Unit 4, Aos 1

Question 1

Business Change

Answer 1

the alteration of behaviours, policies and practices of a business

Question 2

Proactive approach

Answer 2

when a business changes to avoid future problems or take advantage of an opportunity to gain a competitive advantage

Question 3

proactive eg

Answer 3

o Recognising change in market trends
o Investing in new technology
o A business fulfilling a gap in the market

Question 4

Reactive approach

Answer 4

when a business undertakes change in response to a situation or crisis

Question 5

Reactive eg

Answer 5

o E.g a business may incur a data breach that is well-covered in the media, requiring the business to swiftly take appropriate action, with less input of ideas and respond to the situation to restore its reputation
o A competitor introducing a new product that is taking a large portion of market share
o A controversial problem is headlined in the media

Question 6

Similarities reactive proactive

Answer 6

• Utilised by a manager to business to implement change
• Involve undertaking change for future benefits, such as growth, progression and to improve/restore its brand image
• Require support of the manager, who must utilise management and leadership skills if the change is to be implemented successfully
• Can be used to respond to stakeholder conflicts

Question 7

Proactive v reactive

Answer 7

PROACTIVE
* Business takes advantage of an opportunity to avoid future problems
* Often involves use of low-risk strategies
* More planned, coordinated and controlled with fewer pressures acting on the business throughout the change
REACTIVE
* Occurs in response to a situation or crisis that is essentially forcing the business to change
* Usually involves use of high-risk strategies
* More spontaneous, urgent and pressured

Question 8

Key Performance Indicators (KPI)

Answer 8

criteria that measure a business’s efficiency and effectiveness in achieving its different objectives

Question 9

KPIs EG

Answer 9

percentage of market share
net profit figures
rate of productivity growth
number of sales
number of customer complaints
rates of staff absenteeism
level of staff turnover
number of workplace accidents
level of wastage
number of website hits

Question 10

Force Field Analysis (Lewin)

Answer 10

a theoretical model that determines if businesses should proceed with a proposed change

Question 11

Driving forces

Answer 11

factors affecting the business environment that promote and support business change

Question 12

Restraining forces

Answer 12

factors that resist a business change of actively try to stop it

Question 13

FFA steps

Answer 13

weighting
ranking
implementing a response
evaluating the response

Question 14

FFA: weighting

Answer 14

the process of scoring and attributing a value to the driving and restraining forces

Question 15

FFA: ranking

Answer 15

involves arranging the forces in order of value and determining the total score of driving and restraining forces

Question 16

FFA: Implementing a response

Answer 16

An action plan that details what needs to be done, who is responsible, the resources required and deadlines for task completion can be created to support the implementation of change

Question 17

FFA: evaluating the response

Answer 17

Involves determining whether or not the change has been successfully implemented, comparing the actual change to the anticipated change and determining whether further action needs to be taken

Question 18

FFA +

Answer 18

+ May lead to a change being more likely to be successful, positively affecting employee morale
+ Businesses can save money only implementing change where success is likely

Question 19

FFA -

Answer 19

• Can be time-consuming if a business is already aware of the need for mandatory change
• Conducting the analysis will require business resources, at a cost to the business

Question 20

Driving Forces

Answer 20

factors affecting the business environment that promote and support business change

Question 21

Owners as a Driving Force

Answer 21

• Make large-scale decisions for the future and possible expansion of the business
• Vested interest in the ability of their business to meet its objectives and continue to adapt
• Personal interest in its longevity and success
• Owners may actively seek out and support change in order to remain competitive in the business’s rapidly and continuously changing environment
• Driving force for change if they believe change will be beneficial to future business performance

Question 22

Managers as a Driving Force

Answer 22

• Ensure business performance is optimised and objectives are being achieved
• Overseeing implementation of policies and procedures in daily operation as well as the long-term goals
• Managers are concerned with their job security and financial incentives
• Both their approach to management role and their personal interest can guide the business to seek opportunities for change

Question 23

Employees as a Driving Force

Answer 23

• Responsible for achieving the business’s objectives
• Personal interest in the performance of the business, given it provides them with work and income
• Focus on working conditions, training, wage and benefits that business can offer them
• Improve processes within the business where they discover opportunities for improved productivity

Question 24

Pursuit of Profit as a Driving Force

Answer 24

• Encouraged to implement changes that improve their financial performance
• Undertaking change, a business may be better able to fulfil other obligations, such as providing returns to its shareholders
• Businesses must be willing to explore new opportunities to change in order to remain profitable
• Therefore, the pursuit of profit can act upon a business as a driving force for change

Question 25

Reduction of Costs as a Driving Force

Answer 25

* Businesses may implement change to improve efficiency and effectiveness and reduce unnecessary costs that may arise in business processes * Strategies that reduce wastage or improve productivity can reduce a business’s cost, and this often leads to an increase in a business’s net profit figures * Able to source materials from a cheaper supplier or relocate to benefit from less expensive rent as a means of reducing costs and improving profit

