KK4: Driving Forces for Change

Force-Field Analysis – Recap

• Lewin’s Force-Field model frames change as the movement from a current state to a new desired position.
• Two opposing sets of forces:
– Driving forces push the organisation toward change.
– Restraining forces resist the change.
• The larger the net driving force relative to restraining forces, the more likely change will be successful.

Driving Forces – Overview (Part 1 of 2-part series)

• VCE BM U4 AOS 1 lists 10 possible driving forces; this lesson covers 5:

  1. Owners

  2. Managers

  3. Employees

  4. Pursuit of profit

  5. Reduction of costs
    • Remaining forces (competitors, legislation, globalisation, technology, innovation, societal attitudes) covered in Part 2.

Owners as a Driving Force

• Owners seek both financial return and personal reputation – therefore actively push change that improves business performance.
• Definition: Return on Investment (ROI) – what the owner gains financially compared with the amount originally invested.

Ownership Structures & Motivations

• Sole traders / partnerships – owners directly drive change to maximise personal ROI.
• Private Ltd & Public Ltd companies – shareholders drive change aimed at capital gain (share-price growth) and dividends.
• Social enterprises – pursue profit but also substantial social benefits; change aims to balance the two.
• Government Business Enterprises (GBEs) – e.g. Australia Post; government owners pursue social benefit plus profit for reinvestment.

Quiz Insight

• MCQ asked what ROI stands for – correct answer: Return on Investment (B).

Managers as a Driving Force

• Managers’ interest areas: job security, financial incentives, personal reputation.

How Managers Drive Change

• Job security – employment contracts may require delivering change; failure could risk dismissal.
• Financial benefit – bonuses, shares, or other incentives linked to successful change.
• Personal reputation – successful projects build résumé value and industry status.

Quiz Insight

• MCQ: Which option is not a managerial driver? Correct answer D – a return on their personal investment (applies to owners, not managers).

Employees as a Driving Force

• Employees value job security, financial rewards, career development, personal reputation.
• They push change that:
– Improves terms & conditions (wages, flexibility).
– Fixes day-to-day operational problems they observe first-hand.
– Implements new initiatives (e.g. suggestion boxes, innovation programs) that advance the firm and open promotion paths.

Quiz Insight

• MCQ: Least likely driver – C: introducing technology that could replace their own jobs.

Pursuit of Profit

• Fundamental unifier across business types, though intensity varies:
– Public & private companies – shareholders prioritise Capital Gain\text{Capital Gain} + Dividends\text{Dividends}.
– Social enterprises – profit enables funding of the social mission; still vital but not sole goal.
– GBEs – profit desirable, but societal service may outrank it.
• Drives change aimed at revenue growth, efficiency, market expansion, etc.

Quiz Insight

• MCQ: Pursuit of profit drives all businesses (Option A).

Reduction of Costs

• Closely linked to profit – instead of lifting revenue, widen margin by trimming expenses:
Profit=Revenue−Expenses\text{Profit} = \text{Revenue} - \text{Expenses}
Example from slide:
– Before change: Revenue=$1000\text{Revenue} = \$1000, Expenses=$500\text{Expenses} = \$500 ⇒ Profit=$500\text{Profit} = \$500.
– After cost cut: Revenue=$900\text{Revenue} = \$900, Expenses=$100\text{Expenses} = \$100 ⇒ Profit=$800\text{Profit} = \$800 (profit rises even though revenue falls).

Strategies for Cost Reduction

• Marketing – cut advertising spend, target cheaper channels.
• Operations – lean management (POTZ principles), waste minimisation, materials sourcing from cheaper suppliers/regions.
• Human resources – redundancies, outsourcing, off-shoring to lower-wage locations.

Case Study – Qantas 3-Year Cost Plan (valid to 2026)

• Target: $15 billion\$15\text{ billion} in total benefits, $1 billion\$1\text{ billion} p.a. ongoing from FY23.
• Actions:
– Redundancy of 60006000 roles.
– Stand-down of 1500015000 staff until flight volumes recover.
– Immediate retirement of 6 × B747 aircraft; grounding up to 100100 aircraft for up to 12 months.
– Deferred deliveries of A321-neo & 787-9 fleet.
• Illustrates deep cost-cutting across HR, operations and capital expenditure.

Quiz Insight

• MCQ: Strategy not short-term cost response – C: investing in automated production lines (long-term capital outlay).

Formula & Numerical References

• ROI (generic): ROI=Net ReturnInvestment Cost×100%\text{ROI} = \frac{\text{Net Return}}{\text{Investment Cost}} \times 100\%
• Profit equation already noted above.

Ethical, Philosophical & Practical Implications

• Owners & managers pursuing ROI may conflict with employee security or social goals.
• Cost-cutting (e.g. Qantas redundancies) raises ethical issues around livelihoods vs. organisational survival.
• Social enterprises demonstrate an alternative paradigm where profit is a means, not an end.

Connections to Other Curriculum Areas

• Links to Unit 3 content on Stakeholders (1C) – explores varying interests of owners, managers, employees.
• Links to Business Objectives (1B) – especially making a profit and its strategic implications.
• Sets foundation for future lessons on other driving forces and management strategies for change implementation.

Key Terms Recap

• Owners – individuals/entities holding equity & ultimate control.
• Managers – employees with delegated authority to run sections or whole business.
• Employees – staff exchanging labour for wage; vital internal stakeholder group.
• Return on Investment (ROI) – ratio quantifying investment performance.
• Pursuit of Profit – overarching aim to maximise surplus revenue over costs.
• Reduction of Costs – deliberate lowering of expenditure to magnify profit.

What’s Next

• Lesson 4F covers the remaining driving forces: competitors, legislation, technology, globalisation, innovation & societal attitudes.