Business Management Unit 4

Management Strategies to Seek New Business Opportunities in Global and Domestic Markets

- Responding to strong competition - Gaining higher profit margins - Attract new customers - Capitalize on business success - New opportunity or market develops

RF - Organisational Inertia

- Refers to the management's inactivity or lack of response when faced with proposed changes. - The tendency of a mature business to continue on its current trajectory (as changing takes lots of effort).

Cost Leadership Strategy

- A strategy that allows a business to achieve a competitive edge by reducing production or delivery costs. → Increasing profits by reducing production costs, while charging similar prices to those charged by competitors. → Increasing market share by charging lower prices, but still increasing profit by reducing costs. - A disadvantage of this strategy is that customers may associate it with poor or cheap quality so it affects their reputation.

Globalisation

- Access to overseas markets can improve with changes in the Australian (if the dollar goes down) then Australian products will be cheaper to overseas wholesalers and then customers because they don't need as many Australian dollars to pay for the them. - Growth in exports can be beneficial to a business because it provides a larger pool of customers, spreading the risk of economic downturn in a particular market affecting the business' overall profit.

Planning Skills

- All changes need to be planned. - Change can be long-term or short-term and so management must develop a 'plan of action' for dealing with change.

DF - 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.

KPI's

- Any KPI or data source must be: → Relevant - does it provide the information required by users? → Valid - has the data been collected correctly? → Reliable - what is the source of the data? Has it been based on measureable data or is it anecdotal? → Deliver valuable information - will the KPI provide useful information that will help decision making? - KPI's should also be comparative and this can include: → Changes over time - did the rate or amount increase or decrease over the past year? → Comparing it to other businesses or benchmarks in the industry sector - does the business meet or exceed benchmarks set by the best in the industry? → Budgets, estimates or targets set by the business - did performance match or exceed budgets?

RF - Employees

- 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 existing corporate culture. This can create a feeling of mistrust and suspicion among the employees. - Many human resource management consultants argue that staffing considerations are one of the most entrenched reasons for employees to resist change. 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.

Key Approaches of Porter's Generic Strategies

- Are frameworks for strategic business planning. - Need to choose one strategy as if you attempt to implement both it will be unsuccessful - contradict each other. - The strategies focus on low costs and product differentiation. These should be considered in the contexts of competitive advantage and scope (broad or narrow). Scope - the area of focus - broad or narrow. - The model helps businesses decide where to focus their energies to gain a competitive advantage: is it cost? Or some other feature? Do we then focus broadly on that strategy or in some narrow way? - This then becomes one strategy of the business, a considered decision. - The theory is a way of reviewing performance and identifying change needs, in this case, how to achieve a competitive advantage. - Cost leadership involves providing a 'no frills' product at a low price. - Differentiation involves creating a unique and desirable product or service. - Once an approach has been decided it should be the main strategy, but not the only. - Different strategies suit different businesses.

Business Change

- Business change - is defined as a business' planned and unplanned response to internal and external pressures. - Changes can be: incremental or radical, planned or unplanned, predictable or unpredictable. - Businesses need to consider the impact of the change of people, they will mostly consider things from their point of view rather than the business. (can impact staff turnover, productivity). - Managers and owners need to ensure the business is always ready to take on and apply new ideas and plans that can be implemented quickly and smoothly. - Employees need to be able to move on to the new or changed situation in order to establish their familiar roles and become productive again. - There can be no progress without change so management must be committed to the change to ensure the success and future of the business.

DF - Societal Attitudes

- Businesses are constantly confronted by changes in society's attitudes and values. - Society's attitudes to what is right and wrong are constantly changing and this affects the ways in which businesses operate. - Increased access to rapid communications has made the world's population more acutely aware of what businesses are doing. - Pressure from society has forced businesses to implement procedures to preserve and protect the natural environment.

DF - Pursuit of Profit

- Businesses looking to increase profits won't be wanting to do things the same tired old ways, they will want to make changes. - Profit is a major objective for businesses. - Shareholders will be pressuring businesses to increase profits.