Question 26

Competitors as a Driving Force

Answer 26

* Fails to compete within its respective market it will struggle to survive * It is important that all businesses respond appropriately to changes made by rival firms * When competitors change prices, use new technology, or run advertising campaigns this can affect the performance of other businesses on the market * Driving force for change as a business must always adapt to remain competitive

Question 27

Legislation as a Driving Force

Answer 27

* Business may be forced to change if new legislation is introduced * A business will have no choice to change the way it operates * As current laws are constantly being amended and new laws are continuously being introduced, legislation is a constant driving force for change

Question 28

Globalisation as a Driving Force

Answer 28

the process by which governments, businesses, and people across the globe are becoming more interconnected, allowing for increased international trade and cultural exchange * Existence of free trade means businesses are operating in a single global market and constantly facing pressure from international competition * Finding more efficient and cheaper ways to produce their products * Cultural globalisation is a driving force for change as it provides opportunities for businesses to expand to new countries

Question 29

Technology as a Driving Force

Answer 29

* Constantly progressing, driving force for change * Increase efficiency and effectiveness of their operations cutting costs and improving overall productivity

Question 30

Innovation as a Driving Force

Answer 30

* Constant pressure from competitor’s businesses should always aim to improve existing products and services or introduce new ones * Many businesses will continuously innovate their products or procedures in order to increase sales and market share * Since businesses are always looking for ways to improve their products to gain a competitive edge, innovation will always act as a driving force

Question 31

Societal Attitudes as a Driving Force

Answer 31

* Ensure that their operations align with societal attitudes and behaviours * Internet has made it easier for society to be more aware of how businesses are operating, meaning that failure to adapt to the changing environment can result in the business losing sales and profits * Increased societal concerns have caused businesses to become more eco-friendly

Question 32

Restraining Forces

Answer 32

are factors that resist a business change or actively try to stop it

Question 33

Managers as a Restraining Force

Answer 33

* Often introduce change * May be a restraining force if they are unwilling to introduce a business change if they do not support the change * Managers may not support a change if they do not believe the change will be beneficial for the business’s performance, or if the proposed change threatens their position * Difficult to overcome as they are essentially in charge of the business, hence negotiating a compromise or alteration to the initial proposal may be necessary

Question 34

Employees as a Restraining Force

Answer 34

* May resist a business change if the outcome is uncertain, they fear they cannot adapt, it affects their job security or work routine, or they fail to see a reason for the change * Employees may even actively oppose these changes by carrying out industrial action * Managers usually have to persuade or create incentives for the proposed changes to be adopted, often needing to demonstrate key leadership and management skills

Question 35

Legislation as a Restraining Force

Answer 35

* Ensure they comply with business laws and regulations to avoid fines, suspensions or even closure * Prevent a business from implementing change and thus act as a restraining force

Question 36

Organisational Inertia as a Restraining Force

Answer 36

is the tendency for a business to maintain established ways of operating * Difficult for change to occur if businesses have been operating a certain way for such a long time * When a business matures and grows in size, processes and procedures often have to be made consistent to promote efficiency in operations * A business may have to change leadership, restructure the business or create work environments that promote new directions

Question 37

Time as a Restraining Force

Answer 37

* Business change often has to be completed before, after or within a certain time period * Time restrictions may be due to other restraining forces, such as legislation deadlines and financial pressures, or other driving forces, such as competitors and societal attitudes * Change is progressively implemented in stages or another business is engaged to assist with implementing the change

Question 38

Financial Considerations as a Restraining Force

Answer 38

* Costs may be associated with equipment, redundancy packages, training, and/or reorganisation of the business * A business must ensure it has enough funds to carry out the proposed change

Question 39

Porter’s Generic Strategies

Answer 39

lower cost strategy differentiation strategy

Question 40

Porter’s lower cost strategy

Answer 40

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

Question 41

PLCS +

Answer 41

+ Attractive cost-conscious customers + Business operations are optimised and must remain efficient to maintain low costs of production + Reduces the expense of operations

Question 42

PLCS -

Answer 42

- Standardised or basic products may not meet the needs of customers who have specific needs - Customers are not loyal to particular brands, if another business were to offer a cheaper alternative, these customers would likely switch to the new business immediately

Question 43

Porter differentiation strategy

Answer 43

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

Question 44

PDS +

Answer 44

+ Customers are often loyal to the business because of unique product features or services not offered by competitors + Quicker sales from loyal customers when new products or services from the business are introduced + Can charge premium prices for products as customers cannot purchase the product elsewhere

Question 45

PDS -

Answer 45

- Can be difficult to prevent competitors from replicating points of differentiation - Higher-selling prices can deter cost-conscious consumers

Question 46

PLCS v PDS

Answer 46

* LC sells at similar or lower prices than competitors whereas D sells at premium prices * LC targets cost-conscious consumers whereas D targets consumers that are not price-sensitive * LC internal focus on operating processes whereas D external focus on meeting customer needs

Question 47

PDS PLCS similarities

Answer 47

* Increase a business’s profitability by providing a competitive advantage