Performance Issues - International Business Management

What are the different performance issues with respect to international business?

Performance measurement and evaluation is crucial for the success of any business. Performance of the employee as well as business performance has to be measured and evaluated. This chapter concentrates on the performance measurement and evaluation of the business. A standard process is being developed for measuring the performance of the global business. The process is depicted below -

global_business_performance

Establish Standard of Performance

Performance standards are applicable to some of the elements such as customer service, cost, and quality. The manufacturing performance of different units determines the performance standards. The performance of the manufacturing units includes aspects such as quality of the product, process yields, the spending levels of the business etc.

Measure Actual Performance

The actual performance is measured by collecting the information. In order to facilitate with accurate data collection, some of the automated data collection systems are provided. The performance can be measured in terms of working hours which includes man-hours, machine-hours and material usage.

Analyze the Performance and Compare it with standards

Once the data and information is collected, the actual performance is compared with the standard performance levels and is analyzed for the deviations. The standard set for comparison should be achievable and realistic. The performance is analyzed such that the rules can be modified further.

Construct and Implement an Action Plan

Once the performance is analyzed, in accordance with deviations further course of action is constructed and implemented. The problem areas can be identified by using variance analysis. This analysis enables to identify the root cause and the source of the problem and accordingly determine the ways in which the situation can be useful. Again the effectiveness of the variance analysis depends on the correctness of the information.

Review and Revise Standards

Finally the standards are being reviewed and revised. The standards are adjusted according if the variances are significant an in accordance with the overall strategy the performance measurement is effectively integrated.

What is Effective Performance Measurement System?

Effective performance measurement system can be obtained by -

  • Throughout the business organization, own and support the measurement objectives.
  • In order to obtain the maximum benefits, top-down process has to be applied.
  • The system of reporting and measurement should be simple, clear and recognizable.
  • The main focus should be on the key performance indicators.

What is Performance Evaluation System?

In order to achieve the objectives of the business organization, the operations of the business has to be reviewed periodically, which is known as performance evaluation system. The costs and profitability of the domestic and foreign operations have to be evaluated by accurate accounting information.

Evaluating the performance of an individual, a subsidiary or a company as a whole is not an easy task. Some of the main objectives behind performance evaluation are as follows -

  • To determine the economic performance of the organization
  • To analyze the management performance of each of the unit
  • To monitor the achievement of objectives and goals
  • To assist in the allocation of resources

What are the Financial and Non-Financial Measures of Evaluation?

Some of the financial and Non-financial measures that are being used for evaluation are as follows -

ROI (Return on Investment)

The performance of the international firm can be evaluated by this Return on Investment method. The relationship between the capital invested and profit is estimated by this method. The good sign for the business is that the ROI should be improving.

Budget as Success Indicator

The operations of the business are measured and controlled by budget. Added to this, in order to forecast the future operations, budget can be used. The performance standards of the individuals are set by the managers by using the set of objectives defined in the budget. Budget also enables to facilitate smooth functioning of the strategic planning process.

Non-Financial Measures

Market Share, Exchange Variations, Quality Control, Productivity Improvement, and Percentage of Sales are some of the non-financial measures that are being used for performance evaluation.

What are the different types of Performance Evaluation Systems?

The performance can be evaluated in different ways. The following are some of the types for evaluating the performance. They are as follows -

  • Budget Programming – In order to evaluate the performance with respect to financial and operational aspects, budget programming is used. By budget programming, the current performance is measured with respect to some of the past performance metrics.
  • Management Audit – With respect to the financial operations, the quality of the management decisions are monitored by an extended financial audit system known as management audit. The management is audited and the performance appraisal is done by management audit.
  • Programme Evaluation Review Technique (PERT) – A particular program or project is being divided into activities and sub-activities. The main aim of PERT is to optimise the time of the manager. The actual time along with the cost and the scheduled time along with the cost are used for measuring the performance.
  • Management Information System (MIS) – In order to redirect the management towards the pre-defined goals and targets, the system is designed which is meant to plan, monitor, and control and appraise the management. All the financial, budgeting, audit and control system of PERT are encompassed by MIS.

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