BUSINESS MANAGEMENT UNIT 4 AOS 1 THE NEED FOR CHANGE

business change

any alteration to a business or work environment where a business adopts a new idea or behaviour

business change involves

adjustments to departments, operations, jobs, behaviours, managements styles or corporate culture

resist change due to fear of personal ID loss, failure, or disorientation about where change will lead

2234 management implement strategies to support employees and ensure resistance to change is minimised

proactive change

when business anticipates changes in business environment and takes actions in advance to take advantage

examples proactive change

regular market research

encourage employee innovation

forecasting likely future events to ensure business prepared

discuss w employees and consultants to develop changes that will make business more efficient or effective then acting on advice

proactive change case study

microsoft investing 11 billion in OpenAI from 2019-2023 to build best AI platforms to increase competitiveness and take back market share from competitor Google

reactive change

unplanned change occurring after the business has been affected by environment pressures such as responding to poor KPI data or a new competitor entering the market

examples reactive change

observing competitors then implementing similar procedures to stay competitive

dealing with a crisis then putting measures in place to prevent similar circumstances occurring in the future

responding to forces that drive a need for change, such as social attitudes that require out of date policies to be updated

case study reactive change

toys r us losing customers to online and department stores, in response to lost profits, they invested in a website but had to close doors

key performance indicators kpis

measures of a set of data that allow a business to determine whether its meeting its business objectives

kpis involve

use range of kpis to ensure you make sound judgements about business performance

should be compared to previous years, business results or budgets/targets set by the business (benchmarketing)

relate to change management as strategic info based on kpi info, results of kpi data often evidence to help business identify that they need change

10 kpis

percentage market share

number of sales

net profit figures

levels of wastage

rate of productivity growth

level of staff turnover

rate of staff absenteeism

number of workplace accidents

number of customer complaints

number of website hits

percentage of market share

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

number of sales

total quantity of products or services purchased by customers

net profit figures

amount remaining after all operating expenses and tax have been deducted form the business’ total revenue

level of wastage

amount of resources and finished goods that are underutilised or discarded during the production process

rate of productivity growht

amount of outputs produced compared to inputs used and the rate at which it increases over time

level of staff turnover

number of employees that leave a business during a set period and need to be replaced

rate of staff absenteeism

percentage indicating the number of workdays lost due to unscheduled staff absences from work when expected to be there

number of workplace accidents

amount of incidents in working environment that negatively impacted health of safety of employees

number of customer complaints

amount of consumers dissatisfied with the business and or its products and have notified the business of their dissatisfaction

number of website hits

quantity of people and potential customers that have sent a request to the company’s web server

data can include number of visitors, % of new sessions, channels (how they found the site)

force field analysis theory

theory to help business understand and influence the factors that either drive or block movement from a goal or change

driving forces

factors pushing in a particular direction supporting a goal or proposed changef

restraining forces

factors that act against the driving force to resist the change

harnessing forces for change

driving vs restraining

dominance determines how succesful
likely doubtful not

4 key foci of force field analysis

occur before a change is made or decided on

weighting

ranking

implementing a response

evaluating the response

weighting

define target of change

identify driving and restraining

allocate score usually out of 5 to each force to represent its strength and weighting

ranking

place top 3-5 forces in order from most to least important

help understand key drivers and resisters

implementing a response

develop an action plan to reduce the restraining strength and increase driving strength

evaluate response

determine effectiveness of strategies from step 3

assess whether driving forces are now stronger and restraining are now weaker

determine if change is viable

advantages of force field analysis

determine if change worth pursuing

manager develop ways to reduce restraining

action and timeline developed

id stakeholders likely to be supportive or resistant to change

disadvantages force field analysis

participation from many members required for complete picture which can be hard to organise

may divide employees between those for and against change

subjective weighting 2192 poor dm

strong focus on current state rather than future

11 driving forces

managers

employees

competitors

legislation

pursuit of profit

reduction of costs

globalisation

technology

innovation

societal attitudes

owners

managers as driving force

person responsible for controlling and dealing with a group of staff

make decisions about business direction, initiate change after reviewing kpi data, ensure workers understand why and what changes are and make sure they’re implemented

