how would you measure finance (6 points)
- Revenue
- costs
- ROCE
- profit
- balance sheet
- gearing ratio
how would you measure marketing (2 points)
- brand loyalty
- market share
how would you measure operations (5 points)
- labour productivity
- unit cost
- capacity
- capacity utilisation
- defected products
how would you measure HR (5 points)
- employee motivation
- labour turnover
- retention rates
- labour productivity
- absenteeism
core competency definition
a set of skills or actions that a business performs better than anyone else
benefits of having a core competency (3 points)
- competitive advantage
- you can outsource weak areas of your business to ones with them as core competencies
- if you can leverage a core competency you can gain brand loyalty
drawbacks of core competencies
external environment changes means there are never constant core competencies
how can core competencies be tested (3 points)
- do they allow for market development?
- do they provide noticeable benefits to the end user?
- are they difficult to imitate?
Kaplan and Norton’s balanced scorecard model
look it up! (schedule J)
Kaplan and Norton’s balanced scorecard model: Financial
shareholders want: - ROCE, ROI, increased share price and sales growth
- Objective = increase liquidity
- measure = current ratio
- target = from 1:1 to 2:1
- initiatives = decrease receivable days and increase payable days
Kaplan and Norton’s balanced scorecard model: customer/market
brand loyalty
- Objective = increase brand loyalty
- measure = PED
- target = become more inelastic
- initiatives = quality assurance/control
Kaplan and Norton’s balanced scorecard model: Internal business processes
Ability to produce products
- Objectives = increase production
- Measure = capacity utilisation
- target = increase from 60% to 80%
- initiatives = increase labour turnover
Kaplan and Norton’s balanced scorecard model: Learning innovation and growth
learn, improve and innovate
- objective = produce more new products
- measure = number of products in portfolio
- Target = go from 4 to 6 products
- initiatives = invest in R&D
Elkington’s triple bottom line aim
an attempt to make PLC’s more socially responsible
Elkington’s triple bottom line: People
social bottom line
- stake holders
- fair pay for employees
- fair trade products
Elkington’s triple bottom line: Planet
environmental bottom line
- looking to minimise environmental impact
- reduce environmental cost
- use of sustainable raw materials
Elkington’s triple bottom line: profit
financial bottom line
- how much profit is the business making
strengths of Elkington’s triple bottom line (2 points)
- forces the business to look at areas they are less comfortable with
- CSR costs more to maintain (e.g. fairtrade)
weaknesses of Elkington’s triple bottom line
- hard to measure people and planet (no calculation)
