OUTCOME 1

Question 1

Define business change

Answer 1

The concept of business change refers to transitioning individual employees, working teams , functions or the whole business to a new state of operation. Change can take many forms from being widespread and impacting on every area of business through to just small changes in one key area.

Question 2

List five examples of business change

Answer 2

• a new manager coming in and changing traditional management style
• moving production overseas to take account of cheaper labor rates
• changing products to better suit customer needs
• changing the motivation strategies you use with your employees
• change input supplier

Question 3

Define efficiency

Answer 3

Efficiency refers to how well a business uses the resources needed to achieve an objective. The most efficient use of resources occurs when benefits are greater than the costs of resources to achieve a goal.

Question 4

Define effectiveness

Answer 4

Effectiveness indicates to what degree a business has accomplished the objectives it set out to achieve. Being effective means ‘doing the right things’, to reach a set objective.

Question 5

Define Key Performance Indicators (KPI)

Answer 5

KPI’s are criteria used as measure of the success or the efficiency and effectiveness of a particular area of the business’s performance. They can also provide data that drive change for a business. KPI’s draw on information taken from a variety of sources; such as number of sales, rate of productivity growth, net profit figures, level of staff turnover, level of wastage, number of customer complaints and number of workplace accidents.

Question 6

Define percentage of market share

Answer 6

Percentage of market share refers to the business’s share of the total industry sales for a particular good or service, expressed as a percentage.. It is calculated by dividing a business’s sales (from that market) by the total sales of all business in that market and expressing it as a percentage. This KPI directly links to the common business objective; ‘to increase market share’.

Question 7

Define net profit figure

Answer 7

Net profit figure is what remains when expenses related to operating the businesss are deducted from the revenue earned. Net profit is often referred to as the ‘bottom line’, and is often used as a key performer indicator because it directly links to the common business objective; ‘to make a profit’.

Question 8

define rate of productivity growth

Answer 8

Rate of productivity growth is the change in productivity in one year compared to that of the previous year. This is used as a key performance indicator because an increased in productivity indicates that the business is using resources more efficiently.

Question 9

Define productivity

Answer 9

Productivity is a measure of performance that indicates how many inputs (resources) it takes to produce an output (goods or services). Productivity is a measure of efficiency that is used by the operations and human resources function.

Question 10

Define number of sales

Answer 10

The number of sales of a product is a measure of the number of goods or services (products) sold. Measuring the number of sales helps a business evaluate its performance, especially its marketing strategies.

Question 11

Define rate of staff absenteeism

Answer 11

The rate of staff absenteeism measures the number of workers who neglect to turn up for work when they are schedules to so do. This can suggest that employees are at interviews with other businesses, taking a ‘sickie’ or using up their allotted days off rather than be at work.

Question 12

Define level of staff turnover

Answer 12

The level of staff turnover measures the number of staff leaving the business and can be used as an indicator of the degree of staff satisfaction. An increasing level of staff turnover is a negative warning sign for the human resource function as it may suggest employees are dissatisfied working for the business, therefore an action plan would be implemented, if necessary, in response to this indicator, .

Question 13

Define level of wastage

Answer 13

The level of wastage measures the amount of waste created by the production process. This performance indicator is used by the operations function as a business manages more efficiently by reducing waste which can cut production costs.

Question 14

Define number of customer complaints

Answer 14

The number of customer complaints indicates whether or not customers are satisfied with the performance of the business. Customer complaints can lead to a loss of customers (sales) and profits and can impact business performance, especially if posted online for other potential customers to view.

Question 15

Define number of workplace accidents

Answer 15

The number of workplace accidents indicates how safe the workplace is for employees, this is a performance indicator that is important to both the human resources and the operations function. This key performance indicator may also suggest how the business is performing in other areas, as an unsafe workplace can impact productivity as well as employee morale and motivation.

Question 16

Define benchmarking

Answer 16

Benchmarking occurs when a business measures its performance against that of other leading business known for their excellence. This is a method which when completed can be used as a basis for improvements.

Question 17

What are the links between 7 KPI’s and business objectives?

Answer 17

NUMBER OF SALES: increase sales
RATE OF PRODUCTIVITY GROWTH: improve productivity
PERCENTAGE OF MARKET SHARE: increase market share
NUMBER OF WORKPLACE ACCIDENTS: meet safety standards
RATE OF STAFF ABSENTEEISM: improve employee satisfaction
RATE OF STAFF TURNOVER: improve retention of eployees

Question 18

What are the two types of KPI’s?