Rates of Staff Absenteeism Cont.

- Businesses need to monitor rates of staff absenteeism and take steps to reduce rates if it is seen as an issue across the business. - These include: 1. Track staff absences. Helps a business determine if there are patterns or concerns about particular employees. Some employees may have other issues going on and these may be addressed when discussing absences. 2. Make sure that the business has employee wellness programs to support employees. 3. Help employees return to work. Sometimes it can be difficult for employees to return to work after injury or illness. This may include a range a range of activities including modifying work, allowing people to work from home or flexible work hours. 4. Eliminate workplace stress. Sometimes people feel overwhelmed and take time off work. 5. Offer employees flexible time off and holidays. This might include allowing employees to take time off around a public holiday.

Leading Skills

- Leading is the ability to influence others to achieve objectives. - Managers need to influence staff to accept any change and work toward the successful implementation of the change their influence determines how effectively the change is implemented and how quickly and successfully any resistance is overcome.

Implementing Lewin's Theory Generally Requires Four Steps

1. Define the target of change. 2. Identify the driving forces and the restraining forces. 3. Analyse the forces which can be changed. 4. Develop an action plan on what can be changed.

Management Strategies to Respond to KPI's and Other Business Trends and Data

- Businesses use KPI's and other data to analyse performance and develop strategies to improve business processes. - KPI's must be reviewed and this may promote the need for change. - To analyse KPIs, a business must: → Collect information → Store information in a usable format → Ensure records are accurate → Analyse any trends - This is an ongoing process and should be systemized. - Determining which KPI's to monitor, applying thresholds and targets to apply as flags, then investigating and determine causes. - You can't look at everything or do everything (essentially this is a process of prioritization). - A business's most valuable asset is its staff. Ensuring staff have the right skills for the job and are happy is vital. - If a KPI reveals that staff are dissatisfied, strategies must be implemented to rectify the issue. This could be in the form of training and development, or motivational strategies. - The strategies used will be influenced by management style and the manager's skills. KPI trends may also reveal a need for a manager to improve their own skills, or alter their management style.

DF - Competitors

- Businesses will be aware of what their competitors are doing and to changes in market share. - A business needs to respond to pressure from competitors and even stay ahead of them. - Businesses want to create and sustain a competitive advantage.

Ways of Overcoming Employee Resistance to Change - Low Risk

- Can be high risk or low risk. - Low risk strategies to overcome employee resistance: → Communication - two way communication involving open and honest communication. Related to consultative and participative management styles and the management skills of communication. → Empowerment - empowerment to make decisions and involvement in the process creating ownership amongst employees, also having key respected people leading and training others. → Support - emotional - making counsellors available, providing training to relieve performance pressures, redeployment services so staff are not abandoned by the change process. Giving time to adjust is a form of support. → Incentives - resistors could be offered improved working conditions (longer breaks, better facilities) or financial incentives (higher wages, bonuses).

Change

- Change - is any alteration in internal and external environments. - Business change - is defined as a business's planned and unplanned response to internal and external pressures.

Managing Change

- Change can be radical: major alterations to the business, often driven by critical incidents, (a dramatic drop in profits, a merger, a disrupter). - Or incremental: the business remains relatively the same but is working towards improving some aspect of its operations. - Changes can be unplanned (random and often disruptive). Management must rapidly adjust and minimise negative effects. - Change may be planned, where managers decide on a specific course of action to improve the business. - Businesses can be proactive - foreseeing change and looking to maintain or gain a competitive advantage. - Businesses can be reactive - businesses are forced to change to protect or preserve market position. - Being reactive is less desirable as the business may be falling behind the pack.

Interpersonal Skills

- Change can have a negative impact on employees. - Managers need to relate and empathize with employees and any other stakeholder impacted by the change.

Structural Changes as a Motivator

- Change in the economy can force a business to examine how the business operates, methods of production, the product mix, management styles, etc. - These changes can encourage the business to focus attention on overseas markets if their market share is declining or end consumers/supply chain customers alter their behaviour e.g. loss of markets through loss of jobs in the industry.

