UNIT 4 AOS 1 - BUIS MAN

SUMMARY

According to Porter both lower costs and differentiation are generic and can be applied to small, medium and large businesses. For the application to be successful a business should aim to gain a competitive advantage via lowering costs or providing a point of differentiation. A business that aims to do both or chooses to "sit on the fence" and not commit to a strategy faces significant challenges.

PURSUIT OF PROFIT (driving forces)

All businesses, regardless of size, need to earn a profit, of which they return a portion to owners/shareholders. If the profit levels of a business are not as high as the management team have identified as their goal it is likely they would need to make changes to either generate more revenue or decrease their costs to earn the profit that allows them to achieve their goals. The Pursuit of Profit is a driving force for change. If profit is not sufficient to satisfy objectives then the business may undertake a change to assist it in meeting those objectives.

FORCE FIELD ANALYSIS - ACTION PLAN - force field analysis

An important aspect of Lewin's Force Field Analysis is an action plan. Using the following template, driving forces are listed on the left side and restraining forces are listed on the right. Once the forces are listed they are allocated a numerical score. This score is a means of ranking the forces. Those forces that are important are given a score of 4 or 5, with less important or less influential forces given a lower score. This allows the forces to be prioritised, so it can be decided which restraining forces to remove first and which driving forces to promote and encourage.

EMPLOYEES (driving forces)

Employees working for a business expect to be paid fairly, trained properly and treated ethically in return for their vital contribution to production. Employees working in an innovative environment, where ideas are shared and acted on, are likely to recommend changes to policies, production processes or products. If employees support the change and are happy to implement it the business is likely to find the whole change process is a success. Even in cases where it may only be a few key staff who support the change, they are usually able to influence others to ensure the change is successful and permanent.

GENERIC STRATEGIES

Future Target - Lower Cost or Differentiation? Target will relinquish the low cost approach as it hands that component of its offering to Kmart. This will include the Target stores that are being re-branded as Kmart. Target will once again focus on being a "value-based offer but for higher quality products". This places Target as a mid-market retailer. Meaning it will sell higher quality products than Kmart and Best & Less, but can it compete with Zara and H&M for example. The brand restructure has identified Targets approach as differentiation. But only in relation to low-cost retailers. Will their products be unique enough to compete?

GLOBALISATION - definition (driving forces)

Globalisation is the movement across nations of trade, investment, technology, finance and labour brought about by the removal of trade barriers.

RATES OF STAFF ABSENTEEISM- KPI's 1

If staff are absent from the workplace this is a cost for the business. What are the likely costs? A rising rate of absenteeism may indicate problems between the employer and the employees. All Key Performance Indicators need to be specific and measurable. E.g. Rate of staff absenteeism as measured over a specific period of time.

LEVEL OF STAFF TURNOVER - KPI's 2

There are a number of ways that a business can reduce staff turnover: Providing employees with clear expectations, including vision, goals, expected behaviours, standards, priorities and agreed actions. Encouraging employees to use their skills and recognising them. Encouraging employees to get involved in decision-making. Providing opportunities for employees to provide feedback. Encouraging employees to upgrade their skills. Needs a measure and not just listed. E.g. Level of staff turnover as measured over a specific period including weeks, months or years.

PERFORMANCE INDICATORS (effectiveness and efficiency) - KPI's 1

They also lead to strategies that seek to optimise and improve performance. Effectiveness indicates to what degree a business has accomplished the objectives it set out to achieve. In other words, the business is 'doing the right things'. If a business's goal was to make profit, then improving profit from one year to the next would be seen as effective. Efficiency refers to how well a business uses the resources needed to achieve a goal. If a business reduced the amount of waste it produced while achieving its objective of profit, for example, then this may be considered to be efficient.

REDUCTION OF COSTS (driving forces)

A business will incur a range of costs. Supplies, materials, utility costs, government charges and taxes, interest and other finance costs and wages are all costs associated with operating a business. If costs are rising then profit will be negatively impacted and as such may drive the business to change. In these circumstances businesses will seek to implement strategies to reduce costs. Profit may be increased in two ways — an increase in revenue, brought about by increasing sales or raising prices, or through a reduction in the costs associated with operating the business. There are a range of cost-reducing strategies available for businesses to implement: Source materials and supplies from a cheaper supplier, either locally or from overseas . Source a local supplier to avoid paying import duties. Reduce wages through downsizing or replacing labour with technology, such as robotics or an assembly line. Source a new supplier of utilities (gas, water, electricity and telecommunications). Privatisation has led to more options in these areas and so businesses can 'shop around' for better deals.

