Business Change and Key Performance Indicators

A set of vocabulary flashcards based on the lecture notes about business change, key performance indicators, and strategic models such as Force Field Analysis and Porter’s Generic Strategies.

Business change

The alteration of behaviours, policies, and practices of a business.

Proactive approach to business change

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

Reactive approach to business change

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

Gap in the market

When there is a need that is currently unmet in an industry and poses a profitable opportunity for businesses.

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: $\text{Total revenue} - \text{Total expenses}$

Rate of productivity growth

The change in the total output produced from a given level of inputs over time, expressed as a percentage figure: $\frac{\text{New productivity} - \text{Old productivity}}{\text{Old productivity}} \times 100$

Number of sales

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

Number of customer complaints

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

Efficiency

How productively a business uses its resources when producing a good or service.

Effectiveness

The extent to which a business achieves its stated objectives.

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.

Level of staff turnover

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

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 wastage

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

Number of website hits

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

Force Field Analysis

A theoretical model that determines if businesses should proceed with a proposed change by identifying and examining driving and restraining forces.

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 (Force Field Analysis)

The process of scoring and attributing a value to the driving and restraining forces, typically between $1$ and $5$, to determine their level of impact.

Ranking (Force Field Analysis)

The process of arranging forces in order of value and determining the total score for the sum of driving forces against the sum of restraining forces.

Organisational inertia

The tendency for a business to maintain established ways of operating.

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.