Question

Propose and explain two methods to compare the performance of a company. (Apart from ratio analysis). 100 words for each

Answer 1

Overall Market Performance

While overall performance is important, it depends on company performance in particular areas of activity. Performance in the marketplace influences profitability, which is one of the most important company financial health indicators. The key indicators of market performance are market share and market ranking by sales volume.

Many companies, for example, have a dedicated a marketing budget with the hope that it will increase market share, but don't examine its effectiveness. As Edmund Ingham writes in Forbes such budge's aren't "for real" but are just "for show." If you have a substantial market share and rank in the top two suppliers, you have market influence on pricing and are more likely to be profitable.

Performance in Customer Satisfaction

Performance in customer satisfaction is a key factor in long-term success. The key performance variables are repeat orders and the rate of customer acquisition. If you have satisfied customers, you retain those you have and get new ones at a rapid rate. Your evaluation of performance in customer satisfaction highlights potential problems for overall performance.

Product Quality and Returns

Quality products lie at the root of superior company performance. Two variables indicating whether your products are high quality are returns and warranty claims. These product indicators measure company performance on quality but also impact profitability directly. High rates of returns and warranty claims cut into profitability.