Business management Unit 4 AOS 1

Business change definition

When a business modifies its policies, processes, structures or operations due to pressures in the internal or external environment. e.g woolworths scan and go trolleys + cheap as chips taken by choice

Proactive + Reactive change

Proactive - the business plans and initiates change before pressures occur, driven by forecasting, data, or anticipating future trends.

Reactive -The business makes changes after pressures or problems arise, responding to events rather than preparing for them

Similarities and differences between proactive and reactive approach

S- Both approaches are utilised by a manager or business to implement change. Both require the support of the manager, who must utilise management skills if the change is to be implemented successfully.

D - Proactive occurs when a business takes advantage of opportunities and awards future problems. Reactive occurs in response to a situation/crisis. Proactive is more planned, coordinated and controlled with fewer pressures action on business throughout the change yet reactive is more spontaneous, urgent and pressured

Efficiency and effectiveness definition

Efficiency - How well a business uses resources to achieve objectives

Effectiveness - the degree to which a business has achieved its stated objectives

Key performance indicator definition and the 10

Specific criteria used to measure the efficiency and effectiveness of a business performance

the 10 include percentage of market share, net profit figures, rate of productivity growth, number of sales, rates of staff absenteeism, level of staff turnover, level of wastage, number of customer complaints, number of website hits and number of workplace accidents

Define percentage of market share and how its calculated

Represents the proportion of an industry or markets total sales that is earned by a particular company over a specified time period. Calculated by taking the companys sales over the period and dividing it by the total sales in the industry over a certain period of time

Percentage of MS performance comparison and what it may indicate is wrong and proposed changes

Percentage of market share performance comparison involves analysing the company's market share against competitors. A declining share may indicate issues such as pricing strategy problems, reduced customer loyalty, or ineffective marketing, suggesting the need for changes in reducing labour costs via labour wages, shift to global manufacturer, look for cheaper raw materials or increase productivity rates

Define net profit and how its calculated

Net profit is a companys total revenue, excluding its total expenses and showing what the company has earnt or lost in given time period. Calculated by subtracting a comanys total expenses from its total revenue

Examples of NPF and what may indicate and changes

Customers that are not happy with the product can lead to decreasedsales and revenue, a change includes introducing quality strategies and increase staff training and motivation while also introducing cost cutting measures or implementing lean management. Net profit factors (NPF) include customer dissatisfaction, high operational costs, and inventory mismanagement, which may indicate issues in product quality or service delivery. Proposed changes could involve enhancing product quality, improving customer service, and adopting more efficient operational practices.

Define rate of productivity growth and how its calculated

Rate of productivity growth measures the increase in output per unit of input over a specific period. It is calculated by taking the difference in productivity levels over time, divided by the initial level of productivity, and then multiplying by 100 to express it as a percentage.

Examples of ROPG issues and changes

Issues include that machinery could be failing to produce as quickly potentially due to aging, staff are failing to produce as quickly, there is a log jam in inputs arriving in time which stops production. Changes can include investment in technology or redeploy to customer demand, increase staff training and motivation and initiate JIT production system

Define number of sales and calculation + example and issues to change

Number of sales refers to the measure of the total amount of goods or services in a given reporting period. Minus the revenue from the costs to get profit price.

Issues include the product/service is not meeting customer needs, the price of product/service is too high, customers are not aware of the product. Changes can include improving quality in production, increasing staff training, lowering the price, reduce costs to enable lower price for products and improve marketing to customers.

Define number of customer complaints and how its calculated + issues and changes needed to be made

Number of customer complaints refers to the total count of grievances registered by customers regarding a product or service within a specific time frame. It is calculated by tracking all reported complaints and can be analyzed to identify trends or areas needing improvement.

Issues include the quality of the product is declining as well as customer service. To fix, introduce quality strategies, increase investment in technology, increase staff training and motivation.

Define rate of staff absenteeism and how its calculated and issues and changes

Rate of staff absenteeism refers to the percentage of employees who are not present at work during a specific period, typically calculated by dividing the number of days absent by the total number of available workdays, then multiplying by 100. Issues contributing to absenteeism may include low employee morale, health concerns, or lack of engagement, while changes can involve enhancing workplace conditions, offering support programs, and improving employee engagement.