RF - Time

- Change is ongoing and as such there is always pressure for change. Some of these pressures occur quickly and so 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. (note the different focus on time in this one). - Changing too slowly may create negative forces as other things change and create more issues.

DF - Legislation

- Changes to laws can force a business to implement change. - Legislation can come from federal, state or local levels. - A recent legislation change was the reduction of Sunday penalty rates, allowing café's to reduce costs for Sunday trading.

Why Consumers Might Cause Change?

- Changing consumer tastes and preferences. - Changing views and values, e.g. animal rights.

Strategy 2: Staff Motivation

- Connects to KPI's rate of productivity growth, level of staff absenteeism and staff turnover. - Motivation can be measured by staff surveys. - Employer of choice - attracting and retaining great staff by having exceptional work environments and conditions. - Keeping staff motivated: → Recognition and rewards → Performance management systems - goal setting and involvement of staff in assessing their own performance and how it relates to business goals. → Policies such as OH&S, EEO, anti-discrimination and anti-bullying promote inclusivity and indicate the business is concerned about all its staff. → Reviewing job design and specifications to make jobs more interesting - job rotation and building skills.

Strategy 6: Cost Cutting

- Costs have a major impact in the survival of the business and need to be monitored closely. - Areas to examine: → Reviewing non-essential costs. → Controlling cash flow, reducing costs in interest for bank overdrafts, reducing costs by taking advantages of discounts by being a good payer to suppliers, reducing the need for loans. → Selling nonproductive assets (old inefficient items or those being underused) - perhaps leasing instead of owning assets. → Shutting down or outsourcing unproductive parts of the business - redundancies to reduce labour costs. → Energy costs - solar panels, recycling, re-negotiate supplier contracts. → KPI's net profit figures, level of wastage and rate of productivity growth.

Three Attributes Necessary for Effective Change Leadership

- Diagnosing - understand the current situation and what may be required. (To diagnose: identify the nature of a problem by examination of the symptoms). - Adapting - changing behaviour and resource usage to close performance gaps. - Communicating - it's not enough to just know what is to be done, a leader has to get it out there.

Strategy 8: Redeployment of Resources (natural, labour and capital)

- Different types of resources can be used in improved ways. - Raw materials or finished goods might be left idle and tie up money. - Labour - allocating high value employees to key roles or making sure they are retained, noting areas with labour is underutilized, using rosters and overtime efficiently. - Capital (equipment and machinery) should be used to capacity, re-configuring set up by reallocating capital from underperforming areas to high demand areas, reinvesting to provide capital suited to the task. Investing in flexible capital where it is capable of several tasks. - KPI's - rate of productivity growth, rate of staff absenteeism and staff turnover (in regards to labour resources).

DF - Globalisation

- Driven by the growth in trade, free trade agreements, internet and electronic communications, flow of people and workers. - It is a driving force for change because of greater: → Access to markets. → Opportunity for customers to increase their standard of living. → Faster growth as companies develop more trading relationships. → Increases the ability for companies access economies of scale (the more one produces, the cheaper it can be - productivity).

Forces

- Driving forces - positive forces create growth and change. More likely to succeed. - Restraining forces - negative forces prevent growth. More likely to not succeed. - When driving forces are more dominant than restraining forces, change is likely to be successful. - When driving and restraining forces are balanced, change is likely to be unsuccessful. - When restraining forces are dominant, the change is unlikely to be introduced.

Decision-making Skills

- During the change process decisions will need to be made. - During a change process the ability to select the best course of action from a range of options will allow the process to be completed effectively. - Some of these decisions will be difficult as change often leads to job issues.

Differentiation Approach

- Emphasis of the difference between a particular product/service and those that are similar by developing the attributes that customers find appealing. - A differentiation approach involves creating a product with features that meet the specific needs of customers. A differentiation approach normally means that the business can charge higher prices. - Businesses who differentiation often become known for their product (e.g. Apple for the iPhone, Pixar for animation). - Note large businesses find it easier to differentiate as they have the resources and can influence the market. - It is appropriate when the target market is not price sensitive, where the market is competitive and where customers have specific needs which are not being met or addressed as well as they could be.

