The "right" share price in the mind of the capital markets is determined by the market view of future earnings. Apart from the obvious issues of a low share price not pleasing shareholders, it clearly also reduces the company's ability to finance acquisitions or invest in other major strategic initiatives.
The execution of a company's strategy affects 2 aspects of its performance:
1. Financial Performance; and
2. Non-financial Performance.
Financial measures are historical based. However, performance in many non-financial areas often represents "leading" indicators as opposed to "lagging" ones. This implies that non-financial performance provides a context for assessing future earnings potential. Non-financial performance also contributes to the "brand image" of a company.
This presentation provides an introduction to Performance Management. It also discussed a popular Performance & Strategic Management framework, the Balanced Scorecard.
This PPT delves into the dual perspectives of performance measurement: internal and external. It explores how companies achieve balance and operationalize decisions internally while addressing what the market recognizes and rewards externally. The Balanced Scorecard is highlighted as a critical tool for aligning measurement with strategy, ensuring that all performance metrics are tied to strategic objectives.
Market value is influenced by both financial and non-financial performance, including the recognition of intangible value drivers. The presentation outlines ten primary measures of non-financial performance, such as innovativeness, quality of major processes, and research leadership. These measures are essential for understanding how non-financial performance impacts market evaluations and strategic decisions.
The document also addresses common pitfalls in Balanced Scorecard design and emphasizes the importance of cascading the corporate scorecard down into the organization. It provides practical insights into avoiding dysfunctional processes and ensuring that the scorecard tells the story of your strategy through cause and effect relationships. This comprehensive approach to performance measurement is essential for any organization aiming to enhance its strategic management capabilities.
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