3.7.3 The existing internal position of a business

• How do you measure the success of a business?


  Revenue

  Profits

  How many products produced/sold
• You measure the success of a business based in their fulfilment on their mission statement
• How do you measure performance in marketing?

  Market share

  Audience reached

  Customer satisfaction

  Increase in sales from campaign
• How do you measure performance on operations?

  Output per worker

  Overall output

  Unit cost

  Amount of defective products

  Quality
• How do you measure performance in human resources?

  Staff retention

  Job satisfaction

  Diversity of skills

  Staff experience
• Performance can be measured through:

  • Capacity utilisation
  • Labour productivity
  • Unit costs
• You can analyse data in two ways:

  Over time

  • Year on year
  • Year to date
  • Trends over a longer period of time
  • Monthly

  In comparison

  • Benchmark within business or against competitors
  • Industry average between branches or other production lines
  • Geographically
• What is a core competency?

  A core competence is something unique that a business has or can so strategically well
• What are examples of core competencies?

  Collective learning within the business

  Ability to congregate skills and technology

  Ability to deliver superior goods and services

  Ways a business differentiated to be competitive
• IRL example's of core competencies:

  • IKEA - innovative design capabilities, unique organisational culture
  • Apple - integrates ecosystem of software and devices, design built around the user
  • Dominos - integration of multichannel systems, a profitable form of business
• What are the 3 conditions of core competencies?

  • Does it provide consumer benefits
  • Is it difficult for competitors to imitate
  • Can it be leveraged widely to many products and markets
• A business should focus on core competencies and outsource non core activities
• Short-termism is where a business prioritises short-term performance rather than long-term performance
• Short term objectives

  Share price

  Revenue growth

  Gross & Operating profit

  Unit costs & Productivity

  Return on capital employed
• Indicators of short-termism

  Decisions based on short term objectives

  Low investment in R&D

  High dividend pay-outs instead of retaining profits or reinvesting
• Concerns with short term performance

  Stock market (investor) focus on latest financial performance

  Reliance on bonuses based of short term performance

  Frequent changes in leadership and strategy
• What is impacted by short termism?

  Market share

  Quality

  Innovation

  Brand reputation

  Employee skills

  Social responsibility
• Economic


  Refers to a company's financial performance and sustainability
• Corporate Social Responsibility


  The idea that businesses have a duty to society to act ethically and contribute to the well-being of the community
• Sustainability Reporting


  The process of measuring and reporting a company's environmental impact and sustainability performance
• Financial Performance and Sustainability


  Financial performance and sustainability are linked, as positive financial performance can drive sustainability, and sustainability can positively impact financial performance.
• What is Elkington Triple Bottom Line?

  Sustainability framework
• How do you judge a businesses short term or long term performance?

  Investment in R&D

  Source of profit

  Employee engagement

  Customer satisfaction

  Sustainability
• What are the 3 parts of Elkington Triple Bottom Line?

  People, Planet, Profit
• What does the profit part mean?

  Self evident and in the past the sole focus of businesses as it impacts on share price and performance measures
• What does the people part mean of Elkington's Triple Bottom Line?

  Considers the extent that a business is socially responsible and considers the impact on a wide range of stakeholders
• What does the planet part mean of Elkington's Triple Bottom Line?

  Considers the impact of the businesses on the environment from resource use to global warming. Businesses consider the true cost of their activities