Implementing Change (VCE SSCE Business Management): Revision Notes
Management Strategies to Respond to Key Performance Indicators
Why businesses need management strategies to respond to KPIs
Managers and business owners must carefully examine which key performance indicators (KPIs) require monitoring to make informed decisions. Once businesses track these metrics over time, they can identify trends and patterns that inform strategic changes.
By monitoring performance data across multiple years, a business establishes a foundation for making necessary adjustments. Managers use this data to determine which management strategies will be most effective. When businesses understand, respond to, and anticipate data changes, they position themselves for growth and improvement.
The fundamental purpose of implementing management strategies in response to KPIs is twofold:
- To respond to and manage change effectively
- To identify and pursue new business opportunities
Successful businesses don't simply react to KPIs—they use them proactively to stay competitive and responsive to market demands.
Range of management strategies
Businesses deploy various management strategies to address KPI trends and seize new opportunities. The main strategies include:
- Staff training and development
- Change in management styles and management skills
- Increased investment in technology
- Improving quality in production
- Cost cutting approaches
- Initiating lean production techniques
- Redeployment of resources (natural, labour and capital)
- Innovation
- Global sourcing of inputs
- Overseas manufacturing and global sourcing
Each strategy addresses different aspects of business performance and can be applied individually or in combination, depending on the specific challenges indicated by KPI data.
Staff training and development
Understanding the importance of staff training
Employees represent a critical asset for business success. When managers examine employee-related KPIs—such as staff turnover rates, training days completed, workplace accidents, staff complaints, and industrial disputes—they gain insight into employee satisfaction levels.
Key employee KPIs to monitor:
- Staff turnover rate
- Staff absenteeism levels
- Number of workplace accidents
- Staff complaints and grievances
- Industrial disputes
- Productivity rates and growth
Indicators requiring action
High staff turnover compared to industry averages suggests employee dissatisfaction. Similarly, increasing absenteeism may indicate that staff lack commitment to the business's success. These warning signs demand strategic intervention through training and development.
Benefits of effective training programmes
Businesses recognised as 'Employers of Choice' demonstrate how effective training attracts and retains qualified, productive, and experienced staff. A comprehensive training strategy delivers multiple benefits:
Knowledge and skill development: Training provides formalised methods to enhance employee knowledge beyond their current job requirements. It addresses weaknesses that might otherwise limit employee and business performance improvement.
Consistency and standardisation: When employees performing similar jobs receive identical training, the business ensures consistency in practices and processes. This standardisation reduces errors and maintains quality standards.
Employee confidence and motivation: Staff who receive training feel more confident in their abilities, leading to more effective job performance. Access to training opportunities also increases motivation and positive contribution to the business.
Innovation and future development: Employees need both technical skills for current roles and opportunities to innovate. Companies like Google and Virgin encourage staff innovation and risk-taking, ensuring continuous refinement of products and services.
Business case: Officeworks leadership development
Worked Example: Officeworks Leadership Development Programme
Officeworks developed three leadership courses based on staff feedback:
- Store Business Manager In-Training
- Coordinator In-Training
- Emerging Leaders
Programme structure: The programme combines multiple training formats: peer forums, on-the-job actions, coaching, online learning, and traditional classroom sessions.
Results achieved:
- 58% of graduates promoted to leadership positions
- 52% of promoted graduates were female (compared to 46% previously)
Impact on KPIs
Effective training programmes positively influence multiple KPIs:
- Reduced staff turnover
- Lower absenteeism
- Increased productivity growth
- Improved quality of service and products
- Enhanced staff motivation
Change in management styles and management skills
Understanding management styles
The management style employed by leaders significantly influences business performance. In contemporary businesses, employees typically expect involvement in decision-making and two-way communication. Therefore, most businesses favour participative or consultative management styles during normal operations.