What does Employee Resistance Result in?

- Employee working on old tasks that don't support the change. - Careless errors (no commitment). - Working slowly on new tasks causing delays and extra costs. - Hostility, work to rule actions, strikes. - Absenteeism, resignations.

What does Employee Resistance to Change Look like?

- Employees comfortable in what they do. - Not wanting to change because of? - They might be exposed as less than competent (fear). - They might be already stressed by other things in their lives. - They might feel that their skills they have worked so hard to gain will be lost and they have to start again.

Strategies to Seek Opportunities

- Exporting products and services easier because of improvements in technology and communication - Need to consider product mix - SWOT - Target markets - Time frame - Regulations - Import duties and taxes

Change Leadership

- From traditional roles of announcing the change to: → Clearly describing the strategy. → Implementing the changes. → Keeping staff (and other stakeholders) informed. - Relationships are vital - teamwork, coaching and mentoring, open communication are some of the skills. - Dealing with employees who may react negatively or become stressed is also vital.

Ways of Overcoming Employee Resistance to Change - High Risk

- High risk strategies to overcome employee resistance, including: → Manipulation - is where the business uses sneaky tactics to influence. E.g. only providing some of the information (MyHealthrecords.com we know have found out that our health records can store DNA information) or telling staff about the benefits but hiding information about negative like reduced staffing. Or buying off leaders of resistance (with e.g. promises of promotion). Manipulation is high risk because if employees discover they have been manipulated, it can cause more resistance or damage relationships affecting culture and performance. → Threat - is where the business uses force to get employees to accept the change. Threats could be loss of promotions, loss of jobs, loss of benefits that are not coded into employee agreements. Threats can erode positive relationships and make staff resentful even if they appear to accept the change. Affects morale, work ethic and performance.

DF - Employees

- If employees support the change and are happy to implement it, this will be a major boost. - Some staff can influence others. - Some staff can be empowered to lead the change. - Can be encourage to support by a participative or consultative management style. - Employees can also create demands on the business to change.

DF - Reduction of Costs

- If market share can't be increased, a reduction in costs will increase profits. - Some ideas: → 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). Competition in these industries mean that businesses can "shop around" for savings.

RF - Financial Considerations

- Include costs and revenue issues for a business. - The financial costs off its implementation can restrain a change. Even given sufficient finances, a business contemplating change must weigh up the costs and benefits of the change.

DF - Innovation

- Is a process that occurs when something already established is improved upon. - Innovation can be driven by technological advances and by globalisation. - It can result from research and development undertaken by businesses or through individuals identifying areas for improvement. (note the impact of skilled and trained employees and how they are managed (empowered) on individual contributions).

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. - 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. - Many businesses will try to implement processes to reduce waste levels and also recycle and reuse materials and offcuts as much as possible.

Benefits and Problems of Low Risk Strategies

- Low risk strategies have a lower chance or back firing and causing large amounts of resistance. Low risk strategies can even promote and improve the change by getting staff on board. Employees will feel secure and motivated while going through the process. These strategies can build trust. - But these strategies can take time to implement and take effect, e.g. consultation. Proving incentives can be costly and must be carefully implemented so employees don't feel manipulated.

Delegation Skills

- Managers can't oversee all aspects of the change. - Passing authority for specific tasks or appointing a change agent will allow managers to focus on other tasks while the change is managed effectively.

Communication Skills

- Managers must be able to communicate with stakeholders regarding the need for change and the progress of the change. Without clear communication regarding the change there may be resistance to the change, delaying the change and causing problems for management and other stakeholders. - Effective managers understand the importance of communication.

Net Profit Figures

- Net profit - the amount left after all expenses have been paid. - What an acceptable net profit figure is will differ depending on the size and complexity of the business. A small business might be happy with a small net profit as long as the owner can draw a regular wage. A large business, on the other hand, would have pressure from shareholders to deliver substantial and ongoing profits.

