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 branched or 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.