COMPANY DEVELOPMENT POTENTIAL AND PERFORMANCE
Brno, May 30 – 31, 2003 Business development and EC
Emil Vacík, Jiří Vacek, Jiří Skalický Department of Management, Innovations and Projects, Faculty of Economics, UWB
[email protected]://www.kip.zcu.cz
DEVELOPMENT POTENTIAL
• U-SME Innovation: A model of a university – SME cooperation in innovations, 2001 http://www.kip.zcu.cz/USME
• Leonardo da Vinci programme – CZ, UK, F
DP COMPONENTS
• Strategy and planning;
• Marketing;
• Technological process;
• Quality, environment;
• Logistics (purchasing, distribution, outsourcing);
• Organization and human resources.
Innovation potential assessment
1,0
2,0
3,0
4,0Strategy
Marketing
Technology
Quality
Logistics
People
ABCDEF
C, AB, B, A Classes
• C - not ready to implement development activities
• AB - ready to changes necessary for improving performance, must consistently improve basic processes
• B - in principle prepared to undergo a certification process
• A highly competitive, high performers
FIELD RESEARCH
• Faculty of Management of Tomáš Baťa University in Zlín, 2-nd quarter 2002 – 13 - rubber and plastics;– 20 - machinery;– 12 – steel and steel product;– 5 – mechanical engineering..
• 5 companies from Pilsen region • 9 AB, 27 B, 14 A, none C
STATISTICAL ANALYSIS
• Marketing component achieved the lowest values
• Rubber and plastics has the lowest average value of IS and human resources component
• Steel industry is better than average in Marketing and Logistics, below average in Strategy and planning
Cluster analysis
Regression Analysis DP = - 0,0037
+ 0,1809 * Quality and environment
+ 0,1683 * Logistics
+ 0,1938 * Marketing
+ 0,1488 * IS and human resources
+ 0,1775 * Strategy and planning
+ 0,1305 * Production processes and technology
DP and Financial Performance
Correlation analysis:
• value of the development potential influences the financial performance of a company
• financial performance of a company positively influences the value of its development potential
Correlations
• On 95% reliability level between the following coefficients:– ROE and all forms of DP – ROE and ROS– ROE and ROCE– ROA and ROS– ROA and ROCE– ROS and ROCE
CONCLUSIONS
• DP factors can be influenced by the company owners and managers.
• DP has demonstrable effect on the financial performance and correlate with value creation.
• The relevancy of development potential components was demonstrated by statistical methods.
Marketing
• most sensitive factor
• its values in our sample were the lowest
• companies generally have lack of information about customers behaviour
• And this influences management decision making in critical situations involving high risk.
Production processes and technologies
• component achieves the highest values• for industries in our sample this component is
always important• provides the best one-component estimate of DP
and its correlation with ROE is the strongest• leading position in technology and high quality
products - attractive for top employees, satisfy their customers.
Strategy and planning
• significantly influences classification of companies according to their DP
• its explaining power is low
• dependence between the performance measurement and the strategy is rather weak.
Recommendations
• two-sided correlation between DP and financial performance supports efficient implementation of company goals and objectives
• DP together with selected financial indicators can be a valuable tool in evaluation of company owners ambitions and expectations
THANK YOU FOR YOUR ATTENTION