However, situations requiring quick decisions—such as meeting tight deadlines, handling serious incidents, or managing inexperienced workers—may necessitate autocratic or persuasive styles. Effective managers adapt their style to suit the situation and business context.
Management skills in response to KPIs
When KPI data reveals issues with profit, sales, or market share, managers must deploy specific skills:
Communication skills: Managers must communicate effectively with stakeholders across departments to address performance issues.
Decision-making skills: Swift, informed decisions are necessary to ensure sales and profits increase appropriately.
Interpersonal skills: These ensure all staff understand requirements and their role in addressing KPI concerns.
Self-assessment and improvement
KPI trends may highlight the need for managers to develop their own skills. Metrics such as staff absenteeism, turnover, and productivity reflect various issues, including how managers work with and treat employees.
Business case: managing during COVID-19
Worked Example: Management Adaptation During COVID-19
The COVID-19 pandemic forced managers to adapt quickly to remote work arrangements. Research published in the Journal of Leadership and Organizational Studies revealed important findings:
Manager-employee perception gap: Managers believed they were delegating more during the pandemic, but employees perceived a decrease in delegation. This gap may stem from managers' fear of losing control, particularly among lower-level supervisors.
Key lesson: Managers should regularly seek feedback from employees to understand how their management style is genuinely perceived. This feedback loop allows for continuous improvement in leadership approach.
Increased investment in technology
Technology as a driver of change
Technology represents a major catalyst for business transformation. Multiple KPIs benefit from technological investment:
- Reduced wastage levels
- Fewer workplace accidents
- Improved productivity growth rates
Technology in hazardous environments
For industries involving dangerous or physically demanding work, technology enables machines to replace humans in hazardous tasks, improving employee safety. Advanced machinery, cutting lists, materials schedules, and computer-aided design (CAD) systems reduce material wastage, cutting costs and increasing productivity.
Technology in sales and customer engagement
The rapid growth of online shopping and digital research means businesses must invest adequately in technology to remain competitive, particularly in retail. Businesses monitor website hits, sales figures, and market share to identify opportunities for technological development.
Example: Australia Post transformation
Australia Post responded to declining mail volumes and rising online shopping by developing enhanced parcel delivery services, demonstrating successful strategic adaptation to technological trends.
Essential technology applications
Businesses now rely on technology across all operations:
- Record keeping and file management
- Production processes
- Communication systems
- Customer engagement
Without continuous technology upgrades and operations streamlining, businesses lose competitive advantage. Although upgrading technology involves ongoing costs, most businesses have no alternative if they wish to remain viable.
Technology examples for business improvement
| Technology | Description and Benefits |
|---|---|
| Robotic Process Automation (RPA) | Automated bots perform repetitive tasks faster and more accurately than humans. Applications include data entry, supply chain management, and data gathering. Bots operate 24/7 without assistance, making fewer mistakes and freeing workers for higher-value projects. |
| Document Data Extraction | Automatic digital transcription saves countless employee hours. Purchase orders, client documents, customer records, and invoices are scanned quickly and accurately, improving data validation. Data is stored, processed, and integrated into other systems efficiently, reducing manual input errors. |
| Workflow Tools | Cloud-based systems provide excellent platforms for organising work processes and projects within teams. They improve data workflow within organisations and help digitised data to be efficiently processed and stored. |
| AI Assistants | Chatbots handle simple customer service issues, directing complex problems to appropriate staff. This reduces staff workload from simple queries. Businesses respond quickly and handle multiple requests simultaneously. Chatbots are scalable, adjusting to demand fluctuations. |
| Low-code Applications | Customised applications have become more affordable for small businesses. Common software that can be customised helps businesses streamline processes and support specific, complex tasks. |
Benefits of technology investment
Technology provides numerous advantages:
- Increased communication reach and spread
- Enables small businesses to compete more equally with larger competitors
- Streamlined information storage
- Supports staff training
- Allows dangerous tasks to be completed safely
- Reduces waste through streamlined materials management
- Improves financial systems efficiency
Improving quality in production
Quality and business success
Quality directly links to profit and achieving business objectives. Numerous businesses with good ideas or inventions have failed due to actual or perceived quality issues. Conversely, many businesses apply quality improvement strategies to achieve objectives and increase market share.