Number of Customer Complaints

- Number of customer complaints - the number of written or verbal expressions of dissatisfaction from customers about an organization's products or services. - An increase in customer complaints may indicate there is a need for further training of employees or that products may not be of satisfactory standard or quality. - A decrease in the level of customer complaints may be seen as positive data. - Customer complaints may mean that the reputation of the business suffers and impact on future sales.

Number of Sales

- Number of sales - the total quantity of sales of a particular product or service. - To determine whether it is meeting sales forecasts and whether the business has to look at ways to increase sales in both the short term and longer taking note trends in sales will assist a business in planning, budgeting and changing the mix or products and/or services as required.

Number of Workplace Accidents

- Number of workplace accidents - the number of unplanned events interrupting the workflow that may or may not include injury or property damage. - Reducing the number of workplace accidents means employees are less likely to be injured, or even killed, in the workplace and demonstrates the propriety and concern of the business for its employees. - It may also allow the business to reduce its WorkSafe premiums and ensure staff know that their safety is a priority for the business.

Key Performance Indicators Used to Evaluate the Performance of a Business

- Percentage of market share - Net profit figures - Rate of productivity growth - Number of sales - Rates of staff absenteeism - Level of staff turnover - Level of wastage - Number of customer complaints - Number of workplace accidents

Percentage of Market Share

- Percentage of market share - the portion of sales (units or revenue) of a product that a company achieved in relation to the sales of the same product that other companies achieved. - If the proportion of market share increases, the business has a greater percentage of the market and sales.

Rate of Productivity Growth

- Productivity measures the business's ability to transform inputs into outputs; and the rate or change, increase or decrease gives an indication of the rate of growth. - A business that increases the rate of productivity growth uses resources more efficiently.

Benefits of the Model

- Promotes identification of the factors involved in the proposed change. - Helps determine if the change is worth it. - Helps managers develop ways of overcoming resistance. - Allows actions and timelines to be developed. - Identifies stakeholders who will likely support and those who would oppose or want to keep the status quo (how things are now).

DF - Managers

- Provide the vision and leadership, motivate or inspire. - Provide the drive and support.

Strategy 5: Improving Quality in Production

- Quality management - quality control, quality assurance and TQM. - Benefits in reducing costs of wasted resources (KPI's net profit figures and level of wastage). - Reducing costs of reworking faulty products - reducing inspection time (KPI - net profit figures). - Reducing inventory levels (JIT related to TQM, KPI - net profit figures). - Producing higher quality products (KPI - number of customer complaints).

Rates of Staff Absenteeism

- Rates of staff absenteeism - a percentage indicating the number of work days lost due to unscheduled staff absence from work, especially without a good reason. - Rates of productivity may reduce as the staff member is not there to complete their tasks; and it can be a cost to the business as other staff may have to be employed to take over the job as well as the staff member receiving payments if they are taking personal or sick leave. - In a small business, high rates of staff absenteeism may mean the business cannot carry out its operations on some days and this may result in lost sales and revenue. - High or increasing rates of staff absenteeism this may indicate that staff are unhappy in the workplace and with their job.

Strategy 7: Lean Production Techniques

- Reducing wastes and costs - removing wastage in transport - unnecessary movement of products, inventory holding excess materials or works in progress at different stages of production, motion - people or products, waiting - removing bottlenecks in production so items are not sitting around, overproduction, over processing (quality standards in excess of customer requirements), defects, faulty products of wrong information. - KPI's affected net profit figures, rate of productivity growth, level of customer complaints, number of sales and level of wastage.

Why Look for Change?

- SWOT - by looking for future trends businesses and organisations can prepare themselves better to stay ahead of their competitors, maintain market share and identify opportunities. - It also helps businesses identify threats from economic conditions, the natural environment or to the factors of production that they use (sustainability). - This will help the organisation prepare better to weather this change.