EMPLOYEES - restraining forces

Any change to a business and its operating procedures will eventually impact on the level and type of staffing. The introduction of a major change, such as a merger or acquisition, may result in a complete breakdown of the existing corporate culture. This can create a feeling of mistrust and suspicion among the employees. Employees may also resist change because they are worried that they cannot adapt to the new procedures, which threaten established work routines. This is made worse if training is not provided. No matter how technically or administratively perfect a proposed change may be, staffing issues may make or break it. As part of the process a business must encourage adaptability and trust and allow employees to be involved in the process and make suggestions as to how change can be implemented.

GLOBALISATION (driving forces)

Combined with the development of hi-tech communications, lower transport costs and unrestricted trade and financial flows, the whole world can now operate as a single market, producing a more integrated global economic system. Australian businesses therefore operate on the world market, competing not only with businesses in their local area, but businesses nationally and internationally. This process of operating nationally and internationally has been strengthened by globalisation and so businesses that don't recognise they are competing in a world market may find themselves left behind. Globalisation has developed and has been influenced by a number of key drivers, including: The growth in trade between Australia and the rest of the world over the past 25 years Free trade agreements have opened up countries. Australia, for example, has recently signed agreements with Japan, China and South Korea. Development of the internet and electronic communication means there are no boundaries when accessing customers. The flow of people and the migration of skilled workers has changed the workplace . The growth of trade among developing countries has opened up opportunities for businesses across the world.

RESTRAINING FORCES - restraining forces

Employees - Staff members at all Target stores would be mindful and/or fearful of the negative effect that change may have on their employment. When the nominated Target and Target Country stores close, approximately 1300 jobs will be lost. Those staff members who begin working under the Kmart brand, may be concerned about changes to their employment conditions including wages. Financial Considerations - Whilst closing stores may initially appear as an instant saving, there are considerable costs associated with such a change. Wesfarmers have budgeted for between $120m and $170m in costs associated with the store closures. Such costs include breaking leases on retail spaces and the redistribution or sale of stock. In addition is the financial burden of redundancy payments to staff.

SOCIETAL ATTITUDES (driving forces)

Increased access to rapid communications has made the world's population more acutely aware of what businesses are doing. Society is evolving rapidly and as are their attitudes. Businesses must respond to: Impact on the natural environment. Aging workforce and increase in retirement age. Increased participation of women in the workforce. Changing family make up, partners and number of children. Migration and where people originate. Workforce education increasing. Millennial workforce expectations.

INNOVATION (driving forces)

Innovation can be driven by technological advances and by globalisation. Innovation can result from research and development undertaken by businesses or through individuals identifying areas for improvement. Being able to innovate and develop new ways of thinking and doing business will give a business a competitive edge. Often small and medium-sized businesses cannot compete against large businesses and multinational corporations. Innovation can also result from the identification of a niche market. A niche market is a narrowly selected market segment within a larger market

LEGISLATION - restraining forces

Legislation must be complied with, and it can act as a restraining force. This occurs when the legislation places restrictions on certain operational practices and procedures. E.g. Laws such as occupational health and safety laws can prevent a business from undertaking changes that could potentially cause injury to workers. E.g. A mining company wanting to exploit a new mineral resource will have to do so within the limitations of current environmental protection legislation. E.g. Workplace legislation has undergone significant change between 1996 and today including the Workplace Relations Act, Work Choices Act and Fair Work Act.

LOWERING COSTS

Lower cost strategies involve a business seeking to become the business with the lowest costs in its industry.There are three main ways of achieving low costs: Use assets efficiently: Minimise idle stock on shelves; do not stock products that do not sell. In a restaurant, turn over tables quickly — have customers sit, order, eat and leave, then have another group of customers take that table. Lower costs of operating: Source supplies from cheaper suppliers, minimise wage costs, source cheaper utility suppliers and offer minimal packaging. Control the supply chain: Seek contracts with suppliers and delivery businesses that guarantee prices. At the same time, implement stock management systems such as just in time to reduce costs.

