operations through overseas manufacturing

Reducing costs of supplies:

-obtaining discounts from supplier by purchasing supplies in bulk

-securing cheaper supplies from global sourcing of inputs

-maintaining low inventory supplies by using just in time

Porters lower cost (ADS)

Attractive to cost-concious customers

Creates barries to entry for new competitors as its challenging for them to match lower prices of operations but still remain profitable

reduces expenses of operations

Porters lower costs (DISADS)

standardised or basic products may not meet the needs of customers who have specific needs

customers are not loyal to particular brands if another biz offers cheaper they would most likely switch

low prices may result in customer perceptions that the good or service is of lower quality

Porters differentiation strategy

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

Porters differentiation strategy point of differentiation

a biz can create a point of diff by:

-introducing new tech

-innovating its original good or service

-improving durability, meaning the product lasts longer because of high quality materials or design

-advertising a brand image that portrays a status or image aligned with the customers personal values

Porters differentiation (ADS)

-customers are often loyal to the business due to the unique features not offered by competitors

-quicker sales from loyal customers when new products are introduced

-can change a premium price for its products as customers cant purchase it elsewhere

Porter's Differentiation (DISADS)

-can be difficult to provent competitors from replicating points of differentiation

-high selling prices can deter cost-concious customers

-high investments of time and money may be required

Porters strategies (SIMS)

-both increase a biz's profitability by providing a competitive advantage

-both focus on value creation for a customer

Porters strategies (DIFFS)

-lower costs sells similar or lower prices, differentiation sells at premium prices

-lower cost targets cost-concious customers, differentiation targets customers that are not price sensitive

-lower cost focuses on internal focus on operating processes, differentiation focus on external focus on meeting customer needs