Business in a Changing World

Flashcards covering key vocabulary and concepts for the A-Level Business Unit 4: Business in a Changing World course.

Change in Business

Businesses must try to anticipate change rather than always reacting to it, being proactive, flexible, and responsive to developments in technology, market changes, consumer tastes, legislation, and changes in the workforce and economy.

Major Causes of Change

Developments in technology (new products, processes), market changes (new competitors, globalization), consumer tastes (environmentally friendly policies), legislation (taxation), and workforce/economic changes are external factors requiring businesses to adapt.

Internal Causes of Change

Changes in management style, business ownership, business size, and the introduction of new technology.

External Causes of Change

Businesses must react to changing economic circumstances, competition, consumer tastes, and new legislation.

Anticipated and Unanticipated Change Types

Refers to changes that relate to new production technology vs changes caused by things like a sudden increase in demand.

Effects of Change

Shorter product life cycles, diminished brand loyalty, the need for new product development, changes in production methods, retraining the workforce, and the need for a flexible workforce.

Managing Change Effectively

Managers need to put in place strategies that include employee preparation, increased research and development expenditure, and additional capital investment.

Resistance to Change in Business

Employee resistance, lack of finance, lack of management expertise, supplier resistance and owner resistance.

Negotiated Total Package

Management and employees negotiate on how a major change in the way a business functions will be implemented.

Negotiated Piecemeal Initiatives

Management and employees consult and agree on various changes as they become necessary.

Imposed Piecemeal Initiatives

Managers plan and implement changes in order to solve particular problems.

Imposed Total Package

Senior management plan and introduce a major change all at once without consultation with employees.

Unfreezing

Involves creating a motivation for change and creating a realization amongst employees that change is necessary.

Change or Transition

Lewin described the period of transition as a potentially difficult time as employees are now moving towards a new way of doing things.

Refreezing

Establishing stability once the changes have been made. Employees have now accepted the change, and the new methods of working have become the new norm and they are comfortable with their routines.

Marketing Strategy Responses to Change

Changes to the product portfolio, Expansion or reduction, Image shift and being Global, environmentally friendly.

Financial Strategy Responses to Change

Different sources of finance, More capital investment.

Human Resources Strategy Responses to Change

Training/Retraining, Flexible working patterns, Kaizen organization structures.

Operations Management Strategy Responses to Change

Quality, Production processes, Location, Increased research and development.

Corporate Culture

Relates to the values, attitudes, and beliefs of those within an organization, influencing how employees think and act.

Evaluating Change

Quantitative and qualitative indicators such as delivery times, production defects, customer satisfaction, market share, sales turnover and profit.

PEST Analysis

Examines the Political, Economic, Social and Technological environments that affect markets and businesses.

Business Risk

A circumstance or factor that may have a significant negative impact on the operations or profitability of a given business.

Types of Risk

Cash flow problems, breakdown of machinery, industrial action, environmental damage, faulty product, legal non-compliance.

Quantifiable Risk

Can be measured, can often be insurable risks, such as the probability that a major customer becomes bankrupt or Responding to the introduction of new health and safety legislation.

Unquantifiable Risk

Cannot be measured, such as the adverse effect on a company’s image if a product is not successful or if there is a major failure in quality control.

Risk Management

The process of understanding and minimizing what might go wrong in an organization.

Contingency Plan

A plan devised for an outcome other than in the usual (expected) plan.

Legal Factors

Employment Rights, Anti-Discrimination Legislation, Company Law, Consumer Protection, Intellectual Property Law,Competition Law, Data Protection, Health and Safety Law , Environmental Law , Minimum Wage, Planning Law.

Advantages of Minimum Wage to Employees

Benefit from a more motivated workforce, More disposable income,Benefit in low paid industries. Reduces the need to negotiate with unions.

Disadvantages of Minimum Wage to Employers

Wage costs increase, Cost-push inflation, Employ cheaper younger worker, Loss of jobs.

Environmental Damage of Business Activities

The emission of gas through production processes, pollution caused by transporting raw materials and products, the pollution of the sea businesses. The environment Agency monitors and controls pollution.

Waste Management

Businesses increasingly recognize this as an area which needs improvement Design ways of cutting out waste where possible, through reduced packaging and identifying opportunities for reuse and recycle.The phrase ‘reduce, reuse, recycle’ summarises the core waste-reduction process

Pros of Waste Management to Business

Can help businesses to reduce their costs, Improves business's images. By reducing certain types of waste, businesses might be able to reduce the tax they pay.

