Unit 4 AOS 1

• Business Change


  The adoption of a new idea or behaviour resulting in a difference in the form or operation of a business over time
• Proactive Change


  To initiate change rather than simply to react to events
• Reactive Change


  To wait for a change to occur and then respond to it
• KPIs - Percentage of Market Share

  The percentage of an industry or markets total sales that is earned by a particular company over a specified time period
• KPIs - Net Profit

  What the company has earned after all expenses are deducted
• KPIs - Rate of Productivity Growth


  Measures the efficiency of a production process; the percentage increase in productivity over time
• KPIs - Number of Sales


  Refers to the measure of the total customers that bought a good or service in a given reporting period
• KPIs - Level of Staff Turnover

  The amount of employees leaving the business in a period of time as a percentage of the total number of employees in that business
• KPIs - Level of Wastage


  The amount of stock either as a raw material or during processing is discarded
• KPIs - Number of Customer Complaints

  The recorded number of individuals who report a defect, fault, or issue in the good or service they purchased
• KPIs - Number of Workplace Accidents

  The recorded number of worker or customer related injuries that occur in a business
• Force Field Analysis


  Kurt Lewin. Outlines the process of determining which forces drive and which resist a proposed change
• Benefits of a Force Field Analysis


  - Businesses are able to weigh up the 'for's and against' and whether the change is worth undertaking

  - Allows a business to identify and strengthen the driving forces supporting the change and to take action to reduce/eliminate restraining forces
• Driving Forces


  Those forces that initiate, encourage and support the change - they work to assist the business in achieving its goal. E.g. increase revenue, increase market share
• Restraining Forces


  Those that work against the change, creating resistance - they hinder the achievement of the goal. E.g. damage corporate image, upset business partners
• Driving Forces - Managers

  Managers make decisions about the future direction of the business. They share their vision and try to get others inspired to change by being role models
• Driving Forces - Employees

  Can drive change through innovation, place demands on the business to change conditions, policies and processes
• Driving Forces - Competitors

  Competition can drive a business to implement changes to gain a sustainable competitive advantage
• Driving Forces - Legislation


  Changes to laws can force a business to implement change, legislation can change at federal, state or local level. E.g. new penalty rates, wages
• Driving Forces - Pursuit of Profit

  If profit levels of a business are not as high as its goal, they need to make changes to either generate more revenue or decrease their costs to earn more profit
• Driving Forces - Reduction of Costs


  If costs are rising then profit will be negatively impacted and may drive the business to change
• Driving Forces - Globalisation

  This process of operating has been strengthened by globalisation and so businesses that don't recognise they are competing in a world market may find themselves left behind
• Driving Forces - Technology

  Technology allows a business to operate its processes and practices more efficiently and effectively, cutting costs and improving productivity.
• Driving Forces - Innovation

  Adopting something new or improving what already exists, is a major source of competitive advantage for businesses and therefore a strong driving force for change
• Driving Forces - Societal Attitudes

  Society's attitudes are constantly changing, businesses that fail to keep up with these attitudes risk falling behind. E.g. ageing workforce, increased participation of women in the workforce
• Restraining Forces - Managers


  Changes that threaten to eliminate jobs usually face strong resistance. E.g. most business restructuring involves the elimination of middle management positions
• Restraining Forces - Employees


  Any change to a business and its operating procedures will eventually impact on the level and type of staffing. The introduction of a major change, such as a merge or acquisition, may result in a complete breakdown of existing corporate culture
• Restraining Forces - Time


  Sometimes there is not enough time allowed for people to think about the change, accept it, and implement it
• Restraining Forces - Organisational Inertia


  Refers to the management's inactivity or lack of response when faced with proposed changes. Some managers resist change as it requires moving outside their 'comfort zones
• Restraining Forces - Legislation


  Must be complied with. This occurs when the legislation places restrictions on certain operational practices and procedures. E.g. mining company wanting to exploit a new mineral resource, must do so within limitations of current environmental protection legislation
• Restraining Forces - Financial Considerations

  Include cost and revenue issues for a business. Financial costs of change include: purchasing new equipment, redundancy payments, retraining the workforce
• Porter's Generic Strategies


  Is a theory that attempts to explain how businesses may manage change as they attempt to achieve a competitive advantage
• Competitive Advantage


  Occurs when a business has a lower cost price structure than its rivals. The concept can also be extended to product quality, range and flexibility adopting to new market trends
• Porter's Generic Strategies - Theory

  The theory is that to gain a competitive advantage, businesses need to evaluate their strengths and act upon those strengths.
• Porter's Generic Strategies - 5 Forces

  - The entry of new competitors

  - The threat of substitutes

  - The bargaining power of buyers

  - The bargaining power of suppliers

  - The rivalry among existing competitors
• Force Field Analysis - Action Plan


  The forces listed are allocated a numerical score. The score ranges from 1-5, with 5 being more important forces.

  Allows forces to be prioritised, so it can be decided which restraining forces to remove first and which driving forces to promote and encourage.