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Chapter 11 - Performance management (Techniques to improve performance…
Chapter 11 - Performance management
Human Resources
To implement strategic plans aimed at improving the performance of the business, the role played by HR is important
HR Roles
Organise training programmes
Develop and implement an organisation structure
Efficient feedback maintained
Employees need to be motivated
Finance
Owners expect a certain return on their investments. Look at ratios
Performance impacts the business
The performance gap may be the result of changes in either or both the internal and external environment, and the success of the business will depend upon how these changes are dealt with
Strategic planning mostly originates at top level management
Performance gap = Desired performance - Actual performance
Implementation of the strategy is delegated down to middle and lower management
Advantages of quality control
Encourages workers to deliver good quality products and services
Distributors will have fewer complaints and comebacks
Improved quality
Should be seen as an opportunity for improvement
Ratios
Return on investment
Net profit / own capital x 100
Profitability of the business
Ability of the business to generate a profit with capital invested
Solvency ratio
Total assets : total liabilities
Measures whether a business's assets are more than their liabilities
Liquidity ratios
Current ratio
Business's ability to pay off their current debt with current assets
Current assets : current liabilities
2 : 1
Acid test ratio
Business's ability to use its current assets (quick assets) to pay off current debt
Current assets - Inventory : Current liabilities
1 : 1
Risk assessment detailed plan specifies
Other critical duties
Emergency equipment needs to be available and kept up to date
Who would be in charge in an emergency
Escape routes and procedures
Workers should be trained in emergency procedures
Commercial standards
Important when mass production is used
Production function
Product specification is important for good quality and improved performance
Suppliers need to know exactly what quality material is required
Employees must know what is expected from them in terms of acceptable performance levels
Factors affecting quality control
There has to be a system to record where deviations or problems occur
Job tolerances must be defined
It has to be decided how many inspection points are required
Number of inspections per inspection point
Methods of quality control
Sampling - Testing a few products from the batch
Inspections - Each product is tested and compared with quality standards
Marketing function
Product Price Promotion Place
Results from successful marketing
Increasing revenue
Creating / improving brand value
Maintaining / expanding the customer base
Customer loyalty
Variables in the marketing strategy
Semi manageable variables - can possibly be influenced by the marketing manager
Non manageable variables - exist in the external environment
Manageable variables - direct control of the marketing manager
Supply chain elements
Production
Managing the inventory
Purchasing the resources
Transportation and distribution
Public relations
Responsible for maintaining communication between the business and its stakeholders. To evaluate the performance of this department one would need a quantifiable tool
Purchasing power
Buys goods and services needed by all departments
Techniques to improve performance
Benchmarking
Process where the business looks at its own methodologies to perform a task and then compares it to the methods used elsewhere
Business process re-engineering
Radical improvement of processes will result in improved quality and performance
Total quality management and total customer satisfaction
Effort implemented throughout the entire business to plan and control the standards of all operations in order to deliver the best product or service to the customer
Customers will only be satisfied it
Products / services that are delivered when expected
Good quality goods are received
Value for money
Overall organisation - IT development
Quality circles
Effort to improve the quality in a business
Logistics management
Improved efficiency of each department within a business by streamlining its operations and costs and thereby increasing its profits
Logistical centres and networks include
Procurement
Distribution
Disposal of waste
Reverse / re-use and sale of products
Asset control logistics
Business logistics
Green / eco-friendly logistics
Risk management
Identification, analysis, assessment, control, avoidance, minimisation/ elimination of unacceptable risk
Risk management strategies
Risk identification - identify risks
Risk analysis - gain insight
Risk assessment and evaluation
Risk monitoring
Risk mitigation - assess highest ranking risks and develop plans to alleviate them
Balanced scorecard
Strategic management tool used to assess the performance of a business
Four focus points
Financial perspective
Customer perspective
Internal process perspective
Learning and growth perspective