KPIs & Business Performance
What does KPI stand for?
Key Performance Indicator
What is a driving force?
A factor that supports or encourages business change.
What are Porter’s two generic strategies?
Lower Cost and Differentiation
What is the purpose of Force Field Analysis?
To evaluate whether a proposed change is likely to be successful by weighing driving and restraining forces.
Proactive or reactive? A business updates systems to prevent cyberattacks.
Proactive
What KPI measures the number of days employees are away from work?
Rates of staff absenteeism
Name two internal driving forces for change.
Owners, managers, employees, pursuit of profit, innovation.
How does lower cost improve margins?
By reducing operating costs, the difference between cost and price (margin) increases.
Define ‘weighting’ in this model.
Assigning scores (1–5) to forces based on their impact on the change.
What is organisational inertia?
A business’s resistance to change due to entrenched habits or culture.
A business produced 100 units in 20 hours last week. This week, it produced 120 units in 20 hours. Calculate the % growth and explain why this matters.
(120- 100) / 100 × 100 = 20% increase. It shows improved efficiency, meaning more output with same input – good for competitiveness.
Give an example of how can pursuit of profit lead to both proactive and reactive change?
Proactive: launch a new product to gain market edge. Reactive: cut costs after poor quarterly results (e.g. Nike changed sales mix to boost margin).
In what circumstances might a lower cost strategy harm brand perception?
If cost-cutting leads to perceived poor quality or customer service, brand value may decline.
How does ranking help leaders prioritise resources?
It shows which forces need urgent attention. Minor restraining forces may not require resources, allowing focus on impactful ones.
How do KPIs assist in monitoring the effectiveness of change over time?
KPIs track results like sales or turnover to show if change is working and where adjustments are needed.
A business reports rising sales but decreasing net profit. Explain two potential reasons and what KPIs help.
Possible reasons: increasing costs (high wastage), poor pricing strategy. Useful KPIs: net profit, level of wastage, % market share
What role does time play as a restraining force, and how can businesses manage this challenge during urgent change?
Time pressure can rush planning and cause mistakes. Businesses can manage it by phasing change and setting realistic deadlines.
Compare challenges of implementing lower cost vs. differentiation in services.
Lower Cost: Hard to reduce without lowering quality. Differentiation: Needs strong branding and staff training (intangibility makes uniqueness harder).
How do action plans link to Force Field Analysis?
They specify steps to strengthen drivers or reduce restraints, including who does what and when.
What are two reasons employees might resist change, even if it benefits the business?
Fear of job loss or extra workload, and lack of trust in leadership.
Evaluate how three different KPIs provide a clearer picture than one.
Example: Sales may be up, but high turnover and absenteeism suggest poor morale. Combining profit, turnover, and complaints gives better insight.
How can conflicting stakeholder interests undermine change efforts, and what can leaders do to address this?
Stakeholders (e.g. investors, employees, unions) may have competing goals—e.g. cost savings vs. job security. If not aligned, these conflicts delay or derail change. Leaders should use negotiation, transparent communication, and stakeholder mapping to identify and manage competing priorities early.
Evaluate the risk of becoming “stuck in the middle” when attempting both strategies.
Advantage: Can attract a wider customer base by combining low prices with unique features, increasing market share.
Disadvantage: Lack of clear focus can confuse customers and weaken competitive position. Often leads to inefficiency.
How can a poorly conducted Force Field Analysis contribute to failed change?
Overestimating minor forces or overlooking key resistors may result in under-prepared implementation and backlash.
Explain how a misalignment between corporate culture and new strategic direction can impact transformation efforts.
If a business’s existing values and behaviours (culture) conflict with a new strategy (e.g. innovation in a risk-averse culture), employees may resist, misunderstand, or sabotage change. To avoid this, leaders must align change communication, training, and reward systems to shift the culture in parallel with the strategy.