The competitive analysis mode.l A new approach to strategic development for small businesses, страница 3

Finally, all the performance measures for Glangras Foods are presented in Table III.

As can be seen although the firm is a leader when measured by ROA, when the other performance measures are considered the firm’s performance is less outstanding. For example, in terms of return on sales it is 18th out of 23 in its sub-sector, 53rd out of 66 in its sector and 248th out of 302 in all firms.

The relative performance measures

A difficulty often associated with this type of quantitative exercise is so much data is generated that readers have difficulty in assimilating it. CAM has attempted to overcome this problem by providing data in relative terms and also by using graphs to display relative performance.

In so many aspects of strategic analyses it is not the actual performance measures that provide the insights but the relative performance measures (see Hammeresh et al., 1978; Peel et al., 1996, for example.) Thus relative market share, relative growth rate and relative product quality are typical measures used in strategic analysis. CAM uses two relative performance measures:

1.  performance relative to the median; and

2.  relative league position.

The rationale behind each is now discussed and illustrated using just one of Glangras Foods’ performance measures, sales volume growth.

Glangras Foods’ performance relative to the median

Glangras Foods has an actual value for sales volume growth of 6.5 per cent and this is benchmarked against the median sales volume growth in each league by dividing its actual value by its league median value.

• the convenience foods sub-sector median = 15.15 per cent;
• the food firms’ median = 25.1 per cent; and
• all small firms median = 7.8 per cent.

Consequently the sales volume growth Glangras Foods relative to the median in each league is shown in Table IV.

As can be seen the firm is below the median value in all leagues.

Glangras Foods’ relative league position

Glangras Foods has a different position in each league:

• in the convenience foods sub-sector it is 13th out of 23;
• in the food firms sector it is 32nd out of 61; and
• in the all small firms league it is 146th out of 271.

These league positions can be expressed in relative terms by using the following formula:

Relative league position

= (Total number in league – Actual position in league + 1)*100

Total number in league

This formula will scale all players in each league relative to the league’s number one firm which will have a score of 100 per cent and Glangras Foods’ position is shown in Table V.

As can be seen the firm is not the leader in any league and the league in which it fares best is the convenience food firms sub-sector.

Both indices – performance relative to the median and relative league position – are applied to all performance measures and the results are displayed in Table VI.

Graphs to illustrate the percentage performance measures for Glangras Foods

Finally, the data in Table VI is shown in graphic form in Figures 2, 3 and 4. In each figure the growth measures and the profitability measures are displayed on the horizontal axis while the vertical axis expresses the relative scores in per cent. The benchmark line is set at 100 per cent and this line shows the following: