Presentation on theme: "Analysing Business Performance"— Presentation transcript:
1 Analysing Business Performance Pesewa Presentations
2 An Analytical Framework FiMO & RECOILBusiness Performance: Company’s Performance to dateFinanceMarketingOperationsPotential:Company’s Potential/bases for GrowthResourcesExperienceControlsIdeasLeadership
3 Scoring the business Heading Score (1 - 10) Finance Marketing OperationsScore each aspect of the business (10-point scale)Scores of 2 or 3: something is seriously wrongScores of 5 or 6 suggest mediocrityScores 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/machineAge of equipmentSet-up timesDown timeAbsenteeismStaff turnoverStaff trainingDefect ratePerformance advantageTurnover (sales/units)Break-even pointGross profit marginNet profit marginLiquidity ratiosROCEDebtor/creditor daysGearing/interest coverAdvertising spendSelling effectivenessCustomer retentionNew accounts wonRepeat businessNew productsBrand perception (competition)Brand perception (customers)Market position
5 RECoIL: Where we want to go … ResourcesExperienceControlsIdeasLeadershipPhysical assetsHuman assetsFinancial assets Intellectual propertyTechnology (flexibility & capability)BorrowingProduct developmentNew marketsExternal agentsManaging growthAdequacy of info. systemsAbility to useinformation Degree ofdelegationSource andnumberMarketorientationSystematicscreeningDevelopmentand testingMarket planningFocus, visionand missionOwner-managerinvolvementProfessional/ occupationalbackgroundStyle andambitionAttitude to changeFamilyStrategic awareness
6 Scoring the business Use 1-10 scale on the 5 components Build up a profile of the business’ future capabilitiesAssess the business’ strengths and weaknessesIdentify any gaps, training needs or other deficienciesUse the information to inform decision-making
7 RECoIL into action … Heading: Score: Resources Experience Controls and systemsIdeas and innovationLeadership
8 Evaluating the process … Work alone (score yourself), then show the scores to a colleague or business adviserHave 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-criticalCheck the direction of the trend in scores (Is it 5 and rising, or 5 and falling?)Look for firm evidence to support each individual scoreAny outliers (scores that fall outside the norm of the rest) should be thoroughly investigated
11 Balanced business scorecard Dynamic measurement processMeasures key indicators for YOUR business and YOUR strategyProvides the “dials in the aeroplane cockpit”Company-wide focus and deploymentShows how results are to be achievedPuts strategy, not control at the centre of business activities
12 Balanced Scorecard shareholders internal customers business growth Emphasis is placed onSTRATEGY, not financeKaplan & Norton (2000)
14 Balanced Scorecard shareholders return on capital; cash flow; profitability; reliabilitymarketing competitive price; service; quality;complaintsinternal businessdefects; set-up time; safety;output per man-hourgrowth% 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 consensuscommunicatingand linking• communicating & educating• setting goals• linking rewards to performancefeedback & learning• articulate shared vision• provide strategy feedback• facilitate strategy review and learningbusiness planning• setting targets• align strategic initiatives• allocate resources• set and achieve milestones
17 Review and Wrap-upSuccessful business activity comes from sound planning and strategyThese simple tools, FiMO, RECOiL and BBS should help any business to:See where it stands at presentHelp identify where it wants to go (set future goals)Provide guidance on how these goals may be achievedProvide frameworks for measuring extent of successSurvive in the short-termProsper and grow in the medium- to long-termSustain its competitive advantage