Chapter 4 Definitions

A proactive approach

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

A reactive approach

When a business undertakes change in response to a situation or crisis.

Key performance indicators (KPIs)

Criteria that measure a business’s efficiency and effectiveness in achieving its different objectives.

Percentage of market share

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

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

Number of sales

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

Rate of productivity growth

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

Level of wastage

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

Number of customer complaints

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

Number of website hits

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

Rates of staff absenteeism

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

Number of workplace accidents

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

Level of staff turnover

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

Force Field Analysis

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

Driving forces

Factors affecting the business environment that promote and support business change.

Restraining forces

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.

Ranking

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

Porter’s 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.

Porter’s 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.