U4 AOS 1 Reviewing performance – the need for change

• Business change

  is the alteration of behaviors, policies, and practices of a business.
• A proactive approach

  is when a business changes to avoid future problems or take advantage of an opportunity to gain a competitive advantage.
• A reactive approach

  is when a business undertakes change in response to a situation or crisis.
• Key performance indicators (KPIs)

  are criteria that measure a business’s efficiency and effectiveness in achieving its different objectives.
• Percentage of market share (KPI)

  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 (KPI)

  are calculated by subtracting total expenses incurred from total business revenue earned, over a specific period of time.

  
  

  Net profit figures = Total revenue − Total expenses
• Rate of productivity growth (KPI)

  is the change in the total output produced from a given level of inputs over time, expressed as a percentage figure.
• Number of sales (KPI)

  is the total quantity of goods and services sold by a business over a specific period of time.
• Number of customer complaints (KPI)

  is the number of customers who notified the business of their dissatisfaction over a specific period of time.
• Rates of staff absenteeism (KPI)

  are 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  (KPI)

  is the percentage of employees that leave a business over a specific period of time and must be replaced.
• Number of workplace accidents  (KPI)

  measures the amount of injuries and unsafe incidents that occur at a work location over a specific period of time.
• Level of wastage  (KPI)

  is the amount of inputs and outputs that are discarded during the production process.
• Number of website hits  (KPI)

  is the amount of customer visits that a business’s online platform receives for a specific period of time.
• Force Field Analysis

  Is a theoretical model that determines if businesses should proceed with a proposed change.
• Driving forces

  Are factors affecting the business environment that promote and support business change.
• Restraining forces

  Are factors that resist a business change or actively try to stop it.
• Weighting

  Is the process of scoring and attributing a value to the driving and restraining forces.
• Ranking

  Involves arranging the forces in order of value and determining the total score of driving and restraining forces.
• Force field Analysis steps

  Step 1 – Defining the change.

  Step 2 - Identify the Driving and Restraining Forces.

   Step 3 - Analyse the Forces and Provide Weighting and Ranking.

  Step 4 – Develop an Action Plan and Implement Response.

  Step 5 - Evaluate the Response.
• Efficiency

  Is how productively a business uses its resources when producing a good or service.
• Effectiveness

  Is the extent to which a business achieves its stated objectives.
• Porters 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.