Benefits of quality improvement
Implementing quality improvements delivers multiple advantages:
- Elimination of defects
- Reduced inspections required
- Less waste
- Lower inventory requirements
- Ability to charge higher prices for superior quality
- Improved productivity
Monitoring quality through KPIs
Businesses must monitor quality-related data regularly:
- Level of wastage
- Market share
- Sales and profit figures
- Rate of productivity growth
- Number of defects
- Customer complaints
Quality of product and service are vital to success and sustainability regardless of business size.
Strategies to improve quality
Businesses can implement various practices to enhance quality:
Management commitment: Ensure quality is embedded in business goals and priorities.
Quality control measures: Implement quality checks at all production stages.
Quality assurance: Establish systematic quality assurance processes.
Total Quality Management: Introduce comprehensive quality management systems.
Regular operations review: Continuously review and refine operations processes.
Lean production techniques: Apply lean principles to eliminate waste and improve flow.
Benchmarking: Compare performance against world and industry best practice.
Standardisation: Standardise components and processes to reduce inventory and simplify production.
Training: Train managers and employees in quality principles.
Monitoring quality performance
Effective quality monitoring involves:
- Using appropriate KPIs to measure production or service delivery
- Scheduling regular meetings to discuss and resolve issues quickly
- Focusing on product or service to ensure best possible quality
- Ensuring all teams involved are aware of performance data
- Seeking team input regarding improvements
Business case: ISO 9001 certification
Worked Example: Achieving ISO 9001 Certification
ISO 9001 certification provides businesses with advantages including reduced costs, enhanced productivity, and higher customer satisfaction.
Steps to obtain certification:
- Perform and pass internal audit
- Hire competent quality assurance consultants
- Document business processes and systems
- Define appropriate Quality Management System (QMS)
- Implement the QMS
- Verify the QMS
Benefits achieved: Although achieving accreditation is lengthy, benefits include strengthened supplier and customer relationships, increased business efficiency, improved decision-making, and customer attraction.
Cost cutting
Purpose of cost cutting
Businesses implement cost-cutting strategies to improve effectiveness and potentially increase profit. This represents a quick response method for addressing certain KPI concerns.
Cost-cutting methods
Reducing non-essential costs: Conduct a full review of all business expenses with the goal of reducing or eliminating some.
Controlling cash flow: Ensure adequate cash flows in and out of the business in a timely manner. Negotiate extended payment terms with suppliers to reduce need for costly finance or bank overdrafts.
Early payment incentives: Explore discounts and incentives for early invoice payment.
Expert consultation: Hire external consultants to identify bottlenecks in service or production processes. Plan for peak times (e.g., in retail) and adjust staffing rosters accordingly to reduce expenses.
Selling assets: Raise funds by selling unnecessary machinery or switching from purchasing to leasing equipment.
Redundancy and outsourcing: Make employees redundant or outsource certain business functions to Australian or overseas providers. Many businesses now source parts and materials from international suppliers or use overseas call centres and IT services.
Renewable energy: Reduce energy costs by installing solar panels or using other renewable energy sources.
Water conservation: Use tank water to reduce mains water supply costs.
Strategic cost monitoring
When businesses monitor KPIs such as wastage, productivity, productivity growth rate, profit, and cash flow, they make informed decisions about where savings can be achieved. However, reducing employee numbers often becomes the first strategy when expenses need cutting.
