Small Buisness Evaluation - Chp 4

Question 1

What is the aim of business performance evaluation?

Answer 1

To determine whether objectives have been achieved.
To see how the behinds is performing in terms of profit
Whether the business is performing as planned
Whether it’s performance has improved over time
How its performance compares to that of similar businesses

Question 2

What does the business owner need to do once comparison of collated measurements and objectives are observed?

Answer 2

The small business owner needs to ask whether the business operations achieved the desired results and if not where and why he has failed.

Question 3

If the buinsess plan is successful, what steps should the business owner take?

Answer 3

The small business owner should examine what stratagies made it successful and re-use them.

Question 4

What steps should be undertaken if weka spots are identified in the business plan?

Answer 4

Through examination weak spots may arise and could be improved and modified to fix them.

Question 5

What measure can be used to gain a full understanding of the businesses situation?

Answer 5

Quantitative measures (facts and figures) and qualitative measures (observations and comments)

Question 6

Effectiveness

Answer 6

The degree to which a business has achieved its objectives.

Question 7

Efficiency

Answer 7

Refers to ‘how well’ a business uses resources to achieve objectives.

Question 8

What are the measurable statements to which business can use to evaluate performance?

Answer 8

The businesses effectiveness and efficiency

Question 9

Performance indicators

Answer 9

Measurable statements used to evaluate the success of a business in terms of efficiency and effectiveness.

Question 10

What are the two most common types of performance indicators?

Answer 10

Financial indicators and non-financial indicators

Question 11

Financial indicators

Answer 11

Information found in the accounting records and are expresses in dollar terms.

Question 12

Non-financial indicators

Answer 12

Information commonly expresses in real terms and often make use of qualitative data, gathered from customer and employee feedback.

Question 13

Evaluation

Answer 13

The process of accessing whether he the business has achieved stated objectives

Question 14

In order for performance indicators to be useful what must occur?

Answer 14

They need to be measurable, and have a point of reference to be measures against. To analyse the business level of achievement.

Question 15

What are the main types of analysis?

Answer 15

• comparing figures from different years
• comparing figures within one year
• comparing the business’s results with those of similar businesses.

Question 16

Types of non-financial performance indicators

Answer 16

Employee satisfaction, customer satisfaction, market share, number of sales in volume, level of waste, and benchmarking

Question 17

What do that financial indicators lack, that non-financial indicators can assist with?

Answer 17

Financial indicators by themselves are not enough as they only state the problem whereas non-financial indicators can provide information about the causes and broaden the evaluation process.

Question 18

Customer satisfaction

Answer 18

The degree to which the businesses perceived performance meets a customers expectations.

Question 19

Benchmarking

Answer 19

Comparing the strengths and weaknesses of a business against those of other successful businesses with the aim of reforming those processes that are not achieving the businesses objectives