Answer 18

• non financial: performance indicators that are not necessarily evident in the financial statements of an organisation. These include the level of customer satisfaction, employee turnover, product quality and level of innovation.
• financial: Performance indicators based in the organisations financials statements (cash flow, financial performance and financial positions). This includes profitability, return on investment and growth in share prices.

Question 19

Define quantitative measures

Answer 19

objective measures based on collected numeric data such as the number of complaints, dollar costs of inputs or percentage increase in sales. This data provides statistical and logical information regarding a particular area of the business that is being researched.

Question 20

Define qualitative measures

Answer 20

Qualitative measures is subjective measures based on the opinions of a group. For example, measure of employee morale or customer satisfaction.

Question 21

explain why business’s use key performance indicators

Answer 21

• examine how their company has been performing against business objectives
• determine whether their business are using resources most efficiently and examine whether budgets and forecasts are being met
• business becomes aware of areas in need of improvement therefore are able to implement change to improve
• allows business to determine how departments, individual staff and work teams are performing against benchmarks or other standards

Question 22

Examples of KPI’s (adidas, woolworths, qantas)

Answer 22

ADIDAS (australia):
- number of employees at year end (staff turnover):
2017: 56,888
2018: 57,016
- average length in service employees (staff turnover):
2017: 4 years
2018: 4 years
WOOLWORTHS:
- supplier feedback:
- ranked 2nd in dealing with suppliers in a fair and equitable manner
- ranked first in overall performance with suppliers improving from 11th in 2016
- earnings before interests and taxes:
- 2018: $2,548,000,000 (increased by 9.5% from 2017)
QANTAS:
- level of wastage (water usage in Australian Qantas services):
2017: 902,545,000 L
2018: 895,100,000L

Question 23

EXAMPLE for a new program, focus or movement in direction a business is making (QANTAS and WOOLWORTH AS EXAMPLES)

Answer 23

• QANTAS in 2016 partnered with Tesla by allowing electric vehicle owners to charge their vehicles at Qantas’s valet facilities
• WOOLWORTH in 2018 initiated a ‘pick up’ service (consumers ordered their products online and picked up at stores) which resulted in sales growth of over 100%, now representing a quarter of online orders.

Question 24

Define societal attitudes as a driving force for change

Answer 24

Changing societal attitudes, morals and values can serve as a driving force for change. Through technology, people are more aware of what businesses are doing and can pressure them into adopting different practices, such as preserving the natural environment.

Question 25

Define innovation as a driving force for change

Answer 25

Innovation is a process whereby something that exists is improved upon. Innovation such as mobile phones, wireless internet and social media has driven businesses to develop their own Facebook pages to connect with their customers or to develop their own smart phone apps.

Question 26

Define technology as a driving force for change

Answer 26

All businesses can take advantage of technology in order to improve their operations in various areas therefore it should be considered a driving force for change. Some business may need to implement technology to remain competitive, an example would be Amazon prime implementing drone technology in order to deliver their goods to consumers, this may cause Australia post to consider implementing this change also, in order to remain competitive.

Question 27

Define globalization as a driving force for change

Answer 27

Globalization is the movement across nations of trade, investment, technology, finance, and labor brought about by the removal of trade barriers. Australian businesses need to compete on an international level and therefore globalization acts as a driving force for change so businesses can remain viable and competitive.

Question 28

Define pursuit of profit as a driving force for change

Answer 28

If profit is not high enough and the business is looking to increase profits, changes will need to be made, thereby acting as a driving force for change. These changes may include marketing campaigns, expansions or new product lines.

Question 29

Define managers as a driving force for change

Answer 29

Managers will push for changes that result in a better outcome for the business. A positive relationship between managers and employees will allow for a smoother transition for change.

Question 30

Define employees as a driving force for change

Answer 30

Employees can be innovative and contribute ideas to assist with he change process. Employees in a positive and supportive culture are more likely to serve as a driving force for change and offer less resistance.

