Unit 7.3 Assessing Performance Flashcards
Kaplan & Norton
Assesses performance by financial/non financial objectives
4 perspectives of Kaplan Norton
Financial
Customers
Internal process
Organisational capacity (learning & growth)
Key features of Kaplan Norton 3
Needs to align with overall strategy and vision of business
Emphasis on non-financial measures
Balance 4 indicators i.e improving on area without detrimenting another
Financial K&N question, measure, target, initiatives
Q:How to create value for shareholders
M:ROCE, profit margins etc
T:Increase ROCE of 3%
I:Ways to increase rev/decrease costs
Internal processes question, measure, target, initiatives
M:Capacity utilisation, unit costs, productivity
T:Increase labour productivity by 15%
I:New capital/tech, training, motivation
Organisational capacity (learning&growth) QMTI
Q:How to grow and improve
M:Labour retention, staff development
I:Training, changing organisation design
Customers K&N QMTI
Q:How to improve customer service
M:Brand loyalty, customer satisfaction
I:Speed up delivery, improve quality/service
Pros cons of KN 33
Holistic view
Appraises long term success-rather than just financial (short term)
Flexible-measures can be chosen by business
Too many KPI can be bad
Need to balance-e.g R&D for customers/internal processes can affect financial
Senior management over concerned with financial
Ellingtons
Measures performance by 3 overlapping areas-people profit planet
Outline the 3 parts of Elkingtons
Profit-financial measures of company
People-company’s social values towards employees and community
Planet-company’s environmental values and impact to environment
Middle area in elkingtons
Area of Sustainability-ideal balance between the 3 areas
Examples of objectives for Elkingtons
People-paying more than living wage
Planet-use of sustainable inputs, reducing emissions
Benefits Drawbacks of Elkingtons 3,1
Encourages holistic thinking
Encourages CSR reporting
Important in increasingly ethically/environmentally conscious society
Difficult to measure people or planet
Reason for non financial data
Considers other internal factors that can combine to create a CA
Non financial performance measures (3)+ examples
Marketing e.g market share, sales growth, market growth
Operations e.g capacity utilisation, unit costs
HR e.g retention, morale, skill of workforce
Core competences and example
Unique features that make the business unique and give CA e.g innovation-Tesla
Characteristics of core competences 3
Hard to copy
Offer benefits to consumer
Able to change to meet changing market
Prahalad + Hamel theory on core competences
Focus on core competencies, outsource non-core activities
Criticisms of Prahalad + Hamel (3)
Too much outsourcing harms competitiveness
Core competences hard to identify
Can become complacent
Benchmarking
Looking at other businesses to see what they do well, and apply to business. Businesses must be similar to compare.
Eval:doesn’t mean it can be translated