Strategies to Seek Domestic and Global Opportunities

- Since 2015, the value Australian dollar has been in decline. This makes it easier for Australian businesses to export products as they are more price competitive. - Businesses need to consider the legal issues involved with export, including taxation, IP laws and tariffs and restrictions. - Local regulations may involve paying extra money for reasons not obvious. - There are also issues to manage like cultural differences and norms, and language. - Innovation involves improving or inventing something that extends a business or provides a new product to the economy. → Businesses should try and foster a culture of innovation by encouraging and supporting new ideas. → Research and development (R&D) is a way of creating new products and services, or improving existing ones. → R&D can be expensive, so large companies are normally in a better position to invest in this strategy. → Small businesses are not excluded for R&D - smaller budgets can lead to exciting innovations. - Identifying a gap in the market and developing products or services to fill it can often lead to success. - When trying to meet the needs of a niche market, businesses need to think about whether or not the market is viable or, in some cases, actually exists. - New and emerging technologies are challenges to all businesses. The way consumers shop is constantly changing, and the ability to deliver products in different ways can set businesses apart. - Businesses should keep an eye on technological developments to ensure they are not left behind e.g. Australia Post and letters.

RF - Managers

- Some managers may make hasty decisions that are poorly timed and unclear. (skills) - Other managers may be indecisive and put off making a decision, creating uncertainty. - Either of these situations may eventually cause employees to lose confidence in the decision-making abilities of management. - Managers, like employees, may resist change as they may fear losing their jobs.

Benefits of High Risk Strategies

- Speed - making large changes quickly. - Overpowering resistance. - Can be cheaper as less time is involved.

Level of Staff Turnover

- Staff turnover - measures the number of employees who had to be replaced within a given period. - If the level of staff turnover is high, it may indicate dissatisfaction in the workplace. - Staff turnover means that a business incurs a number of costs, including costs for advertising, recruiting and training new employees. - Loses competitive edge. - If it loses only one key staff member it can have an adverse impact on the performance of the business. - The cost of advertising, recruiting and training staff can be high. - A business may also gain a reputation as one that is not desirable to work at and therefore the quality and number of applicants may decrease when positions are advertised.

Strategy 4: Increased Investment in Technology

- Strategy to optimise operations. - Automated production lines, computer aided design, computer aided manufacturing techniques and website development. - Introducing technologies can create efficiencies, especially in mundane and repetitive tasks. Costs of labour (input, expense) can be reduced, but there are usually high investment costs. Productivity can be increases. - High impact on business performance. - KPI's like rate of productivity growth, net profit figures can be improved by improving efficiencies and reducing costs with improved technologies. Repetitive and dangerous jobs can be removed improving rate of workplace accidents.

Five Determinants

- Supplier power - Buyer power - Competitive rivalry - Threat of substitution - Threat of new entry

Key Principles of Lewin's Force Field Analysis Theory

- The "way it is" is because at any given point the counterbalancing forces are keeping it that way. - If the restraining forces are more powerful than the driving forces they are more likely to not succeed. - Management theorist Kurt Lewin developed the concept of Force Field Analysis. - Force Field Analysis states that in any change situation, counterbalanced forces are at work. - These can be driving forces (pushing for change) or restraining forces (hindering the change process). - So the idea is that the business identifies each particular force, then analyses it to see how powerful it will be. - Are there enough driving forces to support the change, and are there ways of overcoming the restraining forces?

Implementing Differentiation

- The business should have effective marketing and promotion strategies to define and emphasize the benefits. - The business can deliver high quality products. - The business can focus on ongoing research and product development/innovation to maintain the differentiation strategy.

Strategy 3: Change in Management Style or Management Skills

- The management approach of providing direction, implementing plans and motivating people. - Autocratic, persuasive, consultative, participative and laissez-faire. - Style used depends on the personality of the manager, constraints such as time, external factors, employees knowledge and skills, types of tasks and culture. - The ability to do something well, gained through training and experience. - Skills - communication, delegation, planning, leading, decision making and interpersonal. - Styles can influence how the business performs. - Modern expectations are that staff have a say in decision making with two way communication. - Two way communication can help gather useful information for decisions. - But situations might arise where direct decision making must be made (crises, inexperienced staff). - Staff involvement through management styles can impact on morale. - Skills can also impact - delegation can impact on the amount of work done and on skill building, communication skills support greater employee say and involvement in decisions. - Improving skills can impact on ways to address issues with KPI's. - Higher staff motivation can improve KPI's such as rate of productivity, number of sales, rates of staff absenteeism and levels of staff turnover.