Question 31

Define competitors as a driving force for change

Answer 31

- the opening of a new business will force existing businesses to undergo change to remain relevant - pricing policies of one competitor may force a business to reduce their own prices to remain competitive - adoption of new production technologies to improve efficiency may cause a business to follow suit - advertising campaign, sales and development of online presence by competitors can drive change in an business

Question 32

Define legislation as a driving force for change

Answer 32

New laws can force a business to change in order to comply. Legislation can change at a federal, state or local level. For example, changes to penalty rates in some industries.

Question 33

Define reduction of costs as a driving force for change

Answer 33

Rising costs impact negatively on profit therefore businesses may undertake change in order to reduce costs. Reducing costs can help a business become more profitable.

Question 34

List 10 driving forces for change

Answer 34

- globalization - pursuit of profit - managers - employees - competitors - legislation - reduction of costs - societal attitudes - innovation - technology

Question 35

Define driving forces

Answer 35

Driving forces are those that initiate or support a business change and push the business towards a new desired state. Some driving forces may include societal attitudes, managers, innovation and competitors. These forces must be strengthened in order to ensure a successful outcome from the implemented change.

Question 36

Define legislation as a restraining force for change

Answer 36

Compliance with legislation can be a restraining force for change as legislation can restrict some operational practices and procedures. For example, a mining company wants to exploit a new mineral resource and has to do it with limitation of environmental protection legislation.

Question 37

Define financial considerations as a restraining force for change

Answer 37

The financial cost of implementing change can be a restraining force. Businesses must weigh up the costs and benefits of implementing the change. Some financial costs that have to be considered as a result of change include purchasing new equipment, redundancy payments, restraining workforce and reorganizing plant layout for new equipment.

Question 38

Define managers as a restraining force for change

Answer 38

Managers can act as a restraining force if they make decisions that are hasty, poorly timed or unclear. By being indecisive and putting off decisions managers act as a restraining force, furthermore a negative relationship with employees or lack of employee consultation may lead to managers acting as a restraining force. - autocratic or persuasive management styles may result in poor communication and increased employee resistance.

Question 39

Define employees as a restraining force for change

Answer 39

Employees may be a restraining force as they may be worried that they cannot adapt to new procedures and the change in routine, especially if training is not provided. Furthermore, employees who do not feel part of the change are more likely to resist it.

Question 40

Define time as a restraining force for change

Answer 40

If the change occurs quickly then businesses may not have time to plan efficiently which may impact how stakeholders accept the change that has occurred. Additionally, if the timing is poor businesses may spend millions only to find that the environment has changed and the change is no longer applicable.

Question 41

Define organisational inertia as a restraining force for change

Answer 41

Organisational inertia is an unenthusiastic response from management to a proposed change. Some managers resist change because it required moving outside of their comfort zone. Many employees and managers want a safe and predictable status quo, therefore this can act as a restraining force against change.

Question 42

Define restraining forces

Answer 42

Restraining forces are forces that make change more difficult. These forces counteract driving forces and lead to the avoidance or resistance of change. These forces, once identified must be weakened if the change is to be implemented.

Question 43

List six restraining forces

Answer 43

- managers - legislation - financial considerations - employees - time - organisational inertia

Question 44

List the steps to conducting a force field analysis

Answer 44

1. define the change and form a group of people to drive or enable it 2. use the force field analysis diagram to identify driving and restraining forces 3. analyse the forces and rank them from 1 to 5 4. identify the restraining forces which can be eliminated and the driving forces which can be promoted 5. develop action plan on what can be changed

Question 45

Define force field analysis

Answer 45

The process of identifying and analyzing the forces that will drive and those that will resist a proposed change. If the restraining forces are too strong, the business will find it difficult to implement the change successfully. To counter restraining forces, stakeholders will drive the change.

Question 46

Outline the benefits of using a force field analysis

Answer 46

- managers are able to identify and analyse the forces for and against the change - helps to determine if the change is worth pursuing - allows manager to develop ways of reducing restraining forces ie. training may overcome staff resistance - allows actions and timeline to be made - identifies stakeholders that will likely be supportive of the change and those who will resist - helps to identify challenges that lie ahead so that a business can plan to strengthen the forces supporting the decision and take the necessary steps to reduce or eliminate forces opposing it - helps to characterize the nature of the change; is it positive or negative.