Define level of staff turnover, how its calculated and issues and changes to improve

Level of staff turnover refers to the rate at which employees leave an organization over a given period. It is calculated by dividing the number of employees who leave by the average number of employees, then multiplying by 100.

Issues leading to high turnover may include inadequate compensation, lack of career advancement opportunities, and workplace culture. Changes to improve retention can involve enhancing employee benefits, providing training and development opportunities, and fostering a positive work environment.

Define number of workplace accidents, how its calculated and issues and changes

Number of workplace accidents refers to the total incidents of injuries occurring in the workplace within a specific timeframe. It is calculated by tracking all recorded accidents and can help identify safety issues or the need for improved training and equipment.

Issues may include hazardous working conditions, inadequate training, and lack of safety protocols. To address these, organizations should implement stricter safety measures, conduct regular training sessions, and improve workplace safety standards.

Define level of wastage, how its calculated, issues and changes

Level of wastage refers to the amount of raw materials or resources that are not utilized effectively during the production process. It is calculated by dividing the total amount of waste produced by the total input of materials, then multiplying by 100.

Issues contributing to high levels of wastage can include inefficient processes, lack of employee training, and poor quality control. Changes to reduce wastage may involve optimizing production methods, enhancing employee training, and implementing better quality assurance practices.

Number of website hits, issues and changes to improve

The number of website hits reflects the total traffic visiting a company's site, indicating online engagement and interest. Issues may arise from low visibility or inefficacy of marketing efforts. Proposed changes can include improving search engine optimization (SEO), enhancing content quality, and utilizing targeted advertising.

Business objective and PI and how it can be evaluated ( Maximise profit and increase sales)

Maximise profit - Net profit - an improvement in net profit means that the business has improved its productivity either by earning move revenue or by reducing expenses and costs.

Increase sales - Number of sales - Customer demands - Quality products, competitive price, excellent customer service, customer satisfaction can equal more customer expectations and also staff training being effective and how businesses marketing been effective.

Business objective and PI and how it can be evaluated ( Improve Productivity, increase market share and meet safety standards)

Improve productivity - rate of productivity growth - resources and labour, getting more outputs from inputs, not wasting raw materials and employees and technology increasing outputs.

IMS - percentage of market share - increasing sales against competitors, increase revenue and investment in tec, goods and services prices are competitive and increasing quality gives a competitive advantage.

MSS - Number of workplace accidents - preventative measures and procedures, effective OH and S training, how many injuries over specific period and improve positive corporate culture

Business objective and PI and how it can be evaluated ( Improve retention of employees, reduce workplace waste)

Improve retention of employees - Level of staff turnover - reducing turnover indicates successful management practices, benefits, and workplace culture that support employee satisfaction and engagement.

Reduce workplace waste - Level of wastage - implementing efficient processes and resource management can minimize waste, benefiting both the environment and operational costs.

Force field analysis theory

A tool used during business change to analyse driving forces (supporting change) and restraining forces (opposing change) to make informed decisions. Change is more likely to succeed if driving forces outweigh restraining forces

distinguish between driving and restraining forces

Driving forces are factors that support and promote change within an organization, while restraining forces are those that hinder or oppose change. Effective change management involves enhancing driving forces while minimizing the impact of restraining forces.

Process of conducting force field analysis

involves identifying and assessing both driving and restraining forces that influence a proposed change. This analysis helps managers develop strategies to strengthen supporting factors and mitigate opposing ones, facilitating successful organizational change.

Benefits and costs of conducting a force field analysis

The benefits of conducting a force field analysis include clearer understanding of the change process, improved decision-making, and better resource allocation. Costs may involve time, financial resources, and potential resistance from stakeholders during the analysis phase.

Driving forces for change (11)

Owners, managers, employees, competitors, legislation, pursuit of profit, reduction of costs, globalisation, technology, innovation and societal attitudes.

DF - Owners and managers

O - Business owners will be DF due to owners wanting their bsiness to advance financial success e.g. make profit. Owners are interested in the success of businesses as can achieve personal reputation for example aus post adding more delivery slots.

M- Job security e.g. managers will support business change to comply with owners directions and meet business objectives. Managing successful change builds personal status and future promotion and can also receive financial incentives.

