Topic 7.3 - Overall performance

Question 1

Marketing measures of business performance

Answer 1

• what percentage of customers are repeat
• what percentage of customers are loyal
• what’s the cost per head of gaining new customers
• market share
• new product sales as a percentage of total sales

Question 2

Human resources measurement to assess performance

Answer 2

• job satisfaction
• diversity
• promotion data
• training per employee

Question 3

Operations data to analyse performance

Answer 3

• quality
• waste
• productivity
• time
• growth

Question 4

The importance of core competences

Answer 4

Something unique a business has or can do strategically well

• creates a competitive advantage
• internal strength
• provides customer benefits
• allow for higher quality products and services

Question 5

Criticisms of core competences

Answer 5

• outsourcing has decreased competitiveness
• difficult for core competencies to be genuinely unique
• businesses may be complacent

Question 6

What is short termism

Answer 6

Is where a business prioritises short term rather than long term performance

• share price
• revenue growth
• gross and operating profit
• unit costs and productivity
• return on capital employed

Question 7

Long term performance measures

Answer 7

• market share
• quality
• innovation
• brand reputation
• employee skills and experience
• social responsibility and sustainability

Question 8

Indicators of a short termism approach

Answer 8

• bonus bases on short term objectives
• low investment in R&D
• high dividends payment rather than investing profits
• overuse of takeovers rather than internal growth

Question 9

Causes of short termism

Answer 9

• focus on short term performance indicators
• threat of takeovers
• many higher ups have a career based in finance

Question 10

Effects of a short termism approach

Answer 10

• reluctance to invest in capacity , training , R&D , and invest in advertising
• decisions that give short term gain

Question 11

The value of different measures of assessing business performance

Question 12

Kaplan and Norton

Answer 12

• align business activities to the vision and strategy of the business, improve internal and external communication and monitor business performance against strategic goals

Question 13

Features of Kaplan and Norton

Answer 13

• top down approach
• starts with mission and vision
• key performance indicators
• non financial measures

Question 14

Four perspectives of balanced scorecard

Answer 14

• financial
• customer
• internal processes
• organisational capacity

Question 15

Financial KPI

Answer 15

• ROI

- profitability margins

Question 16

Customer KPI

Answer 16

• level of return

- service rating

Question 17

Internal processes KPI

Answer 17

• lead time

- unit costs

Question 18

Organisational capacity KPI

Answer 18

• employee retention

- flow of NPD ideas

Question 19

Advantages

Answer 19

• broader view of performance
• links to long term
• involves everyone
• highly flexible

Question 20

Disadvantages

Answer 20

• danger of too many KPIS
• need to balance all 4
• senior management could still be too concerned with financial performance
• need to be updates regularly to be useful

Question 21

Triple bottom line

Answer 21

• profit
• people
• planet

Question 22

Benefits of the triple bottom line

Answer 22

• encourages business to think beyond narrow measure of performance
• encourages CSR reporting
• supports measurement of environmental impact and extent of sustainability

Question 23

Drawbacks of the triple bottom line

Answer 23

• not useful for overall performance
• hard to reliably and consistently measure people and planet
• no legal requirement to report it