Need for change

Question 1

What is business change?

Answer 1

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

Question 2

What are the two types of Business changes and include examples?

Answer 2

Minor for large businesses (e.g., new equipment)

Major for small businesses (e.g., hiring extra staff)

Question 3

What are some factors that can cause change in a business?

Answer 3

Consumer tastes

Employee expectations

Technology updates

New work practices or management structures

Question 4

Why do managers review business performance?

Answer 4

To determine whether objectives are being achieved efficiently and effectively, enabling informed decisions, improvements, competitive advantage, and meeting stakeholder expectations.

Question 5

What is proactive change?

Answer 5

When a business initiates change before being impacted by pressures from its internal or external environment.

Question 6

How can businesses manage proactive change?

Answer 6

Conducting regular market research to stay informed about trends.

Encouraging innovation from employees.

Identifying potential issues early by monitoring KPIs and acting before problems grow.

Question 7

What are two advantages of proactive change?

Answer 7

Helps maintain or gain competitive advantage by staying ahead.

Allows better planning and preparation, reducing resistance and disruption.

Question 8

What are two disadvantages of proactive change?

Answer 8

Involves risk as changes are based on predictions that might not happen.

Can waste time and resources if anticipated pressures don’t emerge.

Question 9

What is reactive change?

Answer 9

Reactive change is when a business implements change in response to pressures from its internal or external environment after they have already occurred.

Question 10

How can businesses manage reactive change?

Question 11

What are two advantages of reactive change?

Answer 11

Based on actual data and events, reducing unnecessary changes.

Can be more cost-effective since action is taken only when needed

Question 12

What are two disadvantages of reactive change?

Answer 12

May cause lost opportunities or competitive disadvantage due to delayed response.

Can lead to rushed decisions, poor communication, and higher employee resistance.

Question 13

Why is managing change critical for a business?

Answer 13

Managing change helps a business maintain a competitive advantage by generating greater sales, margins, or customer retention through lower costs and unique products.

Question 14

What are some negative consequences of poorly managed change?

Answer 14

Employee resistance

Anxiety and tension

Lost productivity

Question 15

What are Key Performance Indicators (KPIs)?

Answer 15

Tools used to measure and evaluate a business’s performance in terms of efficiency and effectiveness.

They help drive continuous improvement and justify strategic change.

Question 16

What is the difference between efficiency and effectiveness in business?

Answer 16

Efficiency = How well resources are used to achieve goals (e.g., minimal waste, lower costs).

Effectiveness = How well a business achieves its objectives (e.g., profit, growth, customer satisfaction).

Question 17

What does the KPI ‘Percentage of Market Share’ measure?

Answer 17

It refers to the proportion of sales a business has compared to the total industry sales, expressed as a percentage.

Question 18

How does Percentage of Market Share affect efficiency and effectiveness?

Answer 18

Efficiency: Limited direct impact, but may reflect efficient marketing or operations.

Effectiveness: Directly measures if financial goals (like profit) are being met.

Question 19

What does the KPI ‘Net Profit Figures’ measure?

Answer 19

The amount of money left over after all expenses have been deducted from revenue earned

Question 20

What impact do Net Profit Figures have on efficiency and effectiveness?

Answer 20

Efficiency: Increased profit often reflects efficient cost and resource management.

Effectiveness: Directly measures if financial goals are achieved.

Question 21

What is meant by the ‘Rate of Productivity Growth’ KPI?

Answer 21

Productivity is a measure of performance that indicates how many inputs (resources) it takes to produce an output (goods or services).

Question 22

How does the Rate of Productivity Growth affect efficiency and effectiveness?

Answer 22

Efficiency: Higher productivity means more output per input, increasing efficiency.

Effectiveness: Helps meet production and delivery goals.

Question 23

What does the KPI ‘Number of Sales’ measure?

Answer 23

It measures of the amount of goods or services sold by the business in a period.

Question 24

What effect does Number of Sales have on efficiency and effectiveness?

Answer 24

Efficiency: Sales achieved without increasing input indicates higher efficiency.

Effectiveness: Shows how well customer and sales objectives are met.

Question 25

What does 'Rates of Staff Absenteeism' measure?

Answer 25

It measures the number of workers who do not turn up for work when they are expected to be there.

Question 26

What is the impact of Rates of Staff Absenteeism on efficiency and effectiveness?

Answer 26

Efficiency: Higher absenteeism lowers productivity, reducing efficiency. Effectiveness: Negatively affects meeting deadlines and service quality.

Question 27

What does 'Level of Staff Turnover' indicate?

Answer 27

It measures the number of staff who are leaving the business and need to be replaced.

Question 28

How does Level of Staff Turnover affect efficiency and effectiveness?

Answer 28

Efficiency: High turnover increases training and recruitment costs, lowering efficiency. Effectiveness: Reduced morale and stability harm overall performance.

Question 29

What does the KPI 'Level of Wastage' refer to?