DRIVING FORCES - force field analysis

Managers Employees Competitors Legislation Pursuit of Profit Reduction of Costs Globalisation Technology Innovation Societal attitudes

RESTRAINING FORCES - force field analysis

Managers Employees Time Organisational Inertia Legislation Financial Considerations There are a multitude of other driving and restraining forces that can be used to respond to a question. The included are prescribed in the study design.

MANAGERS (driving forces)

Managers have the responsibility of operating a profitable or successful business. The poor financial performance of a business would result in management reviewing processes, staff and systems. The role managers play in the operations of a business mean they are key driving forces for change. In a small/medium size business, the manager may also be the owner and so the livelihood of the owner is tied very much to the ability of the business to change and maintain sales, profit, market share and its customer base. In a large-scale business, shareholders are seeking a return on their investment. Managers will push for changes that will lead to a better outcome and more efficient achievement of business objectives.

FORCE FIELD ANALYSIS - force field analysis

Psychologist Kurt Lewin developed a useful model for understanding the change process. Known as Force Field Analysis, the model describes how you can determine which forces drive and which resist a proposed change. Driving forces are those factors that initiate, encourage and support the change — they work to assist the business in achieving its goal. Restraining forces are those factors that work against the change, creating resistance — in other words, they hinder the achievement of the goal.

COMPETITIVE FORCES

Rivalry Amongst Existing Competitors - The main driver of competition is the number and capability of competitors in the market. This can be seen in the diagram above. If a business is operating in a market with many competitors, most of whom are offering undifferentiated products and services, then a business may find they have a reduced market attractiveness. Once the market forces have been identified Porter suggests one of the following strategies to be implemented to gain a competitive advantage: Cost advantage — a competitive advantage is gained through reducing or altering the costs of the business. Differentiation advantage —businesses gain a competitive advantage through varying their product or service from others in the market.

PROACTIVE CHANGE - business change

- to initiate change rather than simply to react to events

REACTIVE CHANGE - business change

- to wait for a change to occur and then respond to it.

LOWER COST STRATEGY (COST LEADERSHIP)

A business manager decides that their strength is to become the lowest cost producer of a product in their industry. This will give them a competitive advantage in that they can now sell their products at a cheaper more "customer attractive" price than their rivals whilst still maintaining their profit margins and thus increasing sales and market share. This appeals to "price conscious" consumers with examples including Aldi, Costco and Tigerair.

LEVEL OF STAFF TURNOVER - KPI's 2

A decrease in staff turnover suggests that fewer employees are leaving, because they are more satisfied with their work conditions. Staff turnover means that staff will need to be replaced, resulting in recruiting and training costs and the loss of productivity and knowledge. Some level of staff turnover is considered healthy in business, as new ideas are brought in and often stimulate innovation in work practices

BENEFITS OF A FORCE FIELD ANALYSIS - force field analysis

Analysis of advantages and disadvantages and whether the change is worth undertaking. An opportunity to identify and strengthen the driving forces supporting the change and to take action to reduce or eliminate the restraining forces. Allows stakeholders to identify the change as a positive or negative change from their perspective. Force Field Analysis can identify if skills are restraining change and therefore what training may be required. The Force Field Analysis diagram is a visual aid that can support communication and reduce communication barriers. It allows the business to identify those people within the business who are supportive of the change and those restraining the change.

FORCE FIELD ANALYSIS - force field analysis

Any business considering undertaking a new project or implementing change can consider the forces that are exerting pressure at this time. The first area to consider are the aspects of the business; the people of influence or the decision-makers and the systems and processes that are driving the project. Once considered, the next step is to consider who and what are restraining the project. To counter these restraining forces, other stakeholders will push or drive the business to change. While these drivers are a positive influence for a business, when confronted with the restraining forces a negative situation for the business will result — the two forces work against each other, resulting in the change not being undertaken at all or implemented in a manner that results in a less than effective situation for the business.