DF - Employees and pursuit of profit

E - Job security, financial incentives such as performance related pay, improve employee motivating and an opportunity for employee innovation and creativity for products.

POP - All businesses must earn profit for financial survival and to distribute investment returns to business owners and company shareholders. They will make changes to generate more revenue or reduce expenses to pursue imposed profit. POP still important to social enterprises to help meet social cause.

DF - Reduction of costs and competitors

ROC - Businesses often seek to reduce costs to improve profitability, enhancing their competitive advantage in the market.

C - Competitors drive businesses to adapt and innovate in order to maintain or increase market share. In a competitive landscape, organizations strive to optimize operations, reduce costs, and improve offerings to meet consumer expectations and remain relevant.

DF - Legislation and globalisation

L - Legislation refers to the laws and regulations that govern business practices, affecting how companies operate in their respective markets.

G - Globalization is the process of integrating economies, cultures, and markets on a global scale, influencing businesses to adapt their strategies in response to international competition and diverse consumer demands.

DF - Technology, Innovation and Societal attitudes

T - Technology encompasses the tools and systems that businesses utilize to enhance operations, create efficiencies, and innovate their products or services.

I - Innovation involves the process of translating ideas into tangible products or improved processes.

SA - Societal attitudes reflect changing consumer preferences and ethical considerations, which can significantly influence business strategies and practices.

Restraining force definition

A restraining force is a factor that hinders or obstructs progress or change within an organization. It may arise from internal resistance, such as employee reluctance, or external factors like market barriers, impacting the ability to implement new strategies or initiatives.

RF - Managers, employees and time

M - Managers are individuals responsible for overseeing and coordinating organizational activities to achieve specific goals, ensuring that resources are utilized effectively and efficiently.

E - Employees are the workforce of an organization, contributing their skills and efforts to complete tasks and fulfill operational objectives.

T - Time is a crucial resource in business management, as it impacts project timelines, scheduling, and the overall efficiency of organizational processes.

RF - Organisational Inertia, Legislation and Financial considerations

OI - Organisational inertia refers to the tendency of an organization to resist change, often due to established routines and processes.

L - Legislation includes laws and regulations that businesses must comply with, which can influence operations and decision-making.

FC - Financial considerations involve the budgeting, funding, and resource allocation necessary for implementing changes.

Competitive advantage, porters lower cost strategy and porters differentiation strategy

Competitive advantage refers to the attributes or conditions that allow an organization to outperform its competitors.

Porter's lower cost strategy focuses on becoming the industry's lowest-cost producer, enabling the business to offer lower prices or maintain higher margins.

Porter's differentiation strategy involves offering unique products or services that provide value to customers, allowing the firm to charge premium prices.

3 Advantages and 3 disadvantages of Porters lower cost strategy

A - Advantages of Porter's lower cost strategy include: Higher market share due to competitive pricing, Increased sales volume leading to economies of scale, and Greater price flexibility during market fluctuations.

D - Potential reduction in product quality, Limited ability to differentiate from competitors, and Risk of price wars, which can erode profit margins.

3 Advantages and 3 disadvantages of Porters differentiation strategy

A - The advantages of Porter's differentiation strategy include stronger brand loyalty, the ability to charge premium prices, and reduced price competition.

D - consist of higher costs to maintain uniqueness, the risk of imitation by competitors, and potential difficulty in targeting multiple market segments.

How a business can implement porters lower cost strategy

A business can implement Porter's lower cost strategy by optimizing operational efficiencies, minimizing production costs, and investing in technology to streamline processes. Additionally, it can focus on high-volume production and negotiate favorable terms with suppliers to reduce expenses, allowing for competitive pricing.

How a business can implement porters differentiation strategy

A business can implement Porter's differentiation strategy by focusing on innovation and product features to create a unique offering, investing in marketing to build brand identity, and obtaining customer feedback to improve their products and services, ensuring they meet specific needs and preferences.

Porters generic strategic management approach

In response to competition, a business may wish to gain its own competitive advantage. Porter identified two categories of competitive advantage:

1. cost advantage. A competitive advantage is gained through reducing the costs of the business, allowing it to operate with larger profit margins compared to its market rivals.

2. differentiation advantage. Businesses gain a competitive advantage through differentiating their good or service from others in the market.