Answer 29

Refers to resources that are underutilised or discarded during production process

Question 30

What is the impact of Level of Wastage on efficiency and effectiveness?

Answer 30

Efficiency: More waste is a direct indicator of inefficiency. Effectiveness: Affects environmental, CSR, and profit goals.

Question 31

What does the KPI 'Number of Customer Complaints' measure?

Answer 31

It refers to the number of customers who contact the business to express their disappointment with the business — the goods or service purchased, the quality, price or the customer service received.

Question 32

How do Number of Customer Complaints influence efficiency and effectiveness?

Answer 32

Efficiency: Handling complaints uses time and resources, reducing efficiency. Effectiveness: Fewer complaints indicate better customer satisfaction.

Question 33

What does 'Number of Website Hits' measure?

Answer 33

Measures the number of times individuals visit a business’s website

Question 34

What is the effect of Number of Website Hits on efficiency and effectiveness?

Answer 34

Efficiency: More hits without sales can mean inefficient marketing spend. Effectiveness: More hits increase brand awareness and chances of achieving sales goals.

Question 35

What does 'Number of Workplace Accidents' refer to?

Answer 35

Refers to any unplanned events causing injury or property damage reported at the workplace.

Question 36

How do Number of Workplace Accidents impact efficiency and effectiveness?

Answer 36

Efficiency: More accidents cause interruptions and higher costs, lowering efficiency. Effectiveness: Poor safety reduces employee morale and productivity.

Question 37

How should you respond to KPI questions in exams?

Answer 37

1. Identify and describe the KPI and what it measures. 2. Describe trends over periods (increase, decrease, steady). 3. Use structured responses: effect of…, reason for…, similarity/difference between…, advantage/disadvantage, and result of change.

Question 38

What is a Force Field Analysis ?

Answer 38

oForce Field Analysis is a model that helps businesses assess the driving and restraining forces impacting a proposed change. oChange occurs when driving forces outweigh restraining forces.

Question 39

What are the types of forces?

Answer 39

oDriving Forces: Push for change (e.g., competition, technology, legislation, managers). oRestraining Forces: Resist change (e.g., employee fear, poor communication, lack of resources).

Question 40

What are the Key Steps in force field analysis?

Answer 40

a.Identify and define the target of change b.Identify driving and restraining forces. c.Weighting: Assign each force a score (1–5) based on its strength/impact. d.Ranking: Prioritise top forces to focus on (usually 3–5). e.Develop an action plan for each action. f.Evaluating the Response- have we strengthened driving forces or weakened restraining forces

Question 41

What is an action plan?

Answer 41

An action plan turns your Force Field Analysis into practical steps that guide a business through change. It helps ensure that change is organised, accountable, and effective.

Question 42

What are three examples of Action Plans?

Answer 42

Context: A business needs to implement change such as automation or restructuring. Example Actions: *Communicate the reason for the change to employees to reduce uncertainty (low-risk strategy). *Provide training to staff to support the transition. *Monitor performance indicators to assess the success of the change. Context: A manufacturing business wants to reduce waste and increase productivity. Example Actions: *Implement Just In Time to reduce inventory holding costs. *Introduce lean management principles like one-piece flow or takt time. *Upgrade to an automated production line to improve consistency and speed. Context: A business wants to improve its environmental sustainability. Example Actions: *Use local, ethically sourced inputs to reduce carbon emissions. *Introduce a recycling program for packaging waste. *Publish an annual sustainability report to increase transparency.

Question 43

What are two advantages of Force Field Analysis?

Answer 43

*Managers can assess whether the benefits of a change outweigh the drawbacks, allowing for better decision-making. *Helps a business find and build up the driving forces (support for change) and reduce the restraining forces (barriers to change).

Question 44

What are two disadvantages of Force Field Analysis?

Answer 44

*Some forces (factors) may be missed or not clearly seen at the time of analysis. *The scores (weights) given to each force can be biased or based on opinion.

Question 45

What is driving forces?

Answer 45

Driving forces work to encourage, foster and support change.

Question 46

What are the 11 driving forces that push for change in a business.

Answer 46

1. Managers 2. Employees 3. Competitors 4. Legislation 5. Pursuit of Profit 6. Reduction of Costs 7. Globalisation 8. Technology 9. Innovation 10. Societal Attitudes 11. Owners

Question 47

How do each of the 11 driving forces that push for change in a business?

