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UNIT 4 AOS 1 - The need for change (Key performance indicators (Rates of…
UNIT 4 AOS 1 - The need for change
The concept of business change
Business change refers to the process of altering existing aspects of the businesses systems, operations or culture.
Key performance indicators
Rates of staff absenteeism
Should be as low as possible. If this is high or increasing, change needs to be implemented, as this means people are actively disliking coming to work
Level of staff turnover
Means that staff are leaving the the workplace at cost to the business though hiring and training processes.
Number of sales
Similar to net profit figure, if this is not meeting goals or is decreasing, this indicates the need for change
Level of wastage
If wastage levels are high, this indicates the need for change as money is lost in unused products and will have a negative societal impact
Rate of productivity growth
The output volume per unit of input volume.If productivity growth is decreasing, this indicates the need for change
Number of customer complaints
If these are high or increasing, change needs to be implemented
Net profit figures
If profits are not meeting goals or are decreasing, this indicates the need for change
Number of workplace accidents
If this is high or increasing, change needs to be implemented
Percentage of market share
If this is low or decreasing, businesses will push for change thought the need for an increase of sales and customers
Industry specific Key performance indicators
For example a hotel might monitor its performance based on how many bookings they have or how often they're booked out
Restraining forces
Time
Many changes can be time-consuming, and the business may feel as though time could be spent doing other things
Organisational Intertia
A state that can develop within a business where the business is receptive and not open to change, or the fear or laziness of going through change
Employees
Can resist change if they feel like their role is threatened, or they fear change
Legislation
If the law changes, businesses may not be able to introduce changes that conflict with these new laws
Managers
Can push against a change that they believe is not in the bests interests of the business, or if it will involve changing their role
Financial Considerations
Sometimes the cost associated with implementing changes to the business can be high
Driving forces
Pursuit of profit
If profit are not as high as managers or shareholders want, they may introduce change to gain higher profits or decrease their costs
Reduction of cost
Change might be an option if the costs of production are too high, for example they might outsource or introduce robotics
Legislation
If the law changes, the business will need to make changes to adjust to the new laws
Globalization
The concept of having to compete with global markets can push for change so that businesses can remain competitive
Competitors
If competitors are proving to be more successful, the business will want to make changes to out-perform them
Technology
Constant improvements in technology may drive a business to implement change
Employees
Will push for changes that are advantageous for themselves and push for changes that they dislike
Innovation
If new ideas can be brought to the business it can push for change as businesses aim to remain competitive
Managers
May push for changes that will benefit themselves and the business
Societal attitudes
Members of society can push for change through wanting certain things or wanting to stop certain things
Lewin's force field analysis theory
Driving forces are factors that apply pressure for changes to occur
Restraining forces are factors that prevent/Limit change from occurring
Outlines the process of determining if a business is able to undergo change. It weighs up both driving and restraining forces. In order for change to occur, the driving forces must outweigh the restraining forces.
Porters generic strategies
Lower cost
The business chooses to become the lowest cost producer of a good/service. This can be done through adequate management of inputs, processes and outputs
Differenciation
When the business is able to create a good/service and establish KEY differences from its competitors. Customers will pay higher because they cant get the products elsewhere. For example Hermes is different because of its extreme luxury experience and products
Porters strategies can be applied to any business with the aim to give the business a competitive advantage