Change
Define change
An alteration to a business and/or it's work environment.
Identify 5 KPIs
Percentage of market share
Number of sales
Net profit figures
Level of wastage
Rate of productivity growth
Level of staff turnover
Rate of staff absenteeism
Number of workplace accidents
Number of customer complaints
Number of website hits
Define driving force and restraining force.
Driving forces are those factors that are pushing in a particular direction and supporting the goal or proposed change.
Restraining forces are factors that act against the driving force to resist the change e.g. employees, time, financial considerations.
Identify the two generic strategies suggested by Porter.
Lower cost
Differentiation
What change hasoccured at Woolworths?
- Introduction of scan&go trolley
Define proactive change.
A change that is planned and occurs before a business is affected by pressures in their environment.
A business has just launched a new website. Identify one KPI that could measure its effectiveness.
Number of website hits.
Identify the 4 principles of the Force Field Analysis
Weighting
Ranking
Implementing a response
Evaluating a response
What does Porter suggest that these strategies allow a business to achieve?
A competitive advantage.
Justify if Woolworths has been proactive or reactive in their approach?
Woolworths has been proactive in introducing this change:
The plan was well planned and not reactive. It started as a trial with 10 stores in NSW in 2024 and has been slowly expanded to more stores after positive customer uptake.
They have filled a gap in the market by identifying a change in market trends. Customers are seeking convenient ways to shop in their busy lives.
Provide an example of how reactive change could come about.
Observing the actions of competitors, then seeking to implement similar processes to ensure that the business remains competitive. Dealing with a crisis
Justify two KPIs that could be used to measure employee morale.
Level of staff turnover - if turnover is low it suggests that morale is high and staff want to keep working in the business.
Rate of staff absenteeism - if rate of staff absenteeism is low it indicates that staff morale is high and staff are happy to regularly come to work.
What is involved in the 'weighting' step of a force field analysis?
Identifying the driving and restraining forces for change. Scoring and attributing a value to the driving and restraining forces e.g. a numerical score between 1 (low score) to 5 (high score).
A strategy that involves a business offering customers similar or lower priced products compared to the industry average, whilst remaining profitable by minimising expenses.
- Net profit figures - 10.5% decrease from FY24
- Number of sales - slow growth only 1.2% increase from FY24
Distinguish between proactive and reactive change.
The key difference is that proactive change occurs before a business has been affected by pressures in their environment, whereas reactive change occurs after a business has been affected by pressures in their environment.
Why do businesses use KPIs?
- Businesses can make major strategic decisions using the information they have collated from KPIs.
- KPIs are often used as the evidence a business uses to identify they need to change.
- To evaluate if a change has been successful.
Explain two driving forces for change.
Managers
Competitors
Pursuit of profit
Globalisation
Innovation
Legislation
Reduction of costs
Pursuit of profit
Technology
Societal attitudes
Owners
How could a business adopt the differentiation strategy?
High quality materials, products and services
Effective marketing and promotion strategies e.g. Red Bull
Building relationships e.g. Lebron James with Nike
Innovations and technology e.g. Tesla self driving technology
Training where employees become more skilled than competitors
Distribution e.g. Amazon offer customers one hour delivery
Describe two driving forces for the changes at Woolworths.
Societal attitudes: customers looking for value for money and convenience as society is struggling with cost of living pressures with rising inflation and are short of time living busy lives.
Technology: supports customers to shop more efficiently by tracking the total spend of their shop live on the screen of their trolley
Pursuit of profit: sales growth and profit lower than desired - shareholders demand WW to take action to attract customers.
Innovation: first supermarket to introduce a smart trolley to meet gap in the market for more convenient shopping.
What is a similarity of reactive and proactive change?
- Both approaches are utilised by a manager or business to implement change.
Explain the relationship between number of customer complaints and rate of staff absenteeism.
If customer complaints are high this could create a stressful work environment as employees will often be dealing with the complaints. If employees are stressed they are more likely to take time off work, increasing rate of staff absenteeism.
What two forces from the study design can be considered both driviing and restraining forces?
Describe an advantages and a disadvantage of the differentiation strategy.
Advantages
Enables business to charge premium price that is greater than the extra cost incurred by differentiation
Builds `brand loyalty’ with customers who are unlikely to switch to a competitor’s products.
Disadvantages
Sometimes the unique features can be copied by competitors
Being unique will often increase costs
It will narrow the market and will not work for `price sensitive’ consumers
Justify which of Porter's Generic Strategies Netflix has taken?
Woolworths have used the differentiation strategy to gain a competitive advantage:
They have offered new technology to fill a gap in the market for increased convenience, time saving and budget tracking while shopping.
They are the first Australian supermarket to introduce a Smart Trolley, indicating that they have innovated to create a competitive advantage.