Business Change
What is Business Change?
Business change is an alteration to a business which includes the adoption of new ideas or behaviors aiming to in some way improve the business.
What are Key Performance Indicators?
specific criteria used to measure the efficiency and/or effectiveness of a business's performance.
Outline the force field analysis.
The model describes how a business can determine which forces drive and which forces resist a proposed change. The driving and restraining forces impacting a business need to be identified. Once identified, they are given a 'score' reflecting their importance to the change process. This process then leads into the development of an action plan. An action plan allows the forces to be prioritized, so it can be decided which restraining forces to deal with first and which driving forces to promote and encourage.
Describe competitors as a driving force for change.
The opening of a new business that will compete with an existing business may cause the existing business to undergo change to stay current and relevant to their customers.
Describe legislation as a restraining force for change.
Legislation as a restraining force occurs when the legislation places restrictions on certain operational practices and procedures.
For example, the ACCC, which has the power to prevent a merger from occurring between two businesses.
Outline having proactive approach to change.
A proactive approach to change refers to the situation where a change is planned and occurs before a business is affected by pressures in their environment.
List the 10 KPI's.
Net profit figures, Percentage of market share, Number of website hits, rate of staff absenteeism, level of staff turnover, level of wastage, number of sales, number of workplace accidents, rate of productivity, and number of customer complaints.
List the driving forces.
Innovation, societal attitudes, owners and managers, employees, competitors, legislation, pursuit of profit, reduction of costs, globalization, technology.
Describe pursuit of profit as a driving force for change.
If profit is not sufficient to satisfy objectives then the business may undertake a change to assist it in meeting those objectives.
Outline porter's generic strategy.
The theory attempted to explain how businesses may seek future growth by pursuing a competitive advantage over other businesses.
A reactive approach to change occurs when a change is unplanned, and takes place after the business has been affected by the pressures from it's environment.
What is rate of staff absenteeism?
Measures the number of workers who do not turn up for work when they are scheduled to do so.
List the restraining forces.
Managers, time, organizational inertia, employees, legislation, financial considerations.
Describe managers as a restraining force for change.
- Some managers make hasty decisions that are poorly timed and unclear.
- Other managers may be indecisive and put off making a decision, creating uncertainty.
- A manager may lack the experience and skills to oversee a transformation.
What is differentiation strategies?
A business will make their product different, unique or superior in some way to gain a competitive edge and allow the business to market itself as a leader or innovator in that industry.
e.g., high-quality products.
Describe legislation as a driving force for change.
Laws can be passed that require a business to stop doing something or to start doing something, therefore its a driving force for change.
What is level of staff turnover?
Measures the number of staff who are leaving the business and need to be replaced.
Describe owners and managers as a driving force?
Managers must ensure that dividends are paid to shareholders and so a healthy profit is needed. Managers will be under pressure to push for changes that will lead to a better outcome and more efficient achievement of business objectives.
Describe employees as a restraining force for change.
- Fear of loosing their job and this can lead to staff resisting the change.
- Major change can lead to the breakdown of the existing corporate culture. This can create a feeling of mistrust and suspicion among employees.
What is lower cost strategies?
Porter highlights that if businesses want to gain a competitive advantage, they can do so by lowering production costs so then they can sell products at a lower price.
Describe technology as a driving force for change.
Technology allows a business to operate its processes and practices more efficiently and effectively, cutting costs and improving productivity. As such, technology, and any advances in technology, should be considered as a driving force for change.
What is productivity?
A measure of performance that indicates how many inputs it takes to produce an output.
Describe employees as a driving force for change.
Employees working in an innovative environment, where ideas are shared and acted on, are likely to recommend changes to policies, production processes or products.
Describe financial considerations as a restraining force for change.
Financial costs of change include:
- purchasing new equipment.
- retraining the workforce.
The high cost of change will often affect the profit margin of a business. To maintain profit, the business may consider raising prices. This acts as a restraining force as competitors may not be facing the same pressures and businesses don't want to price themselves out of the market.