RESTRAINING FORCES - explain - restraining forces

At any given time there will be stakeholders pushing, encouraging or driving the business to undertake change. As identified by Lewin, there will be other stakeholders who like the current situation, the 'status quo'. These stakeholders may overtly or covertly work against the change. These restraining forces are competing with the driving forces, seeking no change to the business. There are a number of restraining forces including managers, employees, time, organisational inertia, legislation and financial considerations.

COMPETITIVE FORCES

Bargaining Power of Buyers - Businesses need to consider how powerful their buyers or customers may be. They need to conduct an assessment of how easy it is for buyers to drive prices down. This is driven by the number of buyers in the market and the importance of each individual buyer to the business. The business also considers the cost to the buyer of changing their supplier. Bargaining Power of Suppliers -The bargaining power of suppliers refers to how easy it is for suppliers to drive up the price of the item they supply to a business. This is driven by the number of suppliers of each essential input, the uniqueness of their product or service, the relative size and strength of the supplier, and cost of switching from one supplier to another which can be influenced by existing contracts and the time taken to undertake this change.

PORTER'S GENERIC STRATEGIES

Businesses can wait to see how driving and restraining forces build around them and respond to them in a reactive way. Businesses can also seek to "shape their own destiny" and plan for the future they want to position themselves in. This proactive approach is called strategic management and one example of such an approach is Porter's generic strategies.

LEGISLATION (driving forces)

Businesses have to deal with three levels of government in Australia - federal, state and local. All levels of government initiate legislation and change laws which can impact on businesses. Often these changes occur and businesses have to be able to respond and change aspects of their operations. Business must meet deadlines and obligations as set out by the level of government implementing new laws, modifying existing laws or removing them all together. Legislation as a driving force for change cannot be ignored. Federal - E.g. Carbon Tax Sate - E.g. Payroll Tax Local - E.g. Zoning & Permits Carbon Tax (Federal Legislation): Between 2012 and 2014 Australia was subject to a carbon tax. The tax was introduced in November 2011 and established a price on the carbon emissions of businesses in Australia. The pricing mechanism, known generally as the 'carbon tax', was intended as a measure to combat climate change and came into operation on 1 July 2012, but after much opposition, legislation to abolish this tax was passed in July 2014. Businesses had to make changes to respond to the legislation relating to the introduction and removal of this tax in both 2012 and 2014.

COMPETITORS (driving forces)

Businesses need to monitor the activities of their competition and determine what effect they may be having in the marketplace. Knowledge of such changes enables a business to make modifications to its existing business activities and to plan new ones. The opening of a new business that will compete with an existing business may cause the existing business to undergo change to stay current and relevant to their customers. Pricing policies by a competitor may lead a business to adopt a similar strategy. In recent years both Coles and Woolworths have sold bread, milk and other staple items at greatly reduced costs in an effort to increase customer numbers. Once one business lowered prices the other business quickly followed suit. The adoption of new technologies, both in production and products, can drive a competitor to change their products or processes. Toyota was the first vehicle manufacturer to introduce a hybrid model car. Many major car manufacturers have now released their own version. Advertising campaigns, sales and the development of an online presence are other examples of how competitors can drive change within a business.

NUMBER OF WORKPLACE ACCIDENTS - KPI's 2

Certain industries have higher levels of workplace accidents than others. Farms are an area of concern for governments and Worksafe Victoria. Farms have a higher proportion of workplace deaths than other industry. WorkSafe Victoria, the state's work safety watchdog, said almost 30 per cent of all workplace deaths occurred on farms, despite less than 3 per cent of Victorians being employed in agriculture.

TIME - restraining forces

Change can occur quickly and businesses do not have the Time to plan the change as efficiently and effectively as they would like. In some circumstances, not enough time is allowed for people to think about the change, accept it, and implement it. In other situations, the timing is poor. If competitors are moving ahead quickly then a business also needs to respond quickly; time is a scarce resource and if a business lags behind its competitors then time can become a restraining force on a business. To avert time as a restraining forces businesses should be proactive rather than reactive as well as attempting to foresee the necessity for change.

