FINANCE, FUNDING AND LEGISLATIVE FRAMEWORKS FOR SUCCESS By Submission Finance, Funding and Legislative Frameworks for Success 1. Measurement against the organizations KPIs A Key Performance Indicator (KPI) refers to a given set of quantifiable measures used by an industry, or a particular company within the industry to measure, or compare its performance, in relation to meeting both its strategic, as well as operational goals. The financial statement provided for the Restaurant Group reflects the financial performance of the company during the fiscal year of 2012 to2013. The KPI for financial growth of the company KPI projected a target of ￡500m, while the exact performance of the company during this period was ￡580m.
This shows that the company exceeded its KPI financial target. The company equally targeted to improve its market presence by opening new restaurants and serving more meals to its target customers. During the fiscal year of 2012 through to 2013, the company opened 35 new restaurants, increased its like-for-like sales by 3.5%. In addition, the company also served over 43 million meals to its customers during the year, as well as provided employment opportunities to over one thousand new job seekers.
As for operational efficiency, the company increased its operating margin to 12.9%. The EBITDA increased to ￡107.8m. The profit before tax increased to ￡72.7m. The EPS increased to 28.0p per share. The proposed full year dividend increased to 14.0p per share. On the other hand, the operations were strongly cash generative. The operating cash flow £116.8m, up 15%. The company also recorded a strong current trading, with total sales up 10% and like-for-like sales growth at 3.5% for the eight weeks to 23 February 2014. 2.
Evaluation of the uses of KPIs in assessing organization performance Using KPIs is instrumental in assessing the performance of an organization in the sense that it sets a benchmark on the targets or goals for which the organization has to achieve. These benchmarks set the precedence of performance for which every company operating in a given industry should achieve in order to be within the profit margin. The Restaurant Group operates in the food and hotel industry, which deals with serving drinks, beverages, as well as meals.
As such, some of the common benchmarks considered when assessing the Key Performance Indicators within the industry include the number of meals served, the number of new restaurants or new outlets opened by the company, as well as the amount of revenue collected by the company over a given fiscal year. The determination of the values of each KPI depends on the market forces affecting the sales volumes and purchasing trends, such as the forces of demand and supply, as well as consumer preferences and purchasing habits. Marr (2014) argues that the KPI is set at a value that shows the industry is stable and profitable considering the current market forces and situation.
As such, using KPIs to assess or evaluate the performance of an organization enables the company to gauge its performance status with expected market ratios. This is turn pushes the company to work even harder to improve on the areas where it appears to be performing much lower than the set values by the industry on the KPIs. Furthermore, achieving a performance higher than the provided values of the KPIs also enables the industry to concentrate on the areas where it has a dismal performance level.
3. Discussion and explanation of your results As mentioned above, KPIs are instrumental in measuring the performance of these companies in such a way that it considers a variety of key performance aspects of the industry. As for the Restaurant Group, it is imperative for the administrators to consider the four key divisions under which the divisions of KPIs fall, thereby making it sustainable across the divide. The first is the quantitative indicator, which is possible to be measured on numerical terms.
The second is the qualitative indicator, which is not possible to measure on numerical terms. The third is the directional indicators, and these are instrumental in specifying whether the organization is improving in performance or not improving, or in a worst-case scenario, making losses. The fourth is the process indicators, which measure the efficiency of the organization in a specified or particular procedure (Baroudi, 2010). Using KPIs to evaluate the performance of the Restaurant Group is instrumental in determining the exact performance lines that the company needs to improve in order to achieve market threshold, as well as maximize on its profit margins.
This is majorly because KPIs in most cases follow the SMART objectives when analyzing the performance output of a particular company, meaning that the sought targets need to be Specific, Measurable, Achievable, Relevant to the business, and Time-dependent. 4. Discussion of the advantages and limitations of the analysis techniques Advantages Some of the advantages that the Restaurant Group enjoys when they employ the application of KPIs in evaluating its performance include standardization, creation of customer loyalty, as well as making accurate long-term predictions.
Performance measures have a tendency of encouraging rigid behavioral outcomes thereby eliminating creativity and innovation. This will in turn lead to standardization of manufacturing procedures in order to achieve preset results. KPIs will enable the restaurant to improve the levels and quality standards of its services and meals, and this will eventually enhance the quality of service delivery for their clients, who will gain more confidence and trust in the company and its products (Parmenter, 2012).
In the end, the customers will continue patronizing their outlets across various locations in order to continue enjoying their services. This makes them loyal customers to the brand and its products and services. Disadvantages However, some of the disadvantages of KPIs fall under measurements whereby some popular metrics of success are not easy to measure and quantify in figurative terms, such as employee engagement, or the level of employee satisfaction. In addition, the expenses incurred during such measurement procedures can sometimes be too high or a little expensive for the company to roll out appropriately in order to reap the benefits of KPIs as performance indicators.
References List The Restaurant Group. Retrieved from http: //www. trgplc. com/sites/default/files/file/TRG_AR13.pdf