Answer 47

Managers- Initiate and implement change by setting strategic goals, identifying inefficiencies, or responding to threats and opportunities. Their leadership and vision are essential to driving transformation. Employees- When engaged and motivated, employees can suggest innovations, support cultural shifts, and improve productivity, which encourages business change from the ground up. Competitors- Competitive pressure forces a business to innovate, reduce costs, improve quality, or adopt new technology to maintain or grow market share. Legislation- Changes in laws (e.g., OH&S, environmental standards, employment law) force businesses to adapt their practices to remain compliant and avoid penalties. Pursuit of Profit- If profits decline or could be increased, a business may implement changes in cost structures, operations, marketing, or product lines to maximise returns. Reduction of Costs- High expenses push businesses to streamline operations, outsource, adopt lean management or automation to improve efficiency. Globalisation- Global competition and access to international markets drive businesses to expand overseas, source cheaper inputs, or adopt world-class practices. Technology- Advancements push businesses to adopt new tech (e.g., automated production lines, AI, e-commerce) to stay relevant and competitive. Innovation- The drive to develop new products, services or processes motivates change to create a competitive advantage or respond to market needs. Societal Attitudes- Changes in public values (e.g., environmental sustainability, diversity, work-life balance) push businesses to adopt more CSR-oriented practices and adapt culture and branding. Owners- Can push for change when they seek greater return on investment, long-term growth, succession planning, or alignment with personal values (e.g. sustainability).

Question 48

What is Restraining Forces?

Answer 48

Restraining forces are those that work against or hinder change, creating resistance.

Question 49

What are the 11 driving forces that push for change in a business.

Answer 49

1.Social Attitudes 2. Pursuit of Profit 3. Reduction of Costs 4. Managers 5. Employees 6. Legislation 7. Competitors 8. Organisational Inertia

Question 50

How do each of the 8 restraining forces that resist change in a business?

Answer 50

Social Attitudes- If a proposed change clashes with public values (e.g. environmental concerns, fair labour practices), the business may face consumer backlash or damage to brand reputation Pursuit of Profit- While profit drives change, it can also hold back investment in initiatives that reduce short-term profits (e.g. CSR projects, training programs, expensive tech upgrades). Reduction of Cost- If the focus is on extreme cost-cutting, the business may resist changes that require investment (e.g., hiring skilled staff, implementing new systems). Mangers- Managers may resist change if they fear loss of control, extra workload, or simply disagree with the proposed strategy. Employees- Employees often resist change due to fear of job loss, skill gaps, or cultural shifts. Legislation- Laws can limit or delay change. For example, changes in structure or operations may breach employee rights, zoning, or environmental regulations. Competitors- If competitors dominate a new market, a business may feel discouraged from pursuing that change due to high risk or low chances of success. Organisational Inertia- Inertia can lead to complacency, resistance to new technologies, and delayed responses to external threats or opportunities—ultimately hindering innovation and adaptation.

Question 51

What is the purpose of Porter's generic strategies and state the two categories?

Answer 51

Purpose is to increase competitive advantage. 1. Lower Cost 2. Product Differentiation

Question 52

What is Porter's strategy lower cost?

Answer 52

Definition: Lower cost involves a business seeking to become the business with the lowest costs in its industry.

Question 53

What are some strategies a business could use to achieve lower cost?

Answer 53

Reducing Direct and Indirect Costs – Reducing direct and indirect costs lowers expenses by cutting wages, sourcing cheaper suppliers, and minimising utility and packaging costs. This creates a competitive advantage by attracting price-sensitive customers and increasing market share. Improving Efficiency – Improving efficiency lowers expenses by streamlining operations—such as reducing idle stock or increasing customer turnover (e.g., in a restaurant). This creates a competitive advantage by maintaining profitability while competing on price. Controlling Management Responsibilities – Controlling management responsibilities lowers expenses by identifying waste and inefficiencies across departments such as operations, finance, and HR. This creates a competitive advantage by ensuring consistent cost control and long-term operational sustainability.

Question 54

What are two advantages and two disadvantages of lower cost strategies?

Answer 54

Advantages: 1. A business can increase its profitability because it earns more profit per unit sold. 2. It may block competitors from gaining market share if they can’t match the business’s low costs or prices. Disadvantages: 1. Customers might think the product is poor in quality, leading to reduced sales. 2. Competitors may also adopt a low-cost strategy, reducing the business’s competitive edge.

Question 55

What is Porter's strategy product differentiation?

Answer 55

Definition: This is creating a unique and desirable goods/services to make your business different from competitors.

Question 56

What are some strategies a business could use to achieve product differentiation?

Answer 56

High-Quality Products – Offering high-quality products lowers the risk of customer dissatisfaction by ensuring goods are more durable, reliable, and supported by strong after-sales service such as warranties. This creates a competitive advantage by building brand loyalty and reducing customer sensitivity to competitor pricing. Innovation – Developing innovative products lowers the likelihood of market saturation by introducing unique features or solutions that are not yet available. This creates a competitive advantage by allowing the business to charge premium prices, build customer loyalty, and limit direct competition.

Question 57

What are two advantages and two disadvantages of product differentiation strategies?

Answer 57

✅ Advantages: Customer Loyalty – Unique features or services help the business better meet customer needs, increasing satisfaction and repeat purchases. Ability to Charge Premium Prices – If customers see added value, the business can charge higher prices, increasing revenue and potentially profit margins. ❌ Disadvantages: Imitation by Competitors – Rival businesses may copy the unique features, reducing the business’s point of difference. Higher Costs and Time Investment – Developing and maintaining differentiation can be expensive and time-consuming, with no guarantee of success.