The competitive analysis mode.l A new approach to strategic development for small businesses, страница 4

• Relative to median measures: the benchmark line represents the median value and consequently a score above it illustrates that the firm has scored above the median for that particular measure. For example Glangras Foods had an actual ROA of 35.2 per cent while the median score in the convenience foods sub-sector was 14 per cent giving a score of 201 per cent.
• Relative league position measures: the benchmark line represents the highest possible league position, i.e. it is the leading firm in the league. In the case of Glangras Foods its best league position is its ROA where it is third out of 21 players in the convenience foods sub-sector, giving a score of 86 per cent[6].

Thus the aforementioned graphs permit a means of visually benchmarking every firm in each of its leagues using the five performance measures.

The above tables and the graphs of Glangras Foods’ performance show the results of following certain strategies but they do not provide information on the determinants of performance. This is considered next.

The determinants of performance

CAM assumes, as shown in Figure 5, that performance is determined by three major influences, namely:

1.  internal factors which are within the firm’s control;

2.  external factors which are outside the firm’s control; and

3.  the strategy followed by the firm and which is within its control.

Each of these major factors is derived from measured determinants set out in Tables VII to IX from the data supplied by each participating firm.

The internal factors

There are five major factors, namely:

• productivity and asset utilisation;
• investment and debt management;
• product quality;
• export markets;
• product and market development.

These are assumed to be the primary internal determinants of performance[7] and their details are shown in Table VII.

The external factors

It is assumed that there are two major factors, namely: operating environment and customers and suppliers which determine performance and their details are shown in Table VIII.

The strategy factors

It is assumed that there are three major strategy factors which determine firm performance, namely: market conditions, core strategy and efficiency and their details are shown in Table IX.

These three major sets of factors – internal, external and strategy – are the determinants of firm performance and generate the output of CAM which is set out below.

The output of CAM

CAM has two major types of output, namely: firm reports for participating firms and generic strategy advice reports.

Type 1 output: firm reports for participating firms

These reports provide each participating firm with the information necessary for it to benchmark its performance, to examine those factors which cause it to have a particular level of performance and foster debate about the actions which are likely to enhance its performance. Firm reports have seven sections:

1.  league position;

2.  overview of the sector;

3.  performance benchmarks;

4.  internal benchmarks;

5.  external benchmarks;

6.  summary tables; and

7.  sectoral benchmarks.

Type 2 output: generic strategic advice reports

These reports distil the findings of the database to provide generic strategic advice for all firms irrespective of their products and markets. Typical reports include: “The role of quality in firm performance”[8], and “Superior routes to exporting”.

An example of a firm report: Glangras Foods

A summarised version[9] of each of the seven sections of the Glangras Foods firm report is presented below.

Section 1: The league position of Glangras Foods