7.3 Overall position (Analysing internal position)

Question 1

Operations data

Answer 1

Capacity utilisation
Labour productivity
Unit costs
Quality (n’ of faults and complaints)

Question 2

Capacity utilisation

Answer 2

Extent to which a business is using its max capacity with current resources in place.
Actual output
———————x100
Max output
-There is a relationship between capacity utilisation and efficiency.

Question 3

Labour productivity

Answer 3

How much employees are producing on average.
-Inverse relationship between labour productivity and unit cost.
Output
———-
N’ of employees

Question 4

Unit costs

Answer 4

Directly related to capacity utilisation and labour productivity.
Lower unit costs= competitive advantage over rivals, allows lower prices.

Question 5

Quality (n’ of faults & complaints)

Answer 5

Subjective.
Quality is judged by; customer loyalty (n’ of repeat customers)
customer satisfaction rates (questionnaires & surveys)
elements of operational performance e.g n’ of faulty products or response times to customer queries.

Question 6

Advantage of financial measures of HR performance

Answer 6

Easy to analyse
Give business important data easily comparable to previous years as well as other businesses.

Question 7

Environmental data

Answer 7

Important in judging business performance because;
-environment and global warming are major issues as science advances.
-businesses judged on environmental performance, receive negative publicity if activities damaging.
-can be a USP or opportunity.
-there is government legislation in place businesses must follow

Question 8

Marketing data

Answer 8

Historic data on specific markets e.g company shares, overall market size etc.
-consumer behaviour & buying decisions
-sales figures
-data on other firms, particularly direct competition-market share
-results of market research
(Market data done in y12)

Question 9

Core competences

Answer 9

Combined expertise, knowledge, experience of leaders & founders of a business.
-Do they allow for market development?
-Do they provide noticeable benefits to end user?
-Are they difficult to imitate?

Question 10

Advantages to core competences

Answer 10

-collective learning and technical expertise.
-leads to competitive advantage.
-unique characteristics to a business.
-difficult to imitate by others.

Question 11

What are core competences?

Answer 11

Unique abilities a business possesses, differentiates them from other businesses, giving competitive advantage.
Businesses compromise other functional areas focusing fully on what they do best.
e.g Apple- design & aesthetics through R&D.

Question 12

Developing core competences

Answer 12

2 theorists: Prahalad and Hamal (Harvard Business Review) argued core comps are combination of business knowledge, production skills, technology use.

Question 13

Questions that tested if a business truly developed their core competency
(developed by Prahalad & Hamal)

Answer 13

1- Do core competences provide access to wide range of markets?
2- Do core competences contribute to end product benefits received by customer?
3- Are they difficult for competitors to imitate? (IMPORTANT)

Question 14

Why are core competences important?

Answer 14

They provide businesses with a competitive advantage, strengthen & develop brand image, contribute to market share, or even become market leader, helps them produce highly differentiated products.

Question 15

Criticisms of core competences

Answer 15

-Outsourcing- common technique used so they can focus on core comps, if done badly can damage reputation, business can become fragmented(no clear leader).

-Theory is out of date. Mark Parker (ex CEO of Nike) argued that in a world experiencing rapid change, having core competences will fail to meet customers constant evolving demands.

Question 16

Outsourcing (core comps criticism centres around outsourcing)

Answer 16

Business hires third party outside company to perform services & create goods traditionally performed internally by business’ own employees.

Question 17

Theory: ELKINGTON’S TRIPLE BOTTOM LINE

Answer 17

-3 areas for a business to be sustainable in modern day.
-Designed to encourage sustainable production
-Forces a business to consider its social responsibility by looking at all 3.

Question 18

3 key components of elkington’s

Answer 18

PROFIT
PEOPLE (all stakeholders & employees )
PLANET ( looking after environment )

Question 19

Elkington’s Theory- Profit

Answer 19

Argues that financial bottom line was that businesses must make profit.
To be successful initially, then further use profits to sustain community business operates in.

Question 20

Elkington’s Theory- People

Answer 20

Measures impact a business will have on all people with which it is involved.
Forces business to be socially responsible to all stakeholders.
Fair Trade movement operates goal of assisting suppliers in less developed countries to achieve better trading terms, improve their living standards.

Question 21

Elkington’s Theory- Planet

Answer 21

Businesses that assess their overall performance using triple bottom line are likely to minimise negative impact their activities will have on environment.
-reduce carbon emissions
-use more sustainable resources
-reduce usage of non-renewable resources

Question 22

Value of triple bottom line

Answer 22

-Encourages business to consider its social responsibilities not simply a method to assess its performance.
-Allows business to explore its strengths and weaknesses in several areas.
-Helps business consider its longer term future with particular emphasis on sustainability.

Question 23

Assessing Short & Long term performance

Answer 23

Assesses business’ overall performance by looking at R&D, Profit quality, Employee engagement, Customer satisfaction, Brand image, Sustainability.

Question 24

R&D (operations)

Answer 24

If business invests heavily in R&D, likely to be looking years into future therefore its performance in longer term.

Question 25

Profit quality (finance)

Answer 25

High quality profit means steadily increasing over number of years, indicates business making longer term financial decisions.

Question 26

Employee engagement (HR)

Answer 26

Businesses that take engagement seriously more likely to have higher retention, lower staff turnover, highly motivated staff as part of soft HR approach. Longer term approach.

Question 27

Customer satisfaction

Answer 27

If aims to develop customer loyalty, will try to do longer term by investing in customer service training.

Question 28

Brand image

Answer 28

Protecting, developing a brand image is directly connected to customer loyalty, therefore business will invest heavily as in longer term can increase market share.

Question 29

Sustainability

Answer 29

Sustainable approach to business is one that can be conducted in long term, using renewable resources & carrying out activities that don’t compromise their longer term futures.