Business case: electric vehicles in trucking
Worked Example: Electric Vehicles in Australia's Trucking Industry
Australia's trucking industry is transitioning to electric vehicles, demonstrating innovative cost-cutting:
Benefits for trucking companies:
- A Brisbane to Sydney trip could cost over $600 in fuel for conventional trucks
- Electric trucks would at least halve that cost
- Reduced maintenance costs
- Lower emissions
Broader benefits:
- Australia spent approximately $31 billion importing oil in 2019, with half used for road transport
- Electric trucking reduces trade imbalance
- Decreases risk to freight industry from geopolitical fuel supply disruptions
- Companies like Woolworths and Ikea gain environmental benefits and brand enhancement
Innovation in electric trucking: Battery swap systems for long-haul trucks eliminate recharging delays. Sole operators can convert existing trucks and lease batteries, making the transition accessible beyond large companies.
Initiating lean production techniques
Understanding lean production
Lean production refers to a range of measures that aim to reduce costs, reduce waste, and increase efficiency in production. The approach involves minimising inventory and maximising flow through the production process.
Origins and development
Engineer Taiichi Ohno developed lean production principles after World War II at Toyota. His philosophy focused on:
- Eliminating waste
- Empowering workers
- Reducing inventory
- Improving productivity
Rather than maintaining resources in anticipation of future needs (like Henry Ford's production line approach), Toyota built supplier partnerships and produced made-to-order automobiles. By maximising multiskilled employees, Toyota reduced management levels and used resources flexibly, enabling faster response to market demands than competitors.
The 10 rules of lean production
- Eliminate waste
- Minimise inventory
- Maximise flow
- Pull production from customer demand
- Meet customer requirements
- Do it right the first time
- Empower workers
- Design for rapid changeover
- Partner with suppliers
- Create a culture of continuous improvement (Kaizen)
Lean production techniques
| Technique | Explanation and Application |
|---|---|
| The pull (e.g. Kanban) | Reduces waste by starting new work only when customer demand exists. This approach reduces overhead and optimises storage costs. Useful for businesses concerned with waste levels, offering flexibility to respond to product demand. |
| One-piece flow | Achieves discrete work flow rather than using a 'batch' approach. Addresses KPIs such as waste levels and productivity growth rate by improving process efficiency. |
| Takt | Refers to the maximum time allowed to produce one unit of product. Helps managers determine time usage and identify improvement opportunities when productivity growth rate is a concern. |
| Zero defects strategy | Focuses on achieving zero defects and eliminating waste associated with defects. Improves quality to reduce waste, support productivity growth, and decrease customer complaints. |
| Just In Time (JIT) | Minimises production time, production costs, and inventory held. Ensures resources arrive precisely when needed in the production process. |
| Benchmarking | Measures business performance against competitors in the same market or industry. Provides insights into performance levels and identifies areas requiring improvement. |
Focus areas for lean production
Womack and Jones, founders of the Lean Enterprise Institute, recommend managers focus on three key areas:
- Purpose – understanding why activities occur
- Process – examining how activities are completed
- People – considering who performs activities and their capabilities
Application across industries
Lean production techniques apply to both manufacturing and service industries. They represent a way of examining data to improve processes. Different businesses implement different systems depending on their situation.
Common lean production systems:
- 5S (sort, set in order, shine, standardise, sustain)
- Bottleneck analysis
- Continuous flow
- Kaizen
- PDCA (plan, do, check, act)
All systems focus on eliminating waste, identifying and addressing defects, and improving the entire system by reducing lead time, ensuring consistent quality, and tracking progress.
Redeployment of resources
What is resource redeployment?
Redeployment of resources involves relocating resources such as materials, equipment, and labour to different departments, sites, or countries to improve efficiency, productivity, and reduce wastage.
Redeployment of staff specifically refers to moving employees from one business area to another, often as an alternative to termination of employment.
When to redeploy resources
When businesses discover high waste levels or other operational inefficiencies, resource redeployment becomes necessary. These inefficiencies appear in KPIs such as waste levels and productivity measures tracked over time.
Properly allocating natural resources, materials, labour, and capital can significantly improve output production. Efficiency gains occur when resources are allocated correctly.