GENERIC STRATEGIES

Current Target - Lower Cost or Differentiation? One of the reasons Target finds itself in a poor financial position, is the perception that it has failed to either compete on cost or differentiation. Instead of committing to a specific strategy, it has attempted to be everything to everyone. Within the retail market, Target has cheaper competitors including stablemate Kmart and other low-cost retailers such as Best & Less. As consumers become more price conscious, they are attracted to cheaper options. Whilst Target does sell a range of low cost items, including clothing, consumers remain confused. Target has attempted to differentiate, in particular, with his 'designer' clothing lines. They may appear to be higher quality than its competition, but does it compete with high profile brands and labels?

DIFFERENTIATION - EXAMPLES

Differentiation can be created through: Innovation leading to new goods and services. E.g. Apple, Tesla electric cars. New product features, extended product durability, all weather features. E.g. Qantas, introduction of business class and safety record. Warranties and after sales services, loyalty cards. The delivery system by which it is sold. E.g. Catch of the Day. A marketing approach which clearly separates the business from its competitors through branding. E.g. Rolls Royce.

DIFFERENTIATION

Differentiation can be defined as an approach or method used to develop the uniqueness of the product or service and its attractiveness in order to attract and keep customers. Differentiation can be based on a number of different factors including product durability and use, support and after sales service and brand image, which allows a business to create an ideal picture and connections with customers to build long-term loyalty to the brand and the products.

DRIVING FORCES FOR CHANGE - definition (driving forces)

Driving Forces are factors that encourage and support change to occur.

DRIVING FORCES FOR CHANGE (driving forces)

Driving Forces for change include: Managers , Employees , Competitors, Legislation, Pursuit of Profit, Reduction of Costs, Globalisation, Technology, Innovation & Societal Attitudes.

LOWER COSTS - EXAMPLES

In order to achieve a "competitive advantage" managers seek out cost saving measures. Strive to use economies of scale. E.g. Bulk buying -Aldi. Offer high volumes of standardised goods or services and aim for "no frills". E.g. Ikea, & Tigerair. Implement new technology to produce goods and services quicker and cheaper with less waste. E.g. Carlton United Brewery. Implement lean production strategies. Buy raw materials from the lowest cost source in the world and develop effective supply chains. Minimise labour costs with overseas manufacture, or outsourcing non-core tasks. Dismiss employees to reduce the businesses wage costs, or renegotiate employment contracts. Review their materials management strategies and use JIT strategies to reduce storage costs E.g. Toyota.

INNOVATION - definition (driving forces)

Innovation is a process that occurs when something already established is improved upon.

DIFFERENTIATION Weakness

Is not good for "price sensitive" consumers / markets. • The "unique features" can be copied / mimicked by other producers domestically or overseas which destroys your competitive advantage. • Can be hard to protect your intellectual property, copyright, etc.

PERCENTAGE OF MARKET SHARE - information - - KPI's 1

It is calculated by dividing a business's sales (from that market) by the total sales of all businesses in that market and expressing this as a percentage. If the proportion of market share increases, the business has a greater percentage of the market and sales. Some industry sectors are dominated by a few large businesses which have substantial market share and a large number of customers. In other sectors of the economy there may be more competition and businesses will vie for market share and customers

PERFORMANCE INDICATORS - KPI's 1 (definition)

Key Performance Indicators (KPI's) measure performance, success and the achievement of objectives.

LEVEL OF STAFF TURNOVER *has to include staff being replaced - definition - KPI's 2

Level of Staff Turnover is the amount of employees leaving the business (that require replacement) in a period of time as a percentage of the total number of employees in that business.

LEVEL OF WASTAGE - definition - KPI's 2

Level of Wastage in a production process will give an indication of business efficiency and is a measure of resources that have not been converted to outputs. Reducing waste levels will reduce the costs associated with producing a product and it may also mean that fewer non-renewable resources are used, having a positive impact in the wider community.

MANAGERS (driving forces)

Managers must be prepared for change and ensure that the leadership and management across the business are all clear about the changes required and that a consistent message is given to all stakeholders. Managers and leaders have to be willing to share their ideas and expertise with others as this can increase capacity and support for change across the business.

BENCHMARKING - KPI's 2

Many businesses adopt the practice of benchmarking. This is not a performance indicator; it is a process (methodology) that can be used to assess performance between internal sections of a business or between businesses known for their excellence. This is then used as a basis for improvements. A business might compare its performance with another business in the same industry or with a business in another industry with similar objectives.

