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1. Balanced Scorecard

There are several options for evaluating a firm's performance. Among these are Net profit trends, market share trends, and the balanced scorecard. These have all been used to evaluate your firm's performance in the simulation. Provide a comparative discussion of the three indicators mentioned above.

Answer 1

Balanced Scorecard: There are several options for evaluating a firm's performance. Among these are Net profit trends, market share trends, and the balanced scorecard. These have all been used to evaluate your firm's performance in the simulation. Provide a comparative discussion of the three indicators mentioned above.

Balanced scorecard:

Under it, performance assessment takes a comprehensive approach.

• Performance of firm is evaluated through
• Examination of financial ratios and trends,
• Customer satisfaction and other related metrics,
• Effectiveness of business processes
• Ability of firm to innovate and be agile

It sets a minimum target for all above to be achieved but emphasize basically on improvement. It also includes financial trends and market share trends. It is best for the firm owners to know all key aspects simultaneously for running the firm successfully and balanced scorecard furnishes this.

Market share trends:

It signifies the preference of consumer for the firm’s product overtime. It indicates firm’s sales growth; level of marketing efforts needed in future and indicates the level of entry barriers for newcomers.

If firm belongs to industry in growth stage, a positive trend is promising for the firm. High market share propels firm to expand its scale of operations as ensures future profitability.

The changes in market share affect the share prices of the firm. It is more of greater importance when firm belongs to cyclical industries characterized by little growth or in mature phase.

Net profit trends:

Net profit trends are based on the most accurate metric of profitability. Sales growth can happen but high cost of production and taxes eats away the profit for firm. Thus to know financial soundness over a specified period net profit margin trends should be rising upward. The positive trend indicates that all costs are getting covered and still surplus is left for firm. It indicates that the firm is better than its competition in efficiency and agility.