Unit 7 - Section 3: Analysing Imternal Strengths Amd Weaknesses

Question 1

Productivity

Answer 1

Measures the quantity of inputs required to produce a unit of output

Question 2

Unit costs

Answer 2

The total costs divided by the outputs

Question 3

Quality

Answer 3

The extent to which the product meets or exceeds customer needs

Measurements:

Repeat customer - loyalty cards

Customer satisfaction - surveys

Question 4

Absenteeism

Answer 4

Occurs when an employee is not at work

Question 5

Unit labour costs

Answer 5

The proportion of unit costs made up from paying workers

Question 6

Employee retention

Answer 6

The number of workers staying with a firm over a period

Question 7

Core competencies

Answer 7

Unique abilities a business has

Allow the firm to have core products. These are those services or goods it offers that have a clear USP

Competencies are combination of the firms knowledge, production scale and technologies

Question 8

Competitive advantage

Answer 8

Is superiority that a business has over its rivals

Question 9

Outsourcing

Answer 9

Using another business to complete part of a firms work

Question 10

Employee engagement

Answer 10

The connection between the employees and its mission, goals and objectives

Question 11

Brand

Answer 11

A name symbol or design that differentiates a product

Question 12

Balanced scorecard

Answer 12

Planning and management strategy designed to match business activity to the firms aspirations

Question 13

Sustainable production

Answer 13

When supply of a product does not impose costs on future generations

Question 14

Social responsibility

Answer 14

Taking account of the needs of society when managing a business

Question 15

Operations data

Answer 15

Measures of Operational performance most commonly used:

Labour productivity/capital productivity/unit costs

Quality

Capacity utilisation

Question 16

Capacity utilisation

Answer 16

The extent to which a business uses all the resources available to it

Wants to be working 80 to 90%

Question 17

Human resource data

Answer 17

Used to demonstrate employee efficiency/engagement key measures are:
Labour productivity
Absenteeism rates
Health and safety data
Labour costs per unit
Average wages
Recruitment costs per worker employed
Staff retention

Question 18

Marketing data

Answer 18

Types of data used:
Historical information on market share, growth, size, product life-cycle
Information on the forces that drive change in the firms market (government decisions, competitive activity etc)
Data on factors which influence customer behaviour
Information linking sales to brand recognition and marketing activity

Question 19

Using an awareness of core competencies

Answer 19

Can allow are found to take full advantage of what they are good at and this may lead to market leadership

Allows the firm to concentrate on the activities that add value

Matching competencies to market opportunities can allow them to create new business

Money believe a firm should outsource all activities that are not competencies

Question 20

Criticism of core competencies

Answer 20

Outsourcing – control and quality issues

Concentrating on core competencies may prevent a firm from being able to be flexible in meeting changing competitive needs

Question 21

Assessing short-term and long-term performance

Answer 21

Kaplan and Nortons balanced scorecard: It is based on the idea that financial data is in adequate and its own as a measure of performance
It adds non-traditional measures to the financial ones to balance the measurements of the firms financial performance

Analysis:
All elements should be quantifiable
The scorecard can be applied to the strategic plan
It can be used to convert the vision and mission into actions
Its main benefit is that it encourages managers to focus on aspects of the business other than finance

Question 22

Using the balance scorecard

Answer 22

1: Identify the performance areas and set objectives within that will allow the firm to achieve its vision
2: Create effective short and long-term methods of measuring achievement of these objectives within the performance areas
3: Gain the support of the workforce for achieving these objectives
4: Ensure decision-making focuses on these objectives
5: Establish systems to collect and interpret the data
6: Take action when performance does not meet objectives

Question 23

Areas of measurement of Kaplan’s and Norton scorecard

Answer 23

Financial performance:
revenue
Profits and profitability (ROCE)
Cash flow

Customer value performance:
Customer loyalty
Delivery on time
Customer satisfaction

Internal business process performance:
Productivity
Quality
Number and affects of bottlenecks in production

Learning and growth performance:
Extent and effectiveness of training
Employee engagement and labour turnover
Effectiveness of communication systems
Innovation, percentage of revenue from new products

Question 24

Elkingtons triple bottom line

Answer 24

The model highlights that business performance may be measured in a number of ways: in relation to its finances, its environmental impact and how socially responsibilities in relation to employees
Elkington argued that only a company that was measuring performance in all three areas was measuring the full costs of its activities. The significance of this is that if you measure all these areas employees are likely to pay attention to them and change their behaviour accordingly rather than just focusing on profit
However in reality it can be difficult to find or agree ways of measuring the impact of business on the planet and people