AOS 4 - The need for change

Question 1

Business change

Answer 1

Is the alteration of behaviors, policies & practices of a business

Question 2

key performance indicators

Answer 2

are criteria that measure how efficient & effective a business is at achieving different objectives

Question 3

percentage of market share

Answer 3

measures a business’s proportion of total sales in a specific industry expressed as a percentage

Question 4

net profit figures

Answer 4

calculated by deducting total expenses incurred from total revenues earned over a period of time

Question 5

number of sales

Answer 5

the number of goods & services sold by a business within a specific time period

Question 6

number of customer complaints

Answer 6

the number of customers who have notified the business of their dissatisfaction

Question 7

rates of staff absenteeism

Answer 7

the average number of days employees aren’t present when scheduled to be at work for a specific period of time

Question 8

level of staff turnover

Answer 8

the percentage of employees that leave a business in a year & have to be replaced

Question 9

number of workplace accidents

Answer 9

measures the number of injuries & unsafe incidents that occur at a work location over a period of time

Question 10

level of wastage

Answer 10

the number of inputs & outputs that are discarded during the production process

Question 11

rate of productivity growth

Answer 11

the increase in outputs produced from a given level of inputs over time

Question 12

force field analysis theory

Answer 12

is a model that determines if businesses should proceed with a proposed change. This model identifies & examines factors that promote or hinder the change from being successful

Question 13

driving forces

Answer 13

are forces outside the business’s environment that promote change

Question 14

restraining forces

Answer 14

are factors within or outside the business’s environment which resist change

Question 15

STEP 1 - identify the need for change

Answer 15

Businesses face internal or external pressures to change what must be altered to fulfill business objectives and reduce these pressures

Question 16

STEP 2 - identify driving forces

Answer 16

which internal & external factors promote the proposed change

Question 17

STEP 3 - identify restraining forces

Answer 17

which factors resist the proposed change

Question 18

STEP 4 - assign scores

Answer 18

determine the strength of each driving & restraining force by assigning numerical scores that are based on their level of influence on the proposed change

Question 19

STEP 5 - analyze & apply

Answer 19

add up scores of driving forces & compare it to total of restraining forces.

Question 20

force field analysis - A & D

Answer 20

A

• business can examine if the proposed change will be successful
• Businesses can potentially save time by promoting the main driving forces & limiting the main restraining forces
• Businesses can potentially save money by only implementing change where success is likely

D

• emps may be unhappy if driving forces exceed restraining forces & change still occurs
• can be time-consuming especially if a business must go ahead with a change.

Question 21

internal driving forces

Answer 21

are the forces that the business has control over & are relevant to the internal environment

Question 22

external driving forces

Answer 22

are factors that exist outside of the business that must be responded to in order to remain competitive

Question 23

managers as a driving force

Answer 23

• vested interest because business performance impacts their financial & job security
• managers will act as an internal driving force as they’re incentivized to push for change that’ll help the business to achieve its objectives
• the achievement of objectives will reflect a positive performance improving a mangers job security to financial benefits

Question 24

employees as a driving force

Answer 24

• in return for their contribution employees have expectations of competitive wages, supportive working conditions
• as such, any proposed change that can improve the working conditions of employees will see them become a driving force

Question 25

pursuit of profit as a driving force

Answer 25

- opportunities to improve financial performance will often encourage a business to change - additionally, that'll make a business better able to fulfill its obligations such as providing a return to shareholders

Question 26

reduction costs as a driving force

Answer 26

- strategies that reduce wastage or improve productivity can reduce a business's costs & improve its profitability as often this'll lead to an increase in a business's net profit margin - a business may be able to source materials from a cheaper supplier to move their locations to benefit from cheaper rent as a means of reducing costs & improving profits

Question 27

competitors as a driving force

Answer 27

- if a business fails to compete within its respective market, it'll struggle to survive - competitors changing prices using new tech or running advertising campaigns can affect the performance of other businesses in the market - this makes competitors a driving force for change as a business must always try to remain competitive

Question 28

tech as a driving force

Answer 28

- if a business fails to adopt suitable tech may impact its ability to compete & survive - as tech is constantly progressing always acts as a driving force for change

Question 29

societal attitudes as driving forces

Answer 29

- society is more aware of how businesses are operating because of the internet as a result companies need to align operations with societal attitudes & changes - the rise of online shopping forced businesses to develop an online presence - an increasing trend of individuals becoming health conscious has driven many businesses to create new healthy product ranges

