Flashcards in Unit 4 AOS 1 Deck (77)
Business change is the alteration and adaption of behaviours, policies and practices of a business.
Why may a business want to implement business change?
Businesses can choose to adapt and evolve in order to increase business performance in varying areas in order to achieve business objectives and goals
Key Performance Indicators (KPI)
Key performance indicators (KPIs) are criteria that measure how efficient and effective a business is at achieving different objectives.
Percentage of market share
Percentage of market share measures a business’s proportion of total sales in a specific industry, expressed as a percentage.
Equation: Total sales/Total industry sales=MS%
What does the Percentage of market share indicate?
Percentage of market share highlights how well a business is performing within their industry. A high percentage of market share shows that the business has a large share of total industry sales relative to competitors. A low percentage of market share shows that the business has a small share of total industry sales.
Net profit figures
Net profit figures are calculated by deducting total expenses incurred from total revenues earned over a period of time.
Equation: Total revenue - total expenses (or turnover) = Net profit ($)
What does net profit figures indicate?
It can indicate the health of the business and the levels of profits being produced in order for future business growth. Too much expenses that are inhibiting profits can indicate negative health whereas high profits indicate a financially healthy business.
Number of sales
Number of sales is the amount of goods and services sold by a business within a specific time period.
Equation: Number of sales
Number of customer complaints
Number of customer complaints is the amount of customers who have notified
the business of their dissatisfaction.
Why may a business implement KPI's?
As all businesses seek to improve performance the implementation of KPI's allows a business to review its performance from a set of data. This can then allow for a business to assess the performance levels of a business and identify if business change needs to occur to improve performance.
--> identify performance levels
--> See if business change needs to occur
--> in order to effectively and efficiently improve the business
Why may a buisness identify the percentage of market share?
Percentage of market share highlights how well a business is performing within their industry. Where the amount of sales within the industry identify the competitiveness of the business.
A high percentage of market share shows that the business has a large share total industry sales relative to competitors resulting in increased sales which can therefore meet business objective. A low percentage of market share shows that the business has a small share of total industry sales.
Why may a buisness need to identify net profit figures?
In order for a buisness to grow and survive the business must examine net profit figures in order to identify revenue and expenses and which areas need improvement to increase profit margin and ensure business health.
Why may a manager need to identify the number of sales?
A manager may examine the number of sales to assess how well the business’s goods and services are selling.
A high number of sales indicates that customers
are satisfied with the quality and price of the good or service the business is providing.
In contrast, a low number of sales may show that customers are becoming dissatisfied with the quality or price of goods or services, or competitors may be offering better goods or services.
Through the identifying the number of sales it can identify if a business needs to implement change in order to increase the number of sales.
Why may a buisness need to identify the number of customer complaints?
A manager may examine the number of customer complaints at a business to
assess the level of customer satisfaction. A low level of customer complaints
indicates that customers are satisfied with the goods and services being
provided. In contrast, a high level of customer complaints indicates that
customers are not satisfied with the goods and services. Complaints may be in
regard to the quality or price of the goods and services a business offers.
Rates of staff absenteeism
Rates of staff absenteeism is the average number of days employees are not present when scheduled to be at work, for a specific period of time. This can be calculated through number of absent staff days divided by number of staff
Why may a manager examine rates of staff absenteeism?
A manager can use this as an indicator of staff morale where a high staff absenteeism can indicate less motivated and unsatisfied working conditions. This can result in additional expenses and halts in business operations due to lack of staff therefore a manager can then find methods and strategies to reduce staff absenteeism in order to improve the business.
Staff morale is the collected attitudes, satisfaction and overall outlook that employees have of the workplace. Staff morale can influence a business’s productivity,
workplace safety, attendance and staff turnover.
Level of staff turnover
Level of staff turnover is the percentage of employees that leave a business in a year and have to be replaced.
Equation: number of staff leaving in a year/total number of staff x100=%
Why may a manager examine the levels of staff turnover?
A manager can assess the levels of staff turnover which can indicate levels of morale within a business. A business with low levels of staff turnover can display levels of satisfaction within the business, work conditions and management styles.
Likewise high levels of staff turnover can indicate employee dissatisfaction which can increase business expenses through replacing and recruiting new employees and reduce productivity through having insignificant employees within a business.
Number of workplace incidences
Number of workplace accidents measures the amount of injuries and unsafe incidents that occur at a work location over a period of time.
Why may a manager examine the number of workplace incidences?
A human resources manager is concerned with the number of workplace accidents occurring at a business since it is their responsibility to ensure the
safety and well being of employees.
A high number of workplace accidents reflects an unsafe workplace. This can affect staff morale and increase the rates of staff absenteeism and level of staff turnover. A high number of workplace accidents also makes the business undesirable for prospective employees.
Levels of wastage
Level of wastage is the amount of inputs and outputs that are discarded during the production process.
Why may a manager examine the levels of wastage?
An operations manager would be concerned with a high level of waste at any stage of the production process. High levels of wastage often increases the
amount of raw materials or time required to produce a product or service. This waste then increases the expenses of the business which reduces the
profit of the business.
Rate of productivity growth
Rate of productivity growth is the increase in outputs produced from a given level of inputs over time.
Why may a manager examine the rates of productivity growth?
A manager may examine rates of productivity. A high rate of productivity growth shows that a business has improved its efficiency. A business that can produce more for the same level of inputs is more efficient and therefore also more profitable.
In contrast, a lower
level of productivity would mean slower rate of growth for the business.
Force field anaylasis
Force field analysis theory is a model developed by Kurt Lewin that determines if businesses should proceed with a proposed change.
This model identifies and examines factors which promote or hinder the change from being successful through identifying factors that will influence change.
What are the two key principles of Lewins Force Field analysis?
Driving forces are factors within or outside the business’s environment which promote change.
Restraining forces are factors within or outside the business’s environment which
These principles act as main factors which influence business change and establish the basis of Lewin’s force field analysis theory.
Lewin’s force field analysis process. Step one
Identify need for change. Businesses face internal or external pressures to change.
Lewin’s force field analysis process. Step two
Identify driving forces. Which internal and external factors promote the proposed change