KPI-ay Caramba!
How do you calculate Net Profit?
Total Revenue - Total Expenses
Define driving forces
factors or forces in the businesses environment that promotes a change to occur
Define restraining forces
Restraining forces are factors that discourage or hinder the change a business is trying to implement
What are Porters two categories of competitive advantage ?
Cost Advantage & Differentiation advantage
What is the aim of Lewin's force field analysis?
The force field analysis is a tool that can be used by businesses to determine which forces drives and which forces restrain a proposed change
Name one Non-Financial KPI
Level of wastage, Level of staff turnover, No. of customer complaints, Rate of staff absenteeism, No. of workplace accidents
Describe how owners and managers can be a driving force for change?
In a small business, they drive change as as they are in control of maintaining sales, profit, market share and customer base.
In a larger-scale business, managers push for changes that will ensure that dividends are paid to shareholders are profits are made.
How may managers be a restraining force?
Managers may also restrain change if they do not implement change in a timely and efficient manner that employees support
They also may not wish to support change as they see it as a threat to their own position, power or role.
Name one lower cost strategy
Reducing direct and indirect costs, improving efficiency & controlling areas of management responsibility
What is a benefit of the force field analysis?
Decides if change is worth it, allows identification of strengths, identify if training is needed, visual aid can support communication
Differentiate between Financial & Non-Financial KPIs
Financial KPIs measure a $ figure, whereas non-financial are a numerical number
How can employees be a driving force for change?
They drive changes as they believe it will be better for the business and their long term employment.
If employees support change, it usually means the change will be successful as they are the ones who implement the change
How can employees be a resisting force?
Employees may restrain changes as it can lead to job losses or a decrease in job security.
If the employees do not understand the change this can also cause them to fear it and therefore not wish to implement the change
Name a differentiation strategy
High quality products, Multiple branding, Innovation and development
What is a limitation of a force field analysis
Subjective, doesn't consider unexpected events, may require more training, may miss some forces
What does the Rate of Productivity Growth measure?
The business’s ability to transform inputs into outputs. The rate of change, increasing or decreasing, gives the rate of growth
How can competitors be a driving force for change?
They drive change for other businesses as they have to compete in their marketplace to maintain market share.
If a competitor is outperforming a business, the need to create changes to regain their competitive advantag
How can legislation be a restraining force?
Laws that are complex usually are restraining forces to change, as the harder it is for a business to implement change due to law, the harder is it for the change to occur
What is one advantage of lower cost strategies
May be more profitable, can stop competitors increasing market share, save money to allow expansion
What are the Key principles of Force Field Analysis
Consider the factors that may drive the change
Consider the factors that are restraining the change
Identify the influence of these factors and their weight to impact the changes that are wanting to be introduced
Name one Strategy you may use to improve staff turnover
Choice of manager, communication, support and encouragement
How can innovation be a driving force for change?
Innovation drives businesses as they can create new or improved products, allowing for the business to gain competitive advantages as they have a product that others do not
What is organisational Inertia?
Organisation inertia is when a business remains still or moves in a constant direction at a constant speed, not responding to change
What is a disadvantage of differentiation strategies?
Rival business can copy - stops any advantage (Temu), High initial cost, can be time consuming
What are the steps to completing a force field analysis?
1. Identify the forces that are driving or restraining change
In this step managers need to score the strength of the force from 1-5, 1 being low strength and 5 being the strongest
Step 2. Prioritise the most influential forces
Take note of the top 3-5 most restraining forces and the top 3-5 driving forces. This shows the business what areas they need to eliminate and what they need to strengthen
Step 3. List actions required to implement a response
Business will create actions that are required to complete the proposed change and passing responsibility for each action
Step 4. Evaluate the response