pesewa presentations. an analytical framework fimo & recoil business performance: company’s...
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Analysing Business PerformancePesewa
Presentat ions
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An Analytical Framework
FiMO & RECOILBusiness Performance: Company’s Performance to date
FinanceFinance Marketing Marketing OperationsOperations
Resources Experience Controls Ideas Leadership
Potential: Company’s Potential/bases for Growth
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Scoring the businessHeading Score (1 - 10)
Finance
Marketing
Operations
Score each aspect of the business (10-point scale)Scores of 2 or 3: something is seriously wrongScores of 5 or 6 suggest mediocrityScores 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.
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FiMO: Where we are …
FinanceFinance Marketing Marketing OperationsOperations
Turnover (sales/units)Break-even pointGross profit marginNet profit marginLiquidity ratiosROCEDebtor/creditor days Gearing/interest cover
Advertising spendSelling effectivenessCustomer retentionNew accounts wonRepeat businessNew productsBrand perception (competition)
Brand perception (customers)
Market position
Output/workerOutput/machineAge of equipmentSet-up timesDown time AbsenteeismStaff turnoverStaff trainingDefect ratePerformance advantage
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RECoIL: Where we want to go …
Resources Experience Controls Ideas Leadership
Physical assetsHuman assetsFinancial assetsIntellectual property Technology (flexibility & capability)
BorrowingProduct developmentNew marketsExternal agentsManaging growth
Adequacy of info. systemsAbility to use informationDegree of delegation
Source and numberMarket orientationSystematic screeningDevelopment and testingMarket planning
Focus, vision and missionOwner-manager involvementProfessional/ occupational backgroundStyle and ambitionAttitude to changeFamilyStrategic awareness
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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
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RECoIL into action …
Heading: Score:
Resources
Experience
Controls and systems
Ideas and innovation
Leadership
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Evaluating the process …1. Work alone (score yourself), then show the scores to a
colleague or business adviser2. Have your colleague/adviser challenge the scores:
1. Where’s the proof?2. What would you need to do to get another point?3. Are you sure it isn’t a point lower?4. How are you going to get the other point?5. What is the trend behind each score?
3. Any scores less than 5 need proper discussion and analysis; these are problem areas.
4. Make recommendations based on current scores and future ambitions. Be aware of the consequences of each change.
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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?
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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
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Balanced business scorecard
• Dynamic measurement process• Measures key indicators for YOUR
business 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
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Balanced Scorecard
shareholdersshareholders
growthgrowth
internalbusinessinternalbusinesscustomerscustomers
Emphasis is placed onSTRATEGY, not finance Kaplan & Norton (2000)
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Balanced Scorecard
finance(shareholders’ perspective)
finance(shareholders’ perspective)
growth(innovation and learningperspective)
growth(innovation and learningperspective)
operations(internal perspective)
operations(internal perspective)
marketing (customer perspective)
marketing (customer perspective)
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Balanced Scorecard
shareholdersreturn on capital; cash flow; profitability; reliability
shareholdersreturn on capital; cash flow; profitability; reliability
growth% revenue-new; new ideas;attitude; revenue/employee
growth% revenue-new; new ideas;attitude; revenue/employee
internal businessdefects; set-up time; safety;output per man-hour
internal businessdefects; set-up time; safety;output per man-hour
marketing competitive price; service; quality;complaints
marketing competitive price; service; quality;complaints
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BBS Cascade Process
vision
mission
strategy
milestones
performance measures
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Managing strategy
translating the vision• clarify vision• gain consensus
business planning• setting targets• align strategic initiatives• allocate resources• set and achieve milestones
feedback & learning• articulate shared vision• provide strategy feedback• facilitate strategy reviewand learning
communicating and linking• communicating & educating• setting goals• linking rewards to performance
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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