employees as driving forcep

person working for business for wages or salary

place demand on business to change conditions, policies and processes

more likely to be successful if employees support change

giving power to innovate change can increase chance they’re supportive of change

competitors

business rival in same market for gs

to gain substantial competitive advantage and stay ahead to respond to industry pressures

legislation driving force

process of making laws

permits, licenses and parking restrictions can force change

pursuit of profit

difference between revenue and expenses

increase sales or reduce expenses

large businesses pressure to increase shareholder dividends

increase profit by improving gs quality, reduce number employees, introduce technology

reduction of costs

monetary value a business has spent to produce something

main driver to implement change

costs in purchasing, production, sales and makreting, finance and administration

globalisation

process where economic boundaries are removed and business operates on an international scale

increased overseas competition, opportunity to sell to larger market, able to use global sourcing of inputs, overseas manufacturing and global outsourcing

technology

practical application of science to achieve commercial and industrial objectives

maintain efficiency and be competitive

owners

indidividual or group w a portion of ownership in the business

vested interest in financial performance so they anticipate threats and opportunities and are proactive to act upon trends or developments that can directly impact the business

may initiate change after reviewing kpi data

6 restraining forces

manager

employees

legislation

organisational inertia

financial consideration

time

managers restrainign force

person responsible for controlling and dealing w a group of staff

feel change threatens current position power or role

may not be able to lead business through change

employees restraining force

person working for business for wages or salary

relocation, termination

fear and anxiety creating resistance

unappreciated not consulted enough

legislation restraining force

process of making laws

can make change hard to implement

managing and adjusting to laws that force unexpected, expensive or difficult change, harder for business to react positively

organisational inertia

lack of ability for a bsuienss to react to internal and external pressures for change

stable businesses w little change over time less likely to respond to changes quickly or positively esp w long history or tradition

management style, corporate culture, conservative policies

financial consideration

business’ economic state

lack of access to finance can be inhibitor for small business

cost being externally accessed is a consideration

time

ongoing sequence of events taking place

impact ability to successfully implement change

lack of planning or foreseen change may leave business unable to respond quickly to any change

may be wrong time to implement change like recession

porter’s generic strategies

to achieve competitive advantage

choose which strategy to implement

swot analysis

5 force analysis,

compare both to select strategy that provides strongest set of options

lower cost cost leadership strategy

strategy allowing business to achieve competitive edge by reducing production or delivery expenses

either increase profits by reducing costs charge same price or increase market share by charge lower but still make profit through lowered costs

how to achieve lower costs

high volumes of standardised products limiting customisation

use fewer parts and limit number of models produced

low rent areas

technology reduce labour costs

buy in bulk/work w supplier for best price

JIT keep stock levels to a minimum

contemp case study lower cost

ikea source products in low wage countries w basic level service

mcdonalds division of labour hiring and train inexperienced employees

advantages lower cost

increase market share from low price sell larger volumes

increase profit margin

ability to withstand price wars

presence of cost leader in industry tends to discourage new businesses due to thin profit margins

disadvantages lower cost

lower customer loyalty as price sensitive customers swap brands easily

associate w lower qulaity

risk reducing cost in areas customers value

can be challenging long term if competitors also lower price

differentiation strategy

method to develop the uniqueness of the product or service in a way that’s valued by customers

high quality, effective marketing, building relationships, innovation and tech, training to have more skilled employees

good for non price sensitive customers, competitive market, customer specific needs not being met

contemp case study differentiation

apple simple innovative product

nike strong athletes w high quality sport range

singapore airlines premium service at practical price, hot meals and scented towels first

advantages differentiation strategy

can charge premium price greater than extra cost incurred by differentiation

build brand loyalty so customers less likely to switch

marketing through word of mouth about unique features

disadvantages differentiation

unique features can be copied

uniqueness often expensive

narrows market and not for price sensitive customers

stuck in the middle

business should choose one rather than be mediocre at both otherwise sitm where business loses focus but cannot completely ignore the other