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Frameworks to Measure Company Performance

Paper Type: Free Assignment Study Level: University / Undergraduate
Wordcount: 3990 words Published: 26th Oct 2020

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The report below evaluates different frameworks professional business advisors use to measure a company’s performance. The practices advisors adopt to effectively comprehend the problems at hand and to devise solutions are also reviewed. Process maps have been used to support familiar and unfamiliar sustainability change scenarios. In the end a review of the literature cited has been provided and its applicability explained.

Professional Business advisor frameworks

Professional business advisors have a set of different tools to analyse and measure a business performance. Some of these are discussed below:-


Benchmarking is a process of comparing some specific performance parameters of a business to those of another similar or dissimilar business to measure its performance against the other (Harvard University, 2017).

Common benchmarking parameters are:

  • The cost of production,
  • Revenues,
  • Staff turnover and
  • Process cycle time

Benchmarking is a powerful tool to measure a company’s performance and to decide where the company is lagging behind, so as to motivate and target the specific performance parameters for improvement (Bain & Company, 2017) (Stroud, 2019)

Figure: 01 Benchmarking of an insurance company’s claim pay-outs against industry standards (Shapland, 2018)

Figure: 01 shows an insurance company’s claim pay-outs against industry average and the best fit (46%). It helps to understand how the company is performing in comparison to the industry average and best fit and encourages one to ponder about what may be done to ensure optimum productivity.

Bench marking may be of 4 types:

  • Internal benchmarking measures performance within internal departments.
  • Competitive benchmarking compares performance metrics directly to those of competitors.
  • Functional benchmarking compares performance metric against those of a different industry. It helps to find common metrics which can be improved in the organisations.
  • Generic benchmarking involves comparison of generic metrics rather than operational metrics.

(Foley, 2017) 

Benchmarking is limited by the fact that it focuses more on the quantifiable data rather than processes involved in outcome of those numbers, in  a way it tells the user if other business in doing better or worse than user in terms of a particular metric but it cannot examine te underlying factors contributing to the superiority of the process.

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Core competencies are the unique skills or advantages an organisation has which are difficult to master by others, or are exclusive to a business and other competitors are restricted by law or knowledge to compete. Patented technologies, designs and processes are an example of core competencies f a business. For example Sony’s expertise in miniaturising of different products brought huge success to the company in launching  product lines (Walkmans, compact digital cameras, compact video recorders etc.) based on a single core competency (Prahalad & hamel, 1990).

Core competencies may result in development of a number of different product lines or entirely different businesses. Following diagram shows development of a number of end products from core products.

Reliance on core competencies for business expansion limits innovation and creativity to the core products of the business as they are seen as non-competitive products. Challenges must be there to encourage innovation of new products and processes.

Figure: 02 Core Competencies to End Products (Prahalad & hamel, 1990)

The GE-McKinsey Nine-Box Matrix

The GE McKinsey grid is a nine-box lattice which is utilized as a procedure device. It helps multi-business organizations assess business portfolios and organize ventures among various specialty units in a deliberate way. This method is utilized in brand showcasing and product management. The investigation enables organizations to choose what items should be added to an item portfolio and which ventures should be invested in. In spite of the fact that, like the BCG matrix, the GE variant is significantly increasingly perplexing. The examination starts as a two-dimensional portfolio grid yet the measurements are multi-factorial with nine industry engaging quality measures and twelve business quality measures. Following steps can be used to apply this to a system (Martin, 2015):

  • Determine Industry Attractiveness of Different Business Units
  • Determine the Competitive Strength of each Business Unit
  • Plot the business units on a matrix
  • Analysis of Information
  • Identify future direction of each unit
  • Prioritize Investments

For example Apple Inc. has an assortment of specialty units each working in an alternate market. Specialty units incorporate personal computers, PCs, tablets, convenient music gadgets, cell phones, watches and cell phones. An examination of the various units in light of the GE McKinsey framework can help survey what units the organization is probably going to put resources into, grow specifically, or strip (Martin, 2015).

This tool may be a costly investment for a small or medium sized company. As it takes considerable time, effort and core understanding of the industry, it’s a job for a highly experienced analyst to perform GE McKinsey analysis. Especially determination of industry attractiveness of different business units and determination of competitive strength requires through knowledge of the industry in concern.

