Business U4 AOS 1 - The need for change

business change

the alteration of behaviours, policies and practices of a business as a result of internal or external pressures

proactive change

change is planned and occurs before a business is affected by pressures in the environment, and takes an opportunity to gain a competitive advantage

reactive change

business undertakes unplanned change in response to a situation or crisis in the environment

KPIs (10)

• % of market share

• net profit figures

• rate of productivity growth

• number of sales

• rate of staff absenteeism

• level of staff turnover

• level of wastage

• number of customer complaints

• number of website hits

• number of workplace accidents

% of market share

What it could represent

• customers arent satisfied with quality or prices

How to improve:

• implement quality strategies

• lower production costs (overseas supply, redundancies)

net profit figures

What it could represent

• low customer satisfaction

• high prices

How to improve:

• improve quality

• reduce production costs

rate of productivity growth

What it could represent

• machine/staff are unable to produce quickly
  
  How to improve:

• invest in tech (apl, ai, etc)

• staff training

number of sales

What it could represent

• low customer satisfaction

• price is too high

• customers are not aware of product

How to improve:

• improve quality

• reduce production costs to lower price

• marketing strategies

rate of staff absenteeism

What it could represent

• job dissatisfaction

How to improve:

• motivation strategies (PRP, career advancement)

• change management style

level of staff turnover

What it could represent

• job dissatisfaction

• redundancies/retirement
  

How to improve:

• motivation strategies

• foster positive corporate culture

• promotion opportunities

level of wastage

What it could represent

• insufficient storage

• inefficient production process
  

How to improve:

• waste minimisation

• lean management

number of customer complaints

What it could represent

• low quality products

• poor customer service
  

How to improve:

• quality management

• staff training/motivation

number of website hits

What it could represent

• low customer awareness

• poor quality products/service

How to improve:

• quality management

• advertising/marketing

number of workplace accidents

What it could represent

• poor quality of safety equipment, training or procedures

How to improve:

• increase staff training

• OH&S procedures

force field analysis

theory that proposes that business usually exist in a state of equilibrium, where some forces acting on a business will drive change whilst others will restrain change

• driving forces must be strengthened or restraining forces must be weakened for change to occur

• When change successfully occurs, the business establishes a new equilibrium point.

principles of FFA

• weighing

• ranking

• implementing a response

• evaluating response

adv/dis of FFA

• + Businesses are able to evaluate whether implementing change is worth it

• + Allows business to identify and strengthen driving forces and take action to weaken restraining forces to support change

• - Weighings can be subjective

• - Some D+R forces may not be clearly identifiable, forgotten or may appear during the change

driving forces

factors affecting the business environment that promote and support business change

what are the driving forces of business change?

• owners

• managers

• employees

• competitors

• legislation

• pursuit of profit

• reduction of costs

• globalisation

• technology

• innovation

• societal attitudes

restraining forces

factors that resist a business change or actively try to prevent it

what are the restraining forces of business change?

• managers

• employees

• time

• organisational inertia

• legislation

• financial considerations

porters generic strategies

• lower cost

• differentiation

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

adv/dis of lower cost

• + Strong competitive advantage in markets with price-conscious customers - dominate market-share

• + Reduce expenses

• + More profitable as profit per unit can increase

• - Customers may perceive product to be poor quality for its price

• - Potential loss of market share if strategy is copied by competitors

• - Difficulty differentiating in the future

differentiation

business offers unique services or product features that are of perceived value to customers, which can be sold at a higher price than competitors

adv/dis of differentiation

• + Ability to charge at premium price increases revenue

• + Can assist with development of customer loyalty

• + Customer loyalty → increase market share

• - Possibility of competitors copying the differentiated approach

• - More costly to implement

• - Price-sensitive consumers/markets may not be attracted to the high price