Measuring Business Performance Coursework Example | Topics and Well Written Essays - 1500 words - 2

Measuring Business Performance - Coursework Example According to Chary (2009: 19.7) efficiency is defined as the ability of a business to produce a desired effect, service or a product with a minimum amount of effort. While effectiveness is defined as the degree or extent to which objectives are achieved, it is being successful in realizing or achieving what is required. Wharton (2012) defines effectiveness as the total output that is generated while efficiency refers to the economy in the utilization or use of resources to perform a task. Assume a lathe operator assigned to make bushes, makes 500 bushes per shift using 25 kilogram of steel rod. The effectiveness is that the operator makes 500 bushes per shift while the efficiency is that the operator produces 25 bushes per kilogram of steel rod. i) Higher levels of effectiveness and efficiency contribute to better results. They enable the company to increase their productivity by producing lower cost goods and services than competitors. This therefore makes the company to make higher profit for each unit sold or offer lower price than competitors to the customers (Wharton (2012: 24). ii) The company is able to develop a competitive advantage over its competitors. Higher levels of efficiency and effectiveness enable organizations to produce high quality goods and services. The organization is able to utilize their resources optimally to achieve desired output thus being ahead of their competitors (Chary, 2009: 19.8). iii) Finally, achieving higher levels of effectiveness and efficiency enables businesses to learn how to energize their workforce to focus on common goals. It helps the organization to manage and direct their human capital towards goal achievement and mission fulfillment. The organization is therefore able to create better communication, leadership, interaction, direction, adaptability as well as positive environment (Chary,

Theoretical relationships between market structure and bank Essay

Theoretical relationships between market structure and bank performance - Essay Example Besides, most banking institutions are failing to engage with customers due to the rising competition from other customers. As opposed to this, it remains the duty of the bank to re- arrange itself in order to beat the other competitive banks in the market. For instance such a bank needs to sell its services well to its potential clients outside through sales representatives ( Gutek, Barbara, & Theresa, 2000). The market structure is normally very sensitive for any institution to sell its services to the publics. The banking institutions at time sell customer products and services they do not comprehend. This makes it easier for banks to really charge these services rather than focus on customer needs which is the most important aspect in the market. High concentration in market encourages organizations to collude. A bank in a more concentrated market will earn higher profits than a bank operating in a less concentrated area ( Etro,2009). In order a bank to know the relation that exi sts between market structure and their performance it should employ or investigate the effects that are caused by changes in the structure or formation of the market. There are two theories that are used to explain how a bank can determine its profitability and understand better its relation with the market structure. They are namely; the structure-conduct- performance (SCP) and the efficient-structure (E-S) hypotheses. The bank will also use the following measures to evaluate the banks performance; return on asset (ROA), return on capital and return on capital ( Baligh, 1997). Structure-conduct-performance theory Structure-conduct -theory determines the degree of a firn’s performance....Most banks may therefore end up in lobbying in order to stop or delay the success of any competitive policy. The market power may however be lost if banking institutions establish non-competitive prices in their products and services. This theory mainly uses market share to measure efficient structure hypothesis. This hypothesis is negatively related with profitability. Market power is the ability of a company to control the prices in the market by manipulating the demand or the supply of goods and services or both. The ability of a company to control prices can have a negative effect on the bank performance due to lower interest rates that will have to be charged on the clients when acquiring loans from the commercial banks. This is due to monopoly in provision o services and goods which money supply low ( Etro,2009). â€Å"Quiet life hypothesis† indicates that the banks tend to enjoy the market power through foregone revenues and the savings on the costs, while the â€Å"efficient structure hypothesis† describes companies are able to make bigger profits into the company than their competitors due to maximum efficiency and not sales or provision of services.