KK4: Driving Forces for Change - Part 2

Eleven forces identified across Units 4, AOS 1:
• Owners • Managers • Employees • Pursuit of profit • Reduction of costs • Competitors • Legislation • Globalisation • Technology • Innovation • Societal attitudes
Part 2 of the lecture concentrates on the last six named above (bold below).

Definition: Other businesses in the same industry selling similar goods or services.
Why they drive change
• Constant battle for $\text{market share}$ ⇒ one firm’s gain usually equals another’s loss.
• Ignoring a rival’s move risks loss of market share → falling sales → lower revenues → declining profit → possible collapse.
Typical triggers
• New product launches, price discounts, enhanced customer experience, aggressive marketing.
Example (fast-food industry)
• McDonald’s vs Hungry Jacks rivalry: vegan burgers, café offerings, ice-cream sundaes, promotional price wars.
VCE exam-style question guidance (3 marks)
1–2 marks: clearly explain mechanism (competitive edge & market share).
+1 mark: give a specific business example as above.
MCQ recall from slides: If a firm fails to respond it will lose market share (Option A).

Definition: The set of laws and legal regulations a business must follow.
Key attribute: it is a compulsory driving force (cannot be ignored or delayed).
Drivers for change
• New Acts/regulations can render existing practices illegal or non-compliant.
• Penalties, fines, reputational damage act as additional pressure.
COVID-19 Victorian examples
• Social-distancing & ventilation standards.
• Mandatory management of workplace cases.
• Vaccination requirements for workers.
• Provision of PPE.
MCQ recall: Legislation is “a compulsory driving force for change” (Option C).

Definition (best answer): Increased trade and cultural exchange between countries due to advances in technology, communication & transport.
How it drives change
• New competitors enter the domestic market (e.g., Amazon AU).
• Expansion opportunities via FTAs, e-commerce, and easier logistics.
• Global supply chains: outsourcing, offshoring, seeking lower labour or input costs, superior quality raw materials.
Implications
• Greater need for cultural awareness, exchange-rate management, cross-border compliance.
• Aligning with global sustainability and ethical expectations.

Definition: Application of scientific knowledge to create new devices, tools, systems or processes.
Constantly progressing ⇒ perpetual pressure on operations, marketing & HR.
Common technological options
• Robotics, automated production lines, AI, big data analytics, cloud computing, self-driving vehicles, 3-D printing.
Industry-specific illustrations
• Retail → online platforms (Amazon/eBay) led to Borders’ collapse (2011).
• Tourism → Airbnb & Skyscanner displacing travel agencies & traditional hotels.
• Entertainment → Netflix/Stan replacing Blockbuster.
• Finance → online share trading bypassing stockbrokers.
• Food delivery → apps like Uber Eats change ordering logistics.
• Manufacturing → future 3-D printing for appliances, clothes, houses.
Best managerial response MCQ: Invest to keep up with technological advancements (Option B).
Connection to 3D positional strategy (Unit 4 3D): Technological strategies lower costs or differentiate.

Definition: Process of altering & improving OR creating entirely new products or procedures.
Significance
• Creates competitive advantage, fills unmet market or social needs.
• Can be product, process, marketing, organisational, or business-model innovation.
Tesla case study (2022)
• Electric powertrain.
• Navigate on Autopilot & automatic lane change.
• Summon command & Autopark.
• Integrated clean-energy ecosystem (batteries, solar roof).
Additional real-world examples
• Gin distilleries shifting to hand sanitiser during COVID.
• Wrinkle-free organic suits.
• Electric vehicles replacing petrol engines.
Non-example (per MCQ): Rebranding an existing soft drink (cosmetic, not genuine innovation).

Definition: Collective values, beliefs & views of the general public. (Best MCQ choice: Option B)
Why businesses must align
• Consumer purchasing choices increasingly values-based.
• Employee attraction/retention linked to corporate purpose & ethics.
Contemporary shifts
• Environmental consciousness → demand for sustainable packaging, waste minimisation, carbon neutrality.
• Digital transparency → requirement for active social-media presence, online shopping, instant customer feedback.
• Workforce trends (Generation Z)
– Digital natives and social-media heavy.
– Purpose driven, free-thinking, creative.
– Seek work-life balance, flexibility, career advancement.
Practical responses
• Eco-friendly packaging, ethical sourcing, CSR initiatives.
• Public reporting (ESG metrics).
• Flexible work policies, meaningful mission statements.

Driving forces rarely act alone; they intertwine. Example: Technology enables globalisation, which intensifies competition, forcing innovation while public societal attitudes favour ethical tech use.
KPI Connections (Unit 3 & 4)
• $\text{Market Share} = \frac{\text{Business Sales}}{\text{Total Industry Sales}} \times 100\%$ – impacted mainly by competitor actions.
• $\text{Net Profit}$ – affected by cost reductions, tech efficiencies, legal compliance costs.
Ethical & philosophical implications
• Balancing automation with job losses.
• Global supply chains vs fair labour practices.
• Innovation in AI & data privacy vs consumer rights.
Exam tip: When evaluating a driving force, always link:
1. Definition
2. Mechanism of pressure
3. Business example
4. Resulting change & KPI impact

Competitors → ignore them and you lose market share.
Legislation → compulsory driver.
Globalisation → increased trade & cultural exchange via tech/transport advancements.
Technology → best response is to invest & keep up.
Innovation → Rebranding ≠ true innovation.
Societal Attitudes → best definition is collective values, beliefs & views of society.

[ ] Scan industry for competitor moves weekly.
[ ] Maintain legal compliance register; schedule audits.
[ ] Monitor global trends & FTAs for export/import opportunities.
[ ] Develop technology roadmap aligned with strategy.
[ ] Establish an innovation pipeline (R&D spending, intrapreneur programs).
[ ] Survey stakeholders annually to track societal attitude shifts & adjust CSR/HR policies accordingly.