Unit 7 - Section 3: Analysing Imternal Strengths Amd Weaknesses Flashcards
Productivity
Measures the quantity of inputs required to produce a unit of output
Unit costs
The total costs divided by the outputs
Quality
The extent to which the product meets or exceeds customer needs
Measurements:
Repeat customer - loyalty cards
Customer satisfaction - surveys
Absenteeism
Occurs when an employee is not at work
Unit labour costs
The proportion of unit costs made up from paying workers
Employee retention
The number of workers staying with a firm over a period
Core competencies
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
Competitive advantage
Is superiority that a business has over its rivals
Outsourcing
Using another business to complete part of a firms work
Employee engagement
The connection between the employees and its mission, goals and objectives
Brand
A name symbol or design that differentiates a product
Balanced scorecard
Planning and management strategy designed to match business activity to the firms aspirations
Sustainable production
When supply of a product does not impose costs on future generations
Social responsibility
Taking account of the needs of society when managing a business
Operations data
Measures of Operational performance most commonly used:
Labour productivity/capital productivity/unit costs
Quality
Capacity utilisation
Capacity utilisation
The extent to which a business uses all the resources available to it
Wants to be working 80 to 90%
Human resource data
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
Marketing data
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
Using an awareness of core competencies
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
Criticism of core competencies
Outsourcing – control and quality issues
Concentrating on core competencies may prevent a firm from being able to be flexible in meeting changing competitive needs
Assessing short-term and long-term performance
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
Using the balance scorecard
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
Areas of measurement of Kaplan’s and Norton scorecard
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
Elkingtons triple bottom line
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
