analysing non-financial performance

Question 1

what is a non-financial performance?

Answer 1

• assesses a business’s success beyond financial performance and focuses on factors such as customer satisfaction, productivity, environmental responsibility

Question 2

why is non-financial performance important?

Answer 2

ensure that the business is working as efficiently as possible and that it is meeting all its objectives, some of which will probably not be connected to the business’ finances.

Question 3

What are some key non-financial performance measures?

Answer 3

• productivity
• market share
• sales targets
• quality
• customer satisfaction

Question 4

what is productivity and why is it important

Answer 4

• This is the output produced in relation to the inputs used.
• it can have a significant effect on the costs of producing a unit

Question 5

what are some methods of increasing labour productivity?

Answer 5

• increasing hours
• training
• investment in equipment
• motivating employees
• change

Question 6

how do you calculate productivity?

Answer 6

total output/ total input

Question 7

why does market share matter?

Answer 7

• identify market position
• helps set growth targets
• guides strategic decisions based on pricing and marketing

Question 8

advantages of using market share as a performance measure?

Answer 8

• indiciate the sucess of a business
• attracts investors
• greater bargaining power with suppliers

Question 9

how is market share calculated?

Answer 9

(sales of the business/ total market sales) x 100

Question 10

disadvantages of using market share as a performance measure?

Answer 10

• does not show if the market is shrinking or changing
• can be affected by external factors such as economic downturns

Question 11

how do businesses use sales targets to measure performance and why does it matter?

Answer 11

• sales targets compare actual sales v projected sales
• why it matters: helps track progress, motivates employees, guides budgeting and financial planning

Question 12

limitations of using sales targets to measure performance

Answer 12

• may not consider external factors
• unrealistic targets can demotivate employees
• can lead to short-term decision making (aggressive discounts to hit sales goals)

Question 13

why is customer satisfaction important for business success?

Answer 13

• happy customers = repeat purchases
• lead to positive word-of-mouth marketing
• reduces complaints and returns
• enhances brand loyalty and reputation

Question 14

how do business measure customer satisfaction?

Answer 14

• surveys and questionnaires
• customer feedback and reviews
• repeat purchase rates