Analysing Non-Financial Perormance

Question 1

Indicators of Non-Financial Performance

Answer 1

Productivity
Market Share
Sales Targets
Environmental Impact
Quality
Customer Satisfaction

Question 2

Productivity

Answer 2

This is the output produced in relation to the
inputs used. For a given time period this could be; output per worker; output per machine; output per site.
Labour productivity can be improved by increasing hours worked, employee training or employee motivation.

Question 3

Quality

Answer 3

Businesses want to avoid defect products in the production process. Poor quality indicates lack of efficiency, leads to higher cost and can impact business reputation.
Businesses aim to meet international quality standards like the ISO 9000

Question 4

Environment

Answer 4

Consumers are more concerned about the effect of business activity on the environment.
Sustainable practices some businesses are involving themselves with are renewable energy, proper waste management and development on brownfield sites.

Question 5

Sales Targets

Answer 5

This is a measure of the sales a business makes in a set period of time. They are often included in the budget.
They can motivate staff assuming they are not set too high or too low.

Question 6

Customer Satisfaction

Answer 6

This regards customers returning and recommending the business to others. This can be measured via questionnaires, repeat purchase and reviews/complaints.

Question 7

Evaluation - Productivity

Answer 7

Good - High productivity can lead to lower unit costs
Bad - Focus on speed could lead to a sacrifice in quality

Question 8

Evaluation - Market Share

Answer 8

Good - High market share is a really strong indication of business success
Bad - It does not show if the market is growing or shrinking

Question 9

Evaluation - Sales Targets

Answer 9

Good - Indicates whether objectives have been met
Bad - Factors outside the business control may have caused targets to be missed, or overachieved.

Question 10

Evaluation - Environmental Impact

Answer 10

Good - Will attract customers with sustainable practices
Bad - It can take a while for policy to come into effect (new suppliers?) and can also be costly

Question 11

Evaluation - Quality

Answer 11

Good - A rise in quality will lead to a rise in demand
Bad - May not be cost effective (additional cost outweighs the additional revenue)

Question 12

Evaluation - Customer Satisfaction

Answer 12

Good - Contended customers are vital to success, particularly the ones that become loyal
Bad - This is hard to quantify and measure

Question 13

Window Dressing

Answer 13

This is the techniques undergone by a business to improve its balance sheet. This is legally dubious practice.

Question 14

Why would a business want to window dress?

Answer 14

Show Success:
-Please stakeholders
-Raise finance
-Increase likelihood of merger

Hide Success:
-Reduce risk of hostile takeover
-Delay tax payments