Forms of resource redeployment
Office and factory relocation: Moving operational facilities to more suitable locations.
Workforce changes: Reducing or changing workforce composition.
Material redirection: Changing or redirecting materials usage.
Product shifting: Moving resources and materials from one product line to another.
Planning staff redeployment
Redeploying staff can be challenging for everyone involved. Businesses must carefully plan how resources, particularly staff, will be allocated. In response to KPI data, businesses may decide where stores or factories should be relocated and allocate resources accordingly.
Many businesses now redeploy activities to other countries to access cheaper labour costs or gain other benefits and concessions.
Business case: Woolworths warehouse closure
Worked Example: Woolworths Minchinbury Warehouse Closure
Woolworths announced nearly $100 million in costs for warehouse worker redundancies and poor Metro store performance.
Key details:
- Approximately 330 jobs lost due to Minchinbury warehouse closure (western Sydney) in 2024
- Site reached capacity, requiring new facility planning
- New warehouse will cost $400 million and create 700 new jobs
- Company exploring redeployment opportunities for affected staff
- Providing support and career transition services before closure
Metro stores challenges:
- Large revenue reduction in inner-city Metro stores due to reduced city customers
- Three of 13 sites already closed
- Reviewing options for remaining 10 stores
Innovation
Understanding innovation
Innovation represents an improvement or invention that enhances or extends a business and provides new products or services to the economy. It involves creating and successfully applying new ideas to business operations.
Innovation provides opportunities to seek and develop new business opportunities for Australian businesses. It can be a way to respond to various KPIs including wastage levels, sales, customer complaints, productivity growth rate, staff turnover, and market share percentage.
Types of innovation
Innovation can be:
- Incremental – small, gradual improvements
- Radical – significant changes to products or processes
- Breakthrough – transformative innovations that change entire economic sectors
Creating a culture of innovation
Developing an innovation culture allows businesses to follow through with ideas and establish foundations for long-term success. Innovation centres on developing unique selling points for products or services.
Sources of innovation:
- Employees
- Managers
- Customers
Strategies to support innovation
Businesses can implement various approaches to foster innovation:
Market research: Conduct research with customers to understand their needs and preferences.
Market analysis: Study market trends to identify and target emerging opportunities.
Risk assessment: Calculate and reflect on innovation risks, working to minimise them.
Competitive analysis: Examine competitor practices to identify adoptable and adaptable approaches.
Research and development investment: Allocate resources to exploring new ideas and technologies.
Learning from failure: Develop systems to analyse failures and extract valuable lessons.
Idea testing: Test new concepts to ensure viability before full implementation.
Business case: YouTube entrepreneurs
Worked Example: Australian YouTube Creators
YouTube has become a lucrative platform for Australian creators:
- Over 200 Australian channels have more than one million subscribers
- YouTube contributed $608 million to the Australian economy in 2020
- Supported 15,750 full-time equivalent jobs
Marion's Kitchen: Marion Grasby transformed from a food company supplying supermarkets to a food media company. The YouTube channel has:
- Over 1.3 million subscribers
- 48 million monthly views across platforms
- Acts as a 'flywheel' for supermarket products
- Plans for e-commerce platform selling products featured on the channel
Bounce Patrol: Shannon Jones's channel has become one of the world's most popular kids' channels:
- 22 million subscribers
- 13 billion views
- Australia-wide team of 10
- Films from Melbourne studio
Key insight: 90% of watch time on Australian YouTube content comes from outside Australia, demonstrating global reach.