Question 30

legislation as a driving force

Answer 30

- if current operations breach new legislation businesses will have no choice but to change the way they operate - Businesses will always need to comply with legislation making it a constant driving force

Question 31

innovation as a driving force

Answer 31

- with constant competitor pressure businesses are always improving existing products & services or introducing new ones - many businesses will continuously innovate their products or procedures in order to maintain sales & market share

Question 32

globalisation as a driving force

Answer 32

- businesses are now operating in a single global market meaning all businesses face the pressure of international competition - increased international competition means that businesses need to find more efficient ways to operate - if a business fails to recognise that they're competing in a global market it'll likely not survive

Question 33

restraining forces

Answer 33

are internal & external factors that resist a business change or actively try & stop it

Question 34

managers as a restraining force

Answer 34

managers may be unwilling to introduce a business change f they don't support the change or it threatens their position

Question 35

employees as a restraining force

Answer 35

- employees may resist a business change if the outcome is uncertain it affects their job security or they fail to see a reason for the change - employees may even actively oppose these changes by carrying out industrial action - to overcome employees as a restraining force managers often have to persuade or create incentives for the proposed change to be adopted

Question 36

legislation as a restraining force

Answer 36

- a business must consider the types of legislation that apply to any proposed business change - to overcome a legislative restraining force a business may have to apply for licenses obtain permits or even change contracts & agreements

Question 37

time as a restraining force

Answer 37

- such as legislation deadlines or financial pressures | - if time has been identified as a restraining force a business may have to find ways to alter the time restrcition

Question 38

financial considerations as a restraining force

Answer 38

- a business must ensure that it has enough funds to carry out the proposed change - if the business cannot finance the change it'll need to explore different ways of obtaining the required funds

Question 39

organizational interia

Answer 39

the tendency for a business to maintain established ways of operating

Question 40

organizational interia as a restraining force

Answer 40

- when a business matures & grows in size processes & procedures often have to be made consistent to promote efficiency in operations - as staff become familiar & comfortable with these structures attempts to make changes can be difficult

Question 41

porter's lower-cost strategy

Answer 41

is 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

Question 42

charge similar prices to competitors -

Answer 42

experiences higher profit margins than competitors because the business has the lowest cost of operations

Question 43

charge slightly lower prices than competitors -

Answer 43

maintains a higher profit margin than competitors by keeping the price decrease smaller than the business's cost advantage

Question 44

charge much lower prices than competitors

Answer 44

thin profit margins are outweighed by a high volume of customer sales gained from significantly lower prices

Question 45

a business can achieve the lowest cost of operations by

Answer 45

- reducing internal operating costs | - reducing costs of supplies

Question 46

porter's lower-cost strategy - A

Answer 46

A - attractive to cost-conscious customers - business operations optimized & must remain efficient & effective to maintain lower costs of operations - reduce expenses of operations

Question 47

porters differentiation strategy

Answer 47

offers customers unique services or product features that are perceived value to customers which can then be sold at a higher price than competitors

Question 48

a business can create a point of differentiation for their product or service by

Answer 48

- implementing innovations - introducing new tech - niche marketing

Question 49

porters differentiation strategy - A

Answer 49

A - customers are often loyal to brand because unique - employees may feel increased sense of pride - quicker sales from loyal customers - can charge premium process for products or services as a customer cannot purchase elsewhere

Question 50

porters differentiation strategy - D

Answer 50

D - can be difficult to prevent competitors from replicating - new employees may require additional training to adapt - higher investments of the money such as research to develop innovative products - higher selling prices can deter some customers

Question 51

porter's lower-cost strategy - D

Answer 51

D - customers aren't brand loyal, and competitors offer cheaper alternatives - fewer employees required as work tasks may be merged, employees may feel stressed - thin profit margins & reliance on low operating costs can leave a business vulnerable to unforeseen increases in expenses

Question 52

Lower costs vs differentiation

Answer 52

LC - sells at similar of lower price - target s costs conscious customers SAME - increases business's profitability by providing competitive advantage D - sells at premium prices - targets customers that aren's price sensitive

Question 53

contemporary case study - Costco | porter's generic strategy

Answer 53

most of the revenue through sail operates with a thin profit margin of around 2%, still, able o generate significant profit. reducing operating costs - purchasing stock directly from manufacturers - $0 advertising budget - purchasing large amounts of stock lower prices than competitors significantly lower than industry average