ORGANISATIONAL INERTIA - explain - restraining forces

Many employees and managers of the typical business desire a safe and predictable status quo. 'But we don't do things that way here' or 'That's how we have always done it'. There are a number of suggestions as to how inertia can be overcome, including changing resources and routines.

NUMBER OF SALES - - KPI's 1

Measuring the number of sales helps a business evaluate its performance, especially its marketing strategies. Usually, a business will be satisfied with its performance when the number of sales increases over a period of time, even if it means lower profits in the short term due to higher marketing costs. The assumption is that such a strategy will lead to higher profits in the long term.

PORTER'S GENERIC STRATEGIES

Michael Porter's theory is a strategic management theory which describes how a business can seek to acquire a competitive advantage in its industry or market and therefore dominate that industry or increase its market share in it. It is therefore a very proactive theory which has two underlying concepts. The first is that this is a generic strategy which means that it can be applied to any business or industry. • The second is that a business needs to identify, focus and build on its strengths. These are its "competitive advantages" categories: • Lower Cost • Differentiation

NET PROFIT FIGURES- definition -- KPI's 1

Net Profit is the earning power of the business determined by calculating the excess revenue remaining after all expenses have been deducted.

NUMBER OF CUSTOMER COMPLAINTS - KPI's 2

Number of Customer Complaints the volume of written or verbal expressions of dissatisfaction from customers about an organisation's products or services (as measured over a specific period of time). It allows the business to compare the number of complaints over time or with the performance of their competitors. An increase in customer complaints may indicate there is a need for further training of employees or that products may not be of a satisfactory standard or quality. A decrease in the level of customer complaints may be seen as the outcome of previously implemented policies, strategies or changes to the operations system.

ORGANISATIONAL INERTIA - definition - restraining forces

Organisational Inertia is the lack of ability of a business to react to internal and external pressures for change as it tends to continue on its well entrenched way.

PERCENTAGE OF MARKET SHARE - definition - KPI's 1

Percentage of market share refers to the business's share of the total industry sales for a particular good or service, expressed as a percentage.

COMPETITIVE FORCES

Porter identified five competitive forces exerting influence on a business. The business needed to react to these competitive forces if they wished to successfully change and gain a competitive advantage: Entry of New Competitors - Markets that are profitable will always attract new businesses. These new businesses see an opportunity to make sales, earn a profit and expand their own areas of operation. The businesses that currently operate in these markets must be able to survive. Threat of Substitutes - Some businesses operate in a market where close substitute products exist. Coke and Pepsi are often considered close substitutes, as are banks with regards to interest rates on home loans. In markets such as these customers may switch to alternatives in response to price increases or changes to the quality of the good or service offered by the business.

LOWER COST (Weakness)

Potentially lower customer loyalty as customers are only price sensitive. • Potentially customers may associate lower price with lower quality. • Standardised goods and services will not meet the demands of customers who want unique, customer specific offerings, or who want something "different".

RATE OF PRODUCTIVITY GROWTH - - KPI's 1

Productivity is a measure of performance that indicates how many inputs (resources) it takes to produce an output (goods or services). Productivity is a measure of efficiency that is used by the operations and human resources functions. Rate of Productivity Growth is the change in productivity in one year compared to that of the previous year. Growth in the rate of productivity indicates that the business is using resources more efficiently. Productivity will improve if a business uses fewer inputs to obtain the same level of output, or if more output is produced from the same input.

DRIVING FORCES (driving forces)

Pursuit of Profit -Target had seen a steady decline in profits, culminating in a $195m loss in 2016. Parent company, Wesfarmers, has implemented the change outlined in order to reduce the downward trend and increase profit. Kmart has outperformed Target for a considerable period and this would be of significant concern. Competitors -Traditional retail has suffered from a range of factors including overseas businesses setting up in Australia (H&M, UNIQLO etc) and an increase in online shopping. Similarly, Big W, has also struggled having announced the closure 30 stores. Competition for customers has become fiercer than ever. The restrictions of COVID-19 has added additional pressure on retailers. Reduction of Costs - Whilst Target's revenue remained steady for a consistent period of time, their profit continued to decline. This suggests that whilst their sales remained relatively strong, their costs increased hence the decline in profit. The closure of selected Target and Target Country stores would relate to their individual profitability and contribution to overall financial performance. Societal Attitudes - As stated by Smart Company, Target confused its customers by offering high-end (relatively) clothing labels, yet offering budget items such as electrical goods and clearance clothing. Budget conscious customers opted to shop at Kmart which appeared to offer better value for money.

