1. Analysing Business Performance
Pesewa Presentations

2. An Analytical Framework
FiMO & RECOIL
Business Performance: Company’s Performance to date
Finance
Marketing
Operations
Potential:
Company’s Potential/bases for Growth
Resources
Experience
Controls
Ideas
Leadership

3. Scoring the business Heading Score (1 - 10) Finance Marketing
Operations
Score each aspect of the business (10-point scale)
Scores of 2 or 3: something is seriously wrong
Scores of 5 or 6 suggest mediocrity
Scores of 8 or 9 suggest that the firm is good, or even “world-class”,
But there needs to be some evidence to support the claim.
Scores of this size are always open to challenge.

4. FiMO: Where we are … Finance Marketing Operations Output/worker
Output/machine
Age of equipment
Set-up times
Down time
Absenteeism
Staff turnover
Staff training
Defect rate
Performance advantage
Turnover (sales/units)
Break-even point
Gross profit margin
Net profit margin
Liquidity ratios
ROCE
Debtor/creditor days
Gearing/interest cover
Advertising spend
Selling effectiveness
Customer retention
New accounts won
Repeat business
New products
Brand perception (competition)
Brand perception (customers)
Market position

5. RECoIL: Where we want to go …
Resources
Experience
Controls
Ideas
Leadership
Physical assets
Human assets
Financial assets Intellectual property
Technology (flexibility & capability)
Borrowing
Product development
New markets
External agents
Managing growth
Adequacy of info. systems
Ability to use
information Degree of
delegation
Source and
number
Market
orientation
Systematic
screening
Development
and testing
Market planning
Focus, vision
and mission
Owner-manager
involvement
Professional/ occupational
background
Style and
ambition
Attitude to change
Family
Strategic awareness

6. Scoring the business Use 1-10 scale on the 5 components
Build up a profile of the business’ future capabilities
Assess the business’ strengths and weaknesses
Identify any gaps, training needs or other deficiencies
Use the information to inform decision-making

7. RECoIL into action … Heading: Score: Resources Experience
Controls and systems
Ideas and innovation
Leadership

8. Evaluating the process …
Work alone (score yourself), then show the scores to a colleague or business adviser
Have your colleague/adviser challenge the scores:
Where’s the proof?
What would you need to do to get another point?
Are you sure it isn’t a point lower?
How are you going to get the other point?
What is the trend behind each score?
Any scores less than 5 need proper discussion and analysis; these are problem areas.
Make recommendations based on current scores and future ambitions. Be aware of the consequences of each change.

9. Checklist: How good are you …?
Do you have an agreed understanding of just how good your business really is?
How do your scores compare with those of your competitors?
How would your Customers score your business?
What is the trend? Are you improving, staying where you are or getting worse?
What is the evidence to support how you have scored the business?

10. Interpreting the scores …
Be critical of too many high scores (on both activities)
But also check to ensure the scorer is not being TOO self-critical
Check the direction of the trend in scores (Is it 5 and rising, or 5 and falling?)
Look for firm evidence to support each individual score
Any outliers (scores that fall outside the norm of the rest) should be thoroughly investigated

11. Balanced business scorecard
Dynamic measurement process
Measures key indicators for YOUR business and YOUR strategy
Provides the “dials in the aeroplane cockpit”
Company-wide focus and deployment
Shows how results are to be achieved
Puts strategy, not control at the centre of business activities

12. Balanced Scorecard shareholders internal customers business growth
Emphasis is placed on
STRATEGY, not finance
Kaplan & Norton (2000)

13. Balanced Scorecard finance marketing operations (customer perspective)
(shareholders’ perspective)
marketing
(customer perspective)
operations
(internal perspective)
growth
(innovation and learning
perspective)

14. Balanced Scorecard shareholders
return on capital; cash flow; profitability; reliability
marketing competitive price; service; quality;
complaints
internal business
defects; set-up time; safety;
output per man-hour
growth
% revenue-new; new ideas;
attitude; revenue/employee

15. BBS Cascade Process vision mission strategy milestones
performance measures

16. Managing strategy translating the vision communicating
• clarify vision
• gain consensus
communicating
and linking
• communicating & educating
• setting goals
• linking rewards to performance
feedback & learning
• articulate shared vision
• provide strategy feedback
• facilitate strategy review and learning
business planning
• setting targets
• align strategic initiatives
• allocate resources
• set and achieve milestones

17. Review and Wrap-up
Successful business activity comes from sound planning and strategy
These simple tools, FiMO, RECOiL and BBS should help any business to:
See where it stands at present
Help identify where it wants to go (set future goals)
Provide guidance on how these goals may be achieved
Provide frameworks for measuring extent of success
Survive in the short-term
Prosper and grow in the medium- to long-term
Sustain its competitive advantage