Question 47

an example of an action plan that could be implemented after a force field analysis to weaken restraining forces

Answer 47

- train staff to minimize their fear of technology - raise wages to encourage productivity - show staff new machinery would introduce variety and interest to their jobs

Question 48

Driving forces, restraining forces (for the banning of plastic bags at coles and woolworths)

Answer 48

DRIVING: - pursuit of profit: increased profit margin - societal attitudes - competitors: other supermarkets are beginning to be more environmentally friendly RESTRAINING: - customer resistance: find the change inconvenient - organisational inertia: moves business out of comfort zone as they now have to deal with new issues and tasks, may want the status quo and see no problem with how the business runs currently

Question 49

Coles selling "ugly fruit" at a discounted price (may 2019 VIC and SA) : DRIVING and RESTRAINING FORCES and KPI's that could be used to evaluate the success of change

Answer 49

``` DRIVING: - reduction of costs/wastage - pursuit of profit - competitors: coles is able to provide consumers with a cheaper alternative to fresh vegetables and fruit RESTRAINING FORCES: - legislation: the output still has to be of a safe and suitable quality, despite being classified as 'second class' products - organisational inertia - financial considerations: new machinery and/or staff might have to be implemented KPIS: - number of sales - net profit - market share - level of wastage - number of customer complaints ```

Question 50

What are the five competitive forces and what are they used for?

Answer 50

- rivalry among competitors - entry of new competitors - bargaining power of buyers - bargaining power of suppliers - threat of substitutes The five competitive forces must be assessed so that a business can see what they can take advantage of and which of porters generic strategies is most suitable for them. To successfully change and gain a competitive advantage businesses need to react to these forces.

Question 51

Define porter's lower cost strategy

Answer 51

The lower cost strategy is one of porters generic strategies where a competitive advantage is gained through reducing or altering costs of the business without negatively impacting the value to the end consumers, while selling their products at or near industry average. This can be done through strategies such as controlling the supply chain, lowering cost of operating and using assets more efficiently.

Question 52

Describe three strategies to lower costs (in relation to porters lower cost)

Answer 52

USE ASSETS EFFICIENTLY: - minimize idle stock, do not stock product that do not sell. In a restaurant for example, turn over tables quickly allowing more customers to come in. LOWER COSTS OF OPERATING: - source supplies from cheaper suppliers, minimize wage costs, source cheaper utility suppliers, offer minimal packaging CONTROL THE SUPPLY CHAIN: - seek contract with suppliers and delivery businesses that guarantee prices. Implement stock management systems such as just in time to reduce costs.

Question 53

Define competitive advantage

Answer 53

Competitive advantage is when a company produces goods or services at a lower price or in a more desirable fashion for customers than competitors. In reference to porter's generic strategies there are two strategies that can be used to achieve a competitive advantage (a business must only choose to pursue one) ; lower costs strategy and differentiation strategy.

Question 54

Define differentiation strategy

Answer 54

Differentiation strategy is one of porters generic strategies used by a business to gain a competitive advantage through offering features or aspects in regards to their good/service that is unique to its customers and different to what competitors are offering. By implementing this strategy, businesses are able to charge a premium price for their product.

Question 55

Define product differentiation

Answer 55

The use of brand names and advertising to establish difference between substitutable products. Product differentiation can lead to a business gaining a competitive advantage as they differ themselves from competitors and consumers are willing to pay premium price for a good/service that offers a unique or superior experience.

Question 56

Some strategies that can be used to implement the differentiation strategy (porter)

Answer 56

- making the product more durable - providing better customer support - extended warranties - different brand within the same market (ie. qantas and jetstar)

Question 57

Define 'porters generic strategies' theory

Answer 57

Porters theory attempts to explain how businesses manage change as they attempt to gain a competitive advantage. Before choosing to implement one of porters two strategies, lower costs strategy or differentiation strategy, the business must look at and asses their own strengths based on the five competitive forces (supplier power, buyer power, threat of substitutes, threat of new entrants and competitive rivalry).

Question 58

Identify and outline the different types of change

Answer 58

RADICAL CHANGE: - Radical change refers to major alteration of the business that is often initiated by critical events. For example a merger is a critical event that could result in major changes for the business. INCREMENTAL CHANGE: Incremental change refers to small changes that occur more frequently and help to improve some aspects of the business without shifting major aspects. For example, new systems, new products or the implementation of new policy. PLANNED CHANGE: Planed change is where a manager decides on a specific course of action to alter the business in some way to assist the business in the future. This change may occur when there's a gap in performance in aim to rectify the situation. UNPLANNED CHANGE: Unplanned change occurs randomly and may be disruptive to the business.Management have to adapt quickly to unplanned changes in order to minimize negative effect. An example of unplanned change would be a major strike by employees which takes management by surprise.

Question 59

Briefly summarize how to assess each competitive force

Answer 59

