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

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analysing business performance

Analysing Business Performance

Pesewa Presentations

an analytical framework

Finance

Marketing

Operations

Resources

Experience

Controls

Ideas

Leadership

An Analytical Framework

FiMO & RECOIL

Business Performance: Company’s Performance to date

Potential:

Company’s Potential/bases for Growth

scoring the business
Scoring the business

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.

fimo where we are

Finance

Marketing

Operations

FiMO: Where we are …

Output/worker

Output/machine

Age of equipment

Set-up times

Down time

Absenteeism

Staff turnover

Staff training

Defect rate

Performance advantage

Advertising spend

Selling effectiveness

Customer retention

New accounts won

Repeat business

New products

Brand perception (competition)

Brand perception (customers)

Market position

Turnover (sales/units)

Break-even point

Gross profit margin

Net profit margin

Liquidity ratios

ROCE

Debtor/creditor days

Gearing/interest cover

recoil where we want to go

Resources

Experience

Controls

Ideas

Leadership

RECoIL: Where we want to go …

Physical assets

Human assets

Financial assetsIntellectual property

Technology (flexibility & capability)

Borrowing

Product development

New markets

External agents

Managing growth

Adequacy of info. systems

Ability to use

informationDegree 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

scoring the business1
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
evaluating the process
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.
checklist how good are you
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?
interpreting the scores
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
balanced business scorecard
Balanced business scorecard
  • Dynamic measurement process
  • Measures key indicators for YOURbusiness 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
balanced scorecard

shareholders

customers

internal

business

growth

Balanced Scorecard

Emphasis is placed on

STRATEGY, not finance

Kaplan & Norton (2000)

balanced scorecard1
Balanced Scorecard

finance

(shareholders’ perspective)

marketing

(customer perspective)

operations

(internal perspective)

growth

(innovation and learning

perspective)

balanced scorecard2
Balanced Scorecard

shareholders

return on capital; cash flow; profitability; reliability

marketingcompetitive price; service; quality;

complaints

internal business

defects; set-up time; safety;

output per man-hour

growth

% revenue-new; new ideas;

attitude; revenue/employee

bbs cascade process
BBS Cascade Process

vision

mission

strategy

milestones

performance measures

managing strategy
Managing strategy

translating the vision

•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 reviewand learning

business planning

• setting targets

• align strategic initiatives

• allocate resources

• set and achieve milestones

review and wrap up
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