The GE-McKinsey Nine-Box Matrix (Martin, 2015)


Porter’s five forces model is an analysis tool to analyse intensity of competition in a specific industry and its level of profitability using five forces which have been described in following figure:

Figure: 04 Porter’s five forces model

These powers decide an industry structure and the dimension of rivalry in that industry. The more grounded focused powers in the business are the less beneficial it is. An industry with low hindrances to enter, having couple of purchasers and providers yet many substitute items and contenders will be viewed as focused and subsequently, not all that alluring because of its low productivity.

Potter’s forces are concerned with forces within the market itself not taking into account the external factors influencing the process such as laws and regulations, environment etc.

Professional Advisor Practices

Professional business advisors use a number of tools and processes to solve client problems such as:

  • Root cause analysis
  • GAP analysis
  • FMEA analysis
  • 5 whys

Root cause analysis

Root cause analysis is an amazing tool that uses visual representations of problematic issues and breaks it down into smaller chunks which can be easily handled. It employs a number of tools such as Pareto Chart, Fishbone Diagram, and Scatter Diagram etc.

A fishbone graph sorts potential causes into different classifications that branch off from the first issue. Likewise called a circumstances and logical results or Ishakawa chart, a fishbone graph may have different sub-causes expanding from each recognized classification (Foster, 2018)

Figure: 05 A fishbone diagram (Foster, 2018)

A Pareto chart is a histogram or bar diagram joined with a line chart that gathers the recurrence or cost of various issues to demonstrate their relative essentialness. The bars show recurrence in downward direction, while the line demonstrates aggregate rate or aggregate as you move from left to right (Foster, 2018).

Figure: 06 A Pareto chart (Foster, 2018)

A scatter plot uses sets of information focused to help reveal connections between factors. A scatter plot is a quantitative technique for deciding if two factors are associated, for example, testing potential causes recognized in a fishbone graph.

Figure: 07 A scatter Plot (Foster, 2018)

Tools used in the root cause analysis have their own limitation which limit the use of this tool. For example not every problem may have a single root cause, a number of problems may arise from separate lines of causes and vice versa.

Gap Analysis

Gap Analysis can recognize regions where the business is performing underneath the criterions expected by clients or the executives that could be trading off the attractiveness of the association inside the market. These zones of under execution may not be promptly noticeable to the board. It is imperative to consistently include clients and other outer partners to the business in playing out a gap investigation as they all observe the business from various edges and communicate with the association in various ways. Operational advisors are routinely engaged with performing gap examination inside activities as they are presented to various enterprises and can rapidly measure the condition of a business' tasks versus an industry benchmark (leanmanufacturingnet, 2019).

Figure: 08 Gap Analysis Lean Operations (leanmanufacturingnet, 2019)

Gap analysis is more focused on the comparison between current state and ideal or desired state, not paying attention to the procedures employed to get to that desired state.

Failure Mode and Effect Analysis (FMEA)

FMEA investigation is an organized examination of a plant or profitable procedure with respect to the potential for its segments, steps as well as errands of falling flat, the danger of this event and its consequences. FMEA investigation is both a critical thinking apparatus and a contributing method for hazard control and measure in a consistent improvement association.

The FMEA examination is a preventive methodology, implying that the clients, process designers or experts are pondering the potential disappointments and issues of a procedure or plant and will probably actualize activities to avert these or diminish their seriousness. Additionally allude to potential hazard investigation for additional on preventive reasoning (leanmanufacturingnet, 2019).

FMEA requires up to date information and all the critical factors related to a failure. Failure to document these events and factors will result in catastrophic failure of the analysis.

Figure: 09 FMEA analysis of Light Weight Glass Bottles

5 Why approach

5 Whys is another critical thinking approach utilized by business counselors to discover answer for issue utilizing why question to discover the reason for issue and from that point can discover the arrangement. To have all the more clear comprehension of the issue is clarified by utilizing a model.

For an example following table shows application of 5 Whys in a business organisation:

Problem: on an assembly line the conveyer belt has stopped working.



1. Why has the transport line halted?

The primary pulley pivoting the belt isn't turning

2. Why is the primary pulley not pivoting?

Since it's not getting enough power from the engine

3. Why is it not getting enough power from the


Since the engine has quit working

4. Why has the engine quit working?

The twisting of the engine had worn out

5. Why have the twisting worn out?

The engine was stacked past its capacity limit

6. For what reason was the engine over-burden?

In spite of the fact that there were determinations about the allowed burden recurrence consistently, there were no guidelines about the most extreme burden weight.