Efficiency and Effectiveness

- The management process requires the efficient and effective combination of resources to produce goods or successfully deliver a service. These resources can include: → Financial resources such as cash and loans. → Material resources such as raw materials. → Human resources such as skills. → Information resources such as knowledge. → Forms of technology to assist in processes. → Records of time to complete a process. → Quality strategies to aid production. - Efficiency is judged as the best use of resources in the production of goods and/or services. - It also relates to being able to accomplish a task with the minimum expenditure of time and effort. - The outcome can be judged on both the quality and quantity of the goods or services produced. - E.g. a bus line operator changes the routes along which its buses run so that it overcomes the time lost while waiting at traffic signals and busy intersections.

RF - Legislation

- The past 20 years have seen significant changes in the legal framework within which Australian businesses must work. - 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. a mining company wanting to exploit a new mineral resource will have to do so within the limitations of current environmental protection legislation.

Level of Staff Turnover Cont.

- There are a number of ways that a business can reduce staff turnover. These include: → Choosing good managers who have developed interpersonal and communication skills. → Providing employees with clear expectations, including vision, goals, expected behaviours, standards, priorities and agreed actions. → Encouraging employees to use their skills and recognizing them. → Providing support for employees when needed. → Encouraging employees to get involved in decision-making. → Providing opportunities for employees to provide feedback. → Encouraging employees to upgrade their skills.

Why Competitors Might Cause Change?

- Threat to market share. - Customer base - repeat customers.

Why do Businesses use KPI's?

- To examine how their company has been performing against business objectives. - Allows the business to determine whether resources are being used properly and to see if budgets and forecasts are being met or exceeded. - If a business does not continually monitor its performance, it may not be aware of issues until it is too large to change or amend processes. - Monitoring KPI's and other data also allows a business and its employees to have a method to determine how departments, individual staff and work teams are performing against benchmarks or other standards.

Strategy One: Staff Training and Development

- Training - the process of providing staff with the knowledge or skills required to do a particular job. - Development - the process designed to build up skills necessary for future work activities and responsibilities. - Connected to employee based KPI's: → Level of staff turnover → Number of workplace accidents → Staff absenteeism → Staff training days → Number of complaints and grievances → Number of industrial disputes - Some of these KPI's can illustrate a lack of commitment or level of unhappiness at work in employees. - What is the effect of this unhappiness? → Lower productivity if staff disengaged or resentful → More absenteeism → Higher level of workplace accidents → And therefore reduced efficiency of staff resources - Access to training means staff can contribute to the business (builds understanding and commitment). - Develop their career paths (connects to motivation if staff can see an improved future). - The business will have more highly skilled staff and more staff capable of being promoted, raising skills. - Training staff shows business commitment to those staff and will raise motivation in return. - More highly skilled staff will be more innovative and creative, improving productivity and outcomes.

Background to the Theory

- Your choice as a consumer will vary and be based on your circumstances. - Products are marketed differently (e.g. price, looks, features) because producers are trying to gain a competitive advantage. - Some try to lower costs, others differentiate their products or unique features and benefits (these benefits might be perceived as well as actual e.g. status of brand). - Because lower cost or other differentiation can be applied to all goods and services, they are generic features. - Generic - characteristic relating to a group of things not specifically to one.

Ways to Achieve This

1. Asset utilization - means being able to use the resources of the business efficiently. 2. Low direct and indirect operating costs - this is achieved by offering high volumes of standardized products offering basic 'no frills' products and limiting the customization and personalization of service. Production costs are kept low by using fewer parts, using standard components and limiting the number of models produced to make sure there are larger production runs. 3. Control over all departments or groups of the business - this approach involves checking and reviewing all areas of the business such as finance and operations.