Cons of Waste Management to Business

It can be difficult to arrange for waste to be disposed of correctly. Some aspects of waste management are very expensive and contribute to higher business costs.

Technology

The application of science to solve problems. One of the most common is ‘the application of science to solve problems’.

Automation Examples

Retailers, Banks, Warehousing, Online services, Utilities (gas and electricity.)

Electronic Point of Sale Systems (EPOS)

The reading of bar codes at checkouts is the tip of the iceberg of EPOS systems, used to determine promotions, selling space allocations and staff requirements.

International Trade

Consists of buying and selling of exports and imports between countries.

Why Trade

Countries do not produce all their own goods to satisfy the needs and wants of their population. increased efficiency in the use of resources

Key factors behind Expansion of Trade

Consumer expectations, Efforts of the World Trade Organization to remove barriers to trade, Technological changes, falling costs of transporting goods, Cross-border deregulation.

Free Trade

Means international trade conducted without the existence of barriers to trade, such as tariffs and quotas.

Advantages of Free Trade

Allows economies of scale to occur, Increases choice ,Increases competition,Increases chances of transfer of technology /skills Increases political stability.

Protectionism

Is an economic policy of restraining trade between countries through the imposition of barriers to trade, such as tariffs or quotas.

Reason for Protectionism

To protect domestic industries. To protect domestic employment. To prevent dumping.

Methods of Protectionism

Tariffs, Quotas, Voluntary export restraint (VER), Non-competitive purchasing by governments., Embargos.

Moving in Oversea Makers

Higher earnings, Spreading of risks, New potential markets, Cashing in on the brand. Benefits of economies of scale.

Dealing With Oversea Markets

Successful exporting and trading with overseas countries depends upon an understanding that people all over the world have different needs, priorities, incomes and tastes.

Over market Factor to Consider when Moving into International Markets

Fluctuations can cause lost orders or pressure on pricing and therefore profits. Different technological and health and safety standards.

Ethical Business

Is one that considers the needs of all stakeholders when making business decisions. Ethical businesses consider the moral rights and wrongs of any strategic decisions that are made

Corporate Social Responsibility (CSR)

This is the concept that businesses have a responsibility that goes beyond making profits for their shareholders

Employees Ethical Responsibilities

Ethical responsibilities should not stop with their own employees. Those working for suppliers are equally as important.

Customers Ethical Responsibilities

Want a quality product or service at a fair price. Businesses which act unethically fail to fulfil this moral commitment to customer

Environmental Ethics

Pressure groups (e.g. Greenpeace) have become increasingly effective in influencing business decision makers

Animal Welfare

Is is a major issue for those retailers with claims to be ethical.

Ethics of Potability

Unless required to do so by law, can negatively impact upon profitability. Revenues are likely to fall. Some customers are attracted to those businesses that adopt an ethical approach

Demographic Change

Measure the changing structure of the population.

LifeStyle Changes and New Business opportunities

Change one major change over the last 40 years has been the increase in the number of women who are economically active, i.e. in work.

Robots Advantages

Can carry out repetitive tasks with great accuracy time after time – repetitive tasks undertaken by humans can lead to boredom, lack of motivation and human error.

Robots Disadvantages

Initial purchase cost can be very high and breakdowns can also be very expensive to resolve. Reprogramming of robots can be very expensive indeed.

Computer-Aided Design (CAD)

An interactive computer system which is capable of generating, storing and using computer graphics. It assists design engineers in solving design problems.

CAD Advantages

Accurate designs can be constructed on a computer which can be viewed in 3D and rotated in order to demonstrate the whole range of possible images

CAD Disadvantages

Cost of setting up – buying the machinery + training of employees to use machinery. Possible redundancy payments to unskilled employees.

Computer-Aided Manufacturing (CAM)

The use of computers in production. It occurs in all sorts of industries - for example, the use of robotic welders in vehicle production.

CAM Advantages

CAM allows for standardised quality – accuracy. Reliability – less waste in manufacture. Lower labour production costs – less supervision.

CAM Disadvantages

Cost of setting up – buying the machinery + training of employees to use machinery. Possible redundancy payments to unskilled employees.