1. 7 Analysing the strategic position of a business
Recap Year 1:
How would you measure a business’ performance in each of the functional areas shown in the table below?
Marketing
Operations
Human resources
7.3 Analysing the existing internal position of a business to assess strengths and weaknesses: overall performance

2. 7.3 Analysing the existing internal position of a business to assess strengths and weaknesses: overall performance
In this topic you will learn about
How to analyse data other than financial statements to assess the strengths and weaknesses of a business
Data other than financial statements should include operations, human resource and marketing data
Data may be analysed over time or in comparison with other businesses
The importance of core competences
Assessing short- and long-term performance
The value of different measures of assessing business performance
Methods of assessing overall business performance to include:
Kaplan and Norton’s
Elkington’s Triple Bottom Line

3. Can you describe each of these measures of operations performance?
Analysing data
Operations data:
Capacity
Capacity utilisation
Labour productivity
Unit costs (average costs)
Quality e.g. number of faults or complaints
Can you describe each of these measures of operations performance?

4. Possible interpretation
Analysing data
In pairs complete the table below.
Measure
Company A
Industry average
Calculation
Possible interpretation
Capacity (tons)
85 000
Company A is 76% bigger than the industry average.
May be a dominant business
Will benefit from economies of scale
Capacity utilisation
80%
70%
Labour productivity
1000
1200
Unit costs
£10.50
£15.75
Quality
(faulty goods) 2% 5%

5. Analysing data In comparison Over time
Remember data can be internal to the organisation e.g. sales volume or external e.g. market size.
In comparison
Benchmark within business or against competitors
Industry average
Between branches or product lines
Geographically
Over time
Year on year
Year to date
Trends over a longer period of time
Monthly
How would analysing data over time and in comparison with other businesses help a car manufacturer? Try to use examples of operations, marketing and HR data.

6. Core competences
What are the core competences of Apple?
In pairs write a list.
Read the article below.
How many of these core competences did you identify?
Combined expertise, knowledge and experience of the leaders and founders of a business
Collective learning and technical expertise
Leads to a competitive advantage
Unique characteristics to a business
Difficult to imitate by others
Core competences are tested using 3 questions:
Do they allow for market development?
Do they provide noticeable benefits to the end user?
Are they difficult to imitate?

7. Assessing short- and long-term performance
A business’ performance can be assessed in the short-term and the long-term
Decisions made in the short-term may allow a business to improve performance in the long-term but have a negative impact in the short-term
How has your short-term decision to study A-levels affected your financial position?
How will it affect your financial position in the long-term?
Example
Short-term
Long-term
Investment in R&D
High expenditure resulting in lower profit margins.
No guarantee of success.
New product development.
Highly differentiated charging a premium price leading to increased profit margins.
Increased capacity
Lower capacity utilisation.
Higher unit costs.
Increased market share.
Achieve an objective of growth.
Training employees
Time away from the workplace.
Additional costs.
Greater employee engagement.
Lower labour turnover.

8. Kaplan and Norton’s Balanced Scorecard
A strategic system used to plan and manage a business’ activities in relation to its vision statement
It aims to link the vision for the future to the day to day running of the business
This should result in a measurable (SMART) improvement in the performance of the business in a number of areas
The underlying premise is that financial data alone is insufficient to fully assess a business’ performance
It measures the performance of different areas of the business to see where improvements can be made
The Balanced Scorecard is used as a starting point to implement these changes
Each scorecard will be individual to the business and designed internally to focus on the business’ own unique characteristics and visions
What is meant by a vision statement?

9. Kaplan and Norton’s Balanced Scorecard
The main areas that the business looks at are:
Finance: Measuring financial capability e.g. financial ratio analysis
Internal business processes: Efficiency in the organisation e.g. JIT and capacity utilisation
Learning and growth: HR requirements e.g. training, labour turnover/productivity and communication
Customer: Expectations being met e.g. customer service, satisfaction and retention
Name 9 financial ratios.
Balanced Scorecard.

10. Kaplan and Norton’s Balanced Scorecard
Balanced score card at Barclays.

11. Elkington’s Triple Bottom Line
A model designed to encourage sustainability
Focus is on 3 key components to measure performance
Profit
People
Planet
Forces a business to consider its social responsibility
John Elkington explains his concept of the triple bottom line.

12. Elkington’s Triple Bottom Line
In pairs complete the final row in the table to show how a business can achieve each area of responsibility.
For example meet health and safety standards for employees (people) whilst paying a fair wage (profit).
Profit
People
Planet
Economic responsibility
Social
responsibility
Environmental responsibility
Shareholders
Employees
Suppliers
Customers
Society
How to make a profit while making a difference.

13. Discussions
To what extent should big businesses put the interest of shareholders above other stakeholders?
Are models such as Kaplan and Norton’s Balanced Scorecard and Elkington’s Triple Bottom Line of genuine use to a business in strategic decision making or a modern day PR exercise?

14. 7.3 Analysing the existing internal position of a business to assess strengths and weaknesses: overall performance
In this topic you have learnt about
How to analyse data other than financial statements to assess the strengths and weaknesses of a business
Data other than financial statements should include operations, human resource and marketing data
Data may be analysed over time or in comparison with other businesses.
The importance of core competences
Assessing short- and long-term performance
The value of different measures of assessing business performance
Methods of assessing overall business performance to include:
Kaplan and Norton’s
Elkington’s Triple Bottom Line