Steps to be Followed When Determining Which Generic Strategy to Use

1. Carry out a SWOT analysis. 2. Conduct a five force analysis to understand where power lies. → Supplier power - how many suppliers for each key part, and how many suppliers in the industry, and is their product unique or can you go elsewhere. → Buyer power - are there lots of buyers for your product, or just a few? Will it cost them to switch from your product (think how banks lock in customers). → Competitive rivalry - are your competitors quick to react and capable? How many are there? Is their product equally attractive to your or do you have a unique feature? → Threat of substitution - do customers have options? Are there products or services similar that customers can switch to? → Threat of new entry - can new businesses easily enter the market or are there barriers like capital investment in machinery or having the right locations? (US cinema chain Readings Cinemas owned a site in Moonee Ponds for 15 years while Hoys took them to the High Court of Australia to prevent their entry to the Australian market. 3. Compare the SWOT analysis with the results of the five forces analysis. Businesses should consider the following: → Reduce or manage supplier power. → Reduce or manage buyer/customer power. → Come out on top of the competitive rivalry (cost). → Reduce or eliminate the threat of substitution. → Reduce or eliminate the threat of new entry.

Threat of New Entry

A new competitor may take customers and reduce market share, especially if there are not distinguishing features of a product or economies of scale that protect pricing decisions.

Five Force Analysis

A tool that focuses on five determinants of competitive power.

Business Change

Any alteration to a business and/or its work environment.

Number of Workplace Accidents - Benefits

Benefits include: → 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.

Impact

Businesses with a high market share are often profitable as are many businesses with low market share. Those in the 'middle' with moderate market share were often the least profitable.

Competitive Advantages

Competitive advantages which establish whether the products are differentiated in any way, or if they are the lowest cost producer in the industry.

Competitive Scope

Competitive scope of the market to determine if the business is to target a wide market or if it should focus on a very narrow niche market.

Buyer Power

Customers who purchase in bulk or large volumes may be able to negotiate a discount.

Supplier Power

Ease with which suppliers can drive up prices (the business becomes a price taker with little opportunity to negotiate a 'good price').

Restraining Forces

Forces that act against the driving forces and resist to change.

Strategies to Seek Domestic and Global Opportunities

Growth of business can be: - Domestic or global - New products - goods or services - New market or niche (a small and specialised market) - Research and development - Innovation of existing product - Since 2015, the value Australian dollar has been in decline. This makes it easier for Australian businesses to export products as they are more price competitive. - Consider which product, strengths and weaknesses of the business, target markets, time frames, money required.

Threat of Substitution

If customers are able to find another supplier for a similar service - this reduces the power and influence of the supplier.

Competitive Rivalry

If there are a large number of players in the market they may follow each other's pricing decisions (e.g. petrol stations or phone/internet deals).

Benchmarks

Is a standard set to measure performance.

The Importance of Leadership in Change Management

Leaders and managers play a vital role in any organisational change. Without strong leadership, change is likely to fail.

Force Field Analysis

Looks at the forces that are driving movement towards a goal or change or restraining or blocking movement towards a goal or change (hindering).

Key Performance Indicator (KPI)

Measures or a set of data that allows a business to determine whether it is meeting its business objectives.

Innovation

Refers to changing or creating more effective processes, products or ideas, and can increase the likelihood of a business succeeding.

'economies of scale'

Refers to the improvements in levels of production that come as a result of producing larger quantities. The 'improvement' in production could refer to the output levels, the quality produced and the costs.

Effectiveness

The degree to which a business achieves its stated objectives. The ability of a business strategy to achieve an intended or expected outcome.

Globalisation

The process of increasing interdependence between countries. It involves the increasing integration of businesses and economies - remove boundaries, creates free trade and movement of capital between countries.

Driving Forces for Change

Those forces affecting a situation that are pushing in a particular direction and are supporting the goal and proposed change.

Link to Management Skills

To be able to effectively manage change, managers will need to be able to apply management skills