Business case: Adore Beauty
Worked Example: Adore Beauty Market Expansion
Online beauty retailer Adore Beauty demonstrates innovation through market expansion:
Strategic innovation:
- Targeting male customers (historically small segment)
- Noticed increased male engagement with skincare during COVID-19
- Launched more products targeted at men
- Redesigned website to better showcase products for male customers
Digital experience focus:
- Online beauty shopping currently represents only 11% of Australia's $6 billion beauty industry
- Goal: create digital experience exceeding in-store experience
- Famous for including a Tim Tam with every order (highly popular with customers)
ASX listing benefits:
- Increased brand and business profile
- Facilitated connections with new brand partners
- Helped attract talent
Global sourcing of inputs
What is global sourcing?
Global sourcing is a procurement strategy where businesses source goods and services from the global market to ensure the highest level of value and efficiency. This approach exploits global efficiencies such as:
- Cheaper raw materials
- Lower labour costs
- Reduced tax rates in some countries
- Free trade agreements
Strategic importance
When businesses implement changes responding to KPIs (sales numbers, profit rates, waste levels), continuing to access high-quality, lower-cost products and components becomes essential for remaining competitive.
Global sourcing enables businesses to:
- Lower costs
- Improve quality
- Meet customer demand by increasing supply
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Reduced production costs due to comparatively cheaper products than Australian-made | Quality standards and quality control may be inferior and more difficult to monitor |
| Access to expertise unavailable in Australia | Supply chain delays as goods must be transported to Australia (significant concern since 2021) |
| Lower production costs as other countries may have better access to raw materials | Communication difficulties across different time zones and language barriers |
Business case: COVID-19 and supply chains
Worked Example: COVID-19 Supply Chain Disruptions
The pandemic revealed significant vulnerabilities in global supply chains:
Supply and demand pressures:
- Unscheduled closures of manufacturing and distribution facilities
- Bottlenecks at borders
- Sick workers causing choke points
- Increased demand for products as people stayed home
- Labour shortages, particularly in licensed trades
Additional disruptions:
- Texas winter storm in February
- Suez Canal blockage (six days) in March
- Colonial gasoline pipeline cyberattack (six days) in May
- Over 3,000 shipping containers lost overboard in 2020
- 1,000 containers lost by end of April 2021
Microchip shortage impact: Prior to COVID-19, microprocessor production already faced capacity constraints. The pandemic intensified pressure through production and distribution bottlenecks and increased demand.
Disruptions now affect automobiles (for power steering, braking, infotainment systems), not just electronics. General Motors and Ford idled North American plants due to semiconductor shortages.
Geographic concentration risk: Microchips are almost exclusively manufactured in areas with high natural disaster risk: China, Japan, Taiwan, South Korea, Malaysia, Thailand, Philippines, and California.
Key lesson: Businesses must become intimately familiar with their supply chains—what they get, how often, in what quantities, from whom, from where, how, and why. Business continuity plans and contingency measures must be established ahead of time.
Overseas manufacturing and global sourcing
Understanding overseas manufacturing
Overseas manufacturing involves using suppliers from other countries to manufacture products, aiming to provide lower costs and greater choice while maintaining high quality standards.
Advantages and disadvantages
| Advantages | Disadvantages |
|---|---|
| Procurement of high-quality goods and services | Potential delays in accessing products |
| Lower production costs | More complicated and complex supply chains |
| Greater choice for businesses and customers | Limited control over prices and ranges when decisions are made in another country |
Overview and evaluation of management strategies
Matching strategies to KPIs
Businesses must continually monitor and evaluate data and KPIs to ensure they employ appropriate strategies for effective response.