RESTRAINING FORCES - definition - restraining forces

Restraining Forces are those that work against change, creating resistance

SOCIETAL ATTITUDES - definition (driving forces)

Society's Attitudes to what is right and wrong are constantly changing and this affects the ways in which businesses operate.

UNDERSTANDING CHANGE - business change

Some changes are forced on a business (reactive), while others are carefully planned in advance to achieve an advantage over competitors (proactive). The ability to manage and, in many cases, embrace and adapt to change will increasingly determine a business's competitive advantage and survival. Successful managers are the ones who anticipate and adjust to changing circumstances rather than ones that get swept along passively or, worse, get caught unprepared. Such managers are said to be proactive rather than reactive. To be constructive, changes must occur at a pace that allows businesses to absorb and integrate them into their operations. All changes should be evaluated thoroughly to assess their overall impact. Poorly managed changes normally result in employee resistance, tension, anxiety, lost productivity and ultimately, unmet objectives.

NUMBER OF WORKPLACE ACCIDENTS - KPI's 2

Staff members who feel unsafe may notterm-26 be motivated to work efficiently while accidents can actually stop production. Increasing workplace safety and thereby reducing the number of accidents has the following benefits: Reduction in number of disruptions to work and production. Reduction in time lost due to accidents and consequent disruption. Reduction in lost production. Reduction in management time required to manage the effect of accidents and disruptions, and the administrative work resulting from these. Enhancement of the reputation of the business. Improvement in staff morale and loyalty.

DIFFERENTIATION Strength

Strong competitive advantage in markets with "brand loyalty". • Can charge premium pricing as the cost is not such an important consideration to consumers. • Can work with large businesses who have money to create a brand image. • Can work with small businesses who create a unique point of difference.

LOWER COST (strengths)

Strong competitive advantage in markets with "price conscious" consumers.

TECHNOLOGY - (driving forces)

Technology allows a business to operate its processes and practices more efficiently and effectively, cutting costs and improving productivity. As such technology, and any advances in technology, should be considered as a driving force for change. All businesses, regardless of size, are able to take advantage of technology and so all businesses are driven to change by technology. Automated production lines, EFTPOS/Pay Wave/Pass, couriers using electronic signatures, clothing stores using scanners and electronic security tags, and supermarkets introducing online shopping and self-service checkouts are all examples of technological advances that have driven change.

FINANCIAL CONSIDERATIONS - restraining forces

The Financial Considerations (Cost) of its implementation can restrain a change. Even given sufficient finances, a business contemplating change must weigh up the costs and benefits of the change. The inability to obtain necessary funds will be a restraining force on the business. Well-informed, calculated decisions to proceed will minimise the risk and enhance the long-term viability of the change. The high costs of change will often affect the profit margin of a business. To maintain profit the business may consider raising prices. This can act as a restraining force as competitors may not be facing the same pressures and businesses don't want to price themselves out of the market in which they operate.

NUMBER OF SALES - definition - - KPI's 1

The Number of Sales indicates the products customers are purchasing or services provided to customers in each timeframe.

NUMBER OF WORKPLACE ACCIDENTS - KPI's 2

The Number of Workplace Accidents refers to the volume of unplanned events interrupting the workflow that may or may not include injury or property damage (as measured over a specific period of time).

RATES OF STAFF ABSENTEEISM - definition - KPI's 1

The Rate of Staff Absenteeism measures the number of times staff are not at work, and who may be using sick or personal leave and not attending the workplace.

BUSINESS CHANGE - business change (definition, examples of change)

The concept of business change refers to transitioning individual employees, working teams, functions or the whole business to a new state of operation. Change can take many forms from being widespread and impacting on every area of business through to just small changes in one key area. Business change can involve: Changing the motivation strategies you use with your employees A new manager coming in and changing the traditional management style

FORCE FIELD ANALYSIS - force field analysis

The current conditions, or status quo, result from these two forces 'pulling' in opposite directions. Managers who are trying to implement a change must conduct a force-field analysis to identify and balance the driving and restraining forces.