``` SUPPLIER POWER: how easy is it for the supplier to drive up the price? Number of suppliers of key inputs? How unique are the resources? how many suppliers in the industry? BUYER POWER: how easy is it for the buyer to drive down the price? the number of buyers and importance of buyers THREAT OF SUBSTITUTES: - the buyer going to a substitute product - buyer ability to substitute - how does the substitute compare - switching costs THREAT OF NEW ENTRANT: - barriers to entry - economies of scale (bulk purchasing is cheaper) - brand loyalty - access to distribution channels COMPETITIVE RIVALRY: - number of competitors - diversity of competitors - industry growth - quality difference - brand loyalty ```

Question 60

Define value chain

Answer 60

refers to all activities performed by a business to design, produce, market, deliver and support its product. These activities may be altered when implementing a lower cost strategy including transportation, economies of scale, decreasing operation costs, introducing lean production strategy and reviewing materials management strategy (possible implementing Just In Time).

Question 61

Positives and negatives of lower costs strategy

Answer 61

POSITIVES: - beneficial where customers are price sensitive - company with lowest cost earns the highest profits in the event when the competing products are essentially undifferentiated and selling at a standard market price - increase in market share due to lowering prices NEGATIVES; - reducing cost becomes the focus and the quality and value may be affected and company may lose vision of their purpose - competitors may copy how the business is reducing their costs

Question 62

Difference between broad and narrow (porters theory)

Answer 62

BROAD: larger target audience NARROW: small target audience BROAD + costs (as a competitive advantage): cost leadership BROAD + differentiation (as a competitive advantage): differentiation leadership NARROW + costs ( as a competitive advantage): cost focus NARROW+ differentiation ( as a competitive advantage): differentiation focus

Question 63

What does a differentiation strategy require to be successful

Answer 63

- good research, development and innovation - the ability to deliver high quality goods and services - effective sales and marketing, so that the market understand the benefits offered by the differentiation offering - procurement: purchasing premium inputs - patents: protecting a products uniqueness

Question 64

Positives and negatives of differentiation strategy

Answer 64

POSITIVES: - can charge a premium price for its product or services in the market - makes it difficult or expensive for rivals to replicate the business's good or service NEGATIVES: - extra costs such as market research, high advertising spending - firm has to estimate if the extra costs can be recovered through premium pricing - your strategy may attract competitors to enter the companies market segment and copy - may not appeal to cost sensitive customers

Question 65

Steps in choosing the right generic strategy

Answer 65

1. conduct a SWOT analysis (strengths, weaknesses, opportunities and threats), conducted at regular intervals to gauge the current position and the impact of any further changes 2. use the five force analysis: to understand the nature of the industry in which they operate 3. compare the SWOT analysis with the five force analysis- to determine the best strategy for the business to gain the competitive advantage when looking at the information gathered in the swot analysis, a business should be asking itself if it can overcome any of the issues found in the force field analysis

Question 66

Similarities and differences between lower cost and differentiation strategy

Answer 66

SIM: - both aim to gain a competitive advantage - both look to maximize profit DIF: - lower costs is reducing expenses whilst charging industry average prices to max. profits vs differentiation will generally have higher expenses which they can pass on to the consumer (premium prices) as it makes the good or service unique - differentiation looks to make the good or service unique vs lower costs which is offering their product or service with no frills at industry price

Question 67

Similarities and differences between lewins force field analysis and porters generic strategy

Answer 67

SIM: - both conduct an analysis (lewin: driving and restraining, porter: 5 competitive forces) - both use external forces; both consider competitors as an effector on the change - both look at many factors when considering change DIF: Porters is proactive as it looks at gaining a competitive advantage in the future through strategic management vs lewins which is reactive as it is responding to KPI's and driving and restraining forces to create an action plan - lewins focuses on driving and restraining forces for change where as porters focuses on gaining a competitive advantage