Business Management, Unit 4 AOS1 – Flashcards
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Business Change
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The concept of business change refers to transitioning individual employees, working teams, functions or the whole business to a new state of operation.
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Key words for business change
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growth, innovation, redundancy, outsourcing, relocation, diversification and competition.
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Percentage of Market Share
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Percentage of market share represents the percentage of an industry or market's total sales that is earned by a particular company over a specified time period.
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How is market share calculated?
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Market share is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period. For example, a company sales of 30,000 units out of a total sales in the industry of 100,000 is 30% market share
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KPI
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Key Performance Indicator
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Examples of key performance indicators
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• percentage of market share • net profit figures • rate of productivity growth • number of sales • rates of staff absentees • level of staff turnover • level of wastage • number of customer complaints • number of workplace accidents.
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Strategies to respond to falling net profit figures
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• cost cutting • marketing • quality strategies • investment in technology
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Key forces of the Force Field analysis theory
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Driving and restraining
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Principles behind the force field analysis theory
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By identifying the driving and restraining forces Lewin argued that business managers can assess the situation and then develop an action plan on the forces which can be changed to allow the change to occur
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Identify driving forces for change
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• managers • employees • competitors • legislation • pursuit of profit • reduction of costs • globalisation • technology • innovation • societal attitudes.
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Organisational inertia
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Organisational inertia is a term used to describe an established company that remains rigid in its thinking, traditions and actions rather than being open to change.
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Identify restraining forces
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• managers • employees • time • organisational inertia • legislation • financial considerations.
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Two key approaches to strategic management in Porter's Generic Strategies
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Lower cost and Differentiation
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the focus of businesses pursuing the low cost approach
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Achieving the lowest cost of production possible through economies of scale, standardised production, low cost raw materials, lean production techniques etc.
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The focus of businesses following the differentiation approach
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To create a unique point of difference whether by innovation, branding, product features, after sales service etc.