| Key Performance Indicator | Suitable Strategies |
|---|---|
| Percentage of market share | Staff selection and training; quality production improvement; management skills (decision-making, analysis); innovation |
| Net profit figures | Lean production techniques; technology improvements; management skills; economies of scale; overseas sourcing and manufacturing; resource redeployment; innovation |
| Rate of productivity growth | Technology improvements; quality supplies; global sourcing; overseas manufacturing; resource redeployment; lean production; innovation |
| Number of sales | Trained and retained employees; quality products/services; technology developments (e.g., online presence) |
| Rate of absenteeism | Productive and motivated employees; people-focused management styles and skills; technology improvements for safer workplace |
| Level of staff turnover | Effective management styles and skills; employee training and retention; technological development creating new job roles; innovation |
| Level of wastage | Lean production techniques; quality management; resource changes (renewable energy, recycling); trained employees; innovation |
| Number of customer complaints | Increased quality output; skilled and knowledgeable employees; supportive management skills; innovation |
| Number of workplace accidents | Technology investment (robotics); staff training for safety; innovation; management reinforcing safe environment |
Advantages and disadvantages of management strategies
| Strategy | Advantages | Disadvantages |
|---|---|---|
| Staff training | Highly skilled staff able to complete new roles; increased motivation as staff feel part of change process | Time and money costs may be substantial; trained staff may leave the business |
| Change in management styles | Participative style involves staff in decision-making; two-way communication; group decisions consider multiple views | May not work if staff lack skills/experience; group decision-making takes more time; may not lead to desired outcomes |
| Change in management skills | Managers with communication, interpersonal, delegation, and leading skills more likely to achieve successful change; all stakeholders understand and are involved | Managers may need time to develop skills; detailed planning may extend change process timeline |
| Increased investment in technology | Provides most efficient way to change processes and products; creates competitive edge; can increase sales and market share | Expensive (technology and training costs); technology becomes obsolete quickly requiring continuous investment |
| Improving quality in production | Less waste; more efficient resource use; high-quality products/services attract and retain customers | Quality strategies must be implemented across whole business; can be costly |
| Cost cutting | Increases profit by reducing operating expenses; makes business more competitive | Often means staff reduction with job losses; remaining staff have increased workload; may reduce product/service quality |
| Initiating lean production techniques | Focuses on systems and processes; improves quality; reduces waste; cuts costs | Organisation-wide model requiring examination of every business aspect; requires time, effort, and money |
| Redeployment of resources | More efficient resource use; moving staff can improve efficiency and motivation; focus on sustainability and renewable resources; capital improvements increase competitiveness | Expensive; stressful for staff; may lead to redundancies; supplier reliability issues; substantial costs for capital movement |
| Innovation | Provides opportunities to enter new markets and expand; creates competitive advantage; offers customers more goods and services | Requires supportive environment and culture; involves risk-taking; demands time and effort |
| Global sourcing of inputs | Access to cheaper products and materials; lower production costs; access to raw materials; quality products | Difficult to control quality; shipping delays; cultural and language differences; slower turnaround for fixes |
| Overseas manufacture and global sourcing | High-quality goods and services procurement; lower production costs; greater choice | Product access delays; complicated supply chain; limited price and range control when decisions made elsewhere |
Key Points to Remember:
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Businesses need management strategies to respond to KPI trends and identify new opportunities—monitoring performance over time establishes patterns for informed decision-making
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The 10 main management strategies are: staff training, management style/skills changes, technology investment, quality improvement, cost cutting, lean production, resource redeployment, innovation, global sourcing, and overseas manufacturing
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Staff training develops both technical skills and innovation capacity—businesses like Officeworks demonstrate how structured programmes improve KPIs including staff turnover and productivity
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Lean production (developed by Taiichi Ohno at Toyota) focuses on eliminating waste, minimising inventory, and maximising flow through techniques like JIT, Kanban, and continuous improvement (Kaizen)
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Each strategy has specific advantages and disadvantages that must be evaluated based on the business context—for example, technology investment provides competitive advantage but requires ongoing costs, while cost cutting improves profit but may reduce quality or require staff redundancies
Highlighted key terms:
- Lean production – measures to reduce costs, waste, and increase efficiency by minimising inventory and maximising flow
- Redeployment of resources – relocating materials, equipment, and labour to improve efficiency and reduce wastage
- Innovation – improvements or inventions that enhance a business and provide new products or services
- Global sourcing – procurement strategy sourcing goods and services from global markets for highest value and efficiency