NET PROFIT FIGURES - causes and solutions - - KPI's 1

What this may indicate is going wrong... Customers are not happy with the product - decreasing sales and decreasing revenue. Our costs and expenses are too high and we need to cut back. How could we solve this... Quality strategies need to be looked at • Staff training, staff motivation Cost-cutting measures • Lean production techniques • Reduce labour costs via global manufacture, lower labour entitlements • Or increase productivity rates via investment in technology strategies

RATE OF PRODUCTIVITY GROWTH causes and solutions -- KPI's 1

What this may indicate is going wrong... Machinery is failing to produce as quickly. Aging machinery. Staff are failing to produce as quickly. There is a log jam in inputs arriving on time which is stopping production. How could we possibly solve this... Investment into technology • Redeployment of resources (capital / labour) Increasing staff motivation • Increased staff training (on the job or off the job) • Improvements in the international supply chain, JIT

RATES OF STAFF ABSENTEEISM - KPI's 1

What this may indicate is going wrong... Possible causes of absenteeism include: • Job dissatisfaction • Lack of opportunity • Personality clashes • Workplace bullying Ongoing personal issues and chronic medical problems. How could we solve this... Investment into worker motivation: e.g. performance related pay, investment in training • Staff support, counselling • Change in management styles • Redeployment of resources Counselling • Medical support, OH&S training • Subsidising flu jabs, health and wellbeing programs

NUMBER OF WORKPLACE ACCIDENTS - causes and solutions - KPI's 2

What this may indicate is going wrong... Possible causes of accidents: • Safety equipment • Safety training • Safety procedures How could we solve this... Staff training • Investment in technology • Redeployment of resources

LEVEL OF STAFF TURNOVER - KPI's 2

What this may indicate is going wrong... Possible causes of staff turnover from resignation include job dissatisfaction, ... ....from retirement ....from redundancy ...from dismissal How could we solve this... • Investment into worker motivation: e.g. performance related pay, investment in training • Staff support, counselling • Change in management styles • Redeployment of resources to allow promotional opportunities -Natural course, just needs to be managed with respect -May be due to a redundancy program and therefore was self inflicted -Ensure clear policies and training on cultural expectations LEVEL OF WASTAGE Level of Wastage in a production process will give an indication of business efficiency and is a measure of resources that have not been converted to outputs.

NUMBER OF CUSTOMER COMPLAINTS - causes and solutions - KPI's 2

What this may indicate is going wrong... Quality of products is declining • Customer service is declining How could we solve this... Quality management strategies • Increased investment in technology • Staff training • Staff motivation Staff training • Staff motivation

LEVEL OF WASTAGE - causes and solutions - KPI's 2

What this may indicate is going wrong... Storage is insufficient Production process is inefficient How could we solve this... Have a quality assurance assessment undertaken to identify incorrect storage or procedures • Total quality management • Implementing lean production strategies • Investment in technology to improve accuracy

NUMBER OF SALES - causes and solutions- KPI's 1

What this may indicate is going wrong... - The product is not meeting the customers needs. - The price of the product / service is too high. - Customers are not aware of the product. How could we solve this... - Improving quality in production - Staff training • Lower the price • Reduce costs to be able to lower the price - Improve marketing to customers

FORCES FOR CHANGE OUTCOMES - force field analysis

When driving forces are more dominant in a business then the change is likely to be successful. If the driving forces are met by restraining forces at a similar level, then it is likely that the change will not be successful. If the restraining forces are more powerful than driving forces, then it is unlikely that the change will be successfully introduced. Therefore, according to Lewin, there is only a one in three chance of change being successfully taken up in a business.

MANAGERS - restraining forces

While employees resist change and may be scared about change, Managers may feel the same way if it threatens their current position, power or role. Managers may also resist change because they not do have the skills and experience to deal with the process or may be concerned about possible resistance from others in the business. If decisions have been made by the senior managers in a business and the middle or lower levels of management have had no input, then they are likely to resist change in the same way that employees would.