Lesson 7: Performance Indicators - profitability, sales and productivity

Question from last lesson

Define the term outsourcing and explain why it is considered as negative to the economy

High unemployment results in a reduction in spending

What is the purpose of a performance indicator?

They evaluate performance by determining whether the objectives have been achieved

Large organisations use key performance indicators (KPIs) to evaluate performance

Efficiency refers to the use of resources (money, time, etc.) in achieving objectives. An organisation is efficient to the extent that it achieves its objectives at the lowest possible cost, using the minimum quantities of resources.

Effectiveness refers to an organisation’s ability to achieve objectives— An organisation is effective to the extent that it is achieving its stated objectives.

Organisational performance can be seen as consisting of two important dimensions: effectiveness and efficiency.

Profitability

Profitability measures the earning performance of the organisation.

If a company is making profit then why are other KPI’s necessary?

Number of sales

Number of sales measures the number of products sold.

What could be a limitation with the number of sales KPI?

Percentage of market share

Percentage of market share is the percentage of a market that a business has, compared to its competitors. It is calculated by dividing an organisation’s sales (from that market) by the total sales of all organisations in that market and expressing this as a percentage.

Rate of productivity growth

Productivity compares the amount of output produced to the amount of inputs (resources) going into production. An indicator of productivity is the rate of productivity growth. This is the change in productivity in one year compared to that of the previous year.

Productivity can be improved by producing more outputs from the same inputs

Productivity can be improve by reducing the level of inputs for the same outputs

To the basketball courts to complete the activity on page 31

SAC

Friday Feburary 21st

See wiki for details

Complete SAC in own time and I will go through some parts next week

I am available every morning by appointment

Mon, Wed and Friday after school