Table: 01 5 Whys to determine the cause of the problem

From the 5 why analysis it is clear that the problem occurred because more load was put on the conveyer belt than the motor could carry. So potential solution would be to replace the motor with a more powerful one or to restrict the weight on the conveyer belt according to motor specification.

Unfamiliar Problem

Wastage in Glass industry impacts environment and business sustainability and productivity.

Glass Industries produce a great deal of waste extending from the side-effects of the utilized crude materials to the harmed glass items. The fuel utilized during glass creation is likewise in enormous amount. Legitimate usage of such squanders from glass culets (holder, level, hardware and different glass containing items) can limit the vitality necessities and decrease creation cost. The financial possibilities in cutting these costs by reusing squanders to deliver glass or other helpful articles, which may likewise clean the earth and improve effective generation have been studied in the case study.

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As indicated by the contextual analysis taken from glass manufacturing organization the glass business is acclaimed for abuse of assets and utilizing rehearses which are unsustainable for the business. The waste from the glass manufacturing ventures is considered as the primary natural danger which additionally shows that the procedures are not effective enough which are done during the manufacturing procedure. The excreta from the processing plants were dumped straightforwardly into close-by zones or waterways which was not beneficial for the earth and human populace living around. Further the plant which was utilized to treat the waste water didn't fulfill the natural guidelines. Refer to the following process flow chart depicting wastage at every step in glass manufacturing process from initiation (raw material collection) to output (delivery).

Potential problem areas:

Cullet   from   glass   of   different   conformations (dissimilar natural make-up)  e.g.  bottle- glass and crystal from table top ware or oven ware etc. are mixed together which makes it hard to utilise.

Mix of transparent and colour glass, upsets the desired colour and solar properties of glass.

Adulteration issue (metal accessories e.g. axes,   door   grips,   isolating   glass   unit insertions,   window   framer,   gums,   glass printing, plastic from laminated glass etc.), Particles   such   as   ceramic,   china   stones, lumps, dirt, concrete etc. cause bubbles and inclusion during moulding process.

Figure: 10 Process flow chart of wastage in glass industry.

Summary of Literature

As indicated by the literature, issues were identified utilising 5why's and more procedures and manufacturing organizations are investigating zero waste system which goes for relieving the waste and adds to business manageability. The zero waste approach goes for reusing the waste items to make new items.

Glass waste may be utilized to make insulating glass wool, decorative items pieces of jewellery, key chains, place settings and so forth.

The waste water plant ought to be associated with another water reuse plant to reuse the waste water and periodic maintenance of the plant is essential to ensure it meets its natural commitment (Isa, 2008)

Familiar problem

Employees at an enormous West Coast marina had been griping about the tedious idea of the procedure for gathering expenses for momentary moorage – it removed time from different exercises that were possibly progressively gainful for the marina. Through the marina's key arranging, this procedure was focused for development. It was noted that a significant time was devoted to invoicing process as shown in the process map below:

Figure: 11 process map of Marina (Shih, 2014)

By reviewing the case study problem it was observed that the boaters utilized the office so they have to pay for their utilization of the office. The marina is an open office and all utilization expenses must be gathered for the benefit of citizens. In such a case that the marina does not gather the charges, the boaters will utilize the office without paying for it. There is no impetus for them to pay on the off chance that they can pull off utilizing the office without paying. This is the reason in equivalent circumstances, there are train conductors strolling around gathering tickets and parking garage chaperons checking instalments in instalment encloses against autos the parking garage spaces.

The fundamental supposition was that boaters can't be trusted and that given the chance, the transient moorage clients will either deliberately not pay or come up short on their day by day moorage expenses. A considerable lot of the exercises inside the expense gathering procedure need to be built up to guarantee that the majority of the charges are gathered. It is recommended that the operational group test this supposition with information and make a standard structure for them to utilize. The marina group should revisit  its records for as long as two years to find how many clients did not pay their moorage intentionally and how many paid less than required.

The best solution to this would be to eliminate steps 04 an d05 from the process map which take a significant time and are non-productive in nature , it will result in time saved and utilised in other more productive work.


The evaluation above well clarifies the distinctive business counsellor structures and the business consultant practises the apparatuses they use to take care of the issues. Notwithstanding these natural and new issues situations are clarified utilizing diverse procedure maps, the issue is referred to and at last writing of the contextual investigations are abridged. The appraisal is all around depicted utilizing charts, flowcharts and numerous different graphs for better comprehension of the subjects.


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