Overview

In the same way that in the foregoing chapters we have examined and systematically evaluated the performance of the business in relation to its operating environments, its resource requirements, its sales and marketing performance, its managerial capabilities, and its staff management, we now have to look more closely at the financial performance to date, and the financial systems the business currently employs. In terms of the revised vocational standards, this process relates to Units A2, G1 and G4.

If anything, financial performance has got to be one of the easier areas to evaluate, because it is measured against what is essentially factual information, but in practice this is not simply a case of just comparing the factual data on a year-on-year basis. Such comparisons only tell the analyst about what is happening within the organization over a period of time, and not what is happening in a wider context, i.e. how the business is performing in the market environment, and how it is performing in the light of changes in that market. Achievement cannot just be assessed by actual performance alone, it has to be assessed in relation to the market environment in which the organization operates. For example, a business that has sales of 1 million in a market worth 10 million in 2001 has a 10 per cent share of the market. However, if in 2002 the sales increase by 10 per cent to 1.1 million, but the overall market size grows by 20 per cent to...