Question 1
A key performance indicator is best described as
VCE Business Management key performance indicators
Unit 4 names ten key performance indicators. Know what each measures, how to work out the percentage ones, and what a rise or fall says about the business.
| Percentage change | (new − old) ÷ old × 100 |
|---|---|
| Market share | Business's sales ÷ total market sales × 100 |
| Staff turnover | Staff who left ÷ average number of staff × 100 |
| Absenteeism | Days absent ÷ working days available × 100 |
The indicators in the study design
- Percentage of market share and number of sales.
- Net profit figures and the rate of productivity growth.
- Rates of staff absenteeism and level of staff turnover.
Reading an indicator
An indicator means little alone. Compare it over time or with a target, say what may have caused the change, and link it to a strategy: rising staff turnover may point to motivation or management style; rising wastage to quality or lean strategies.
Try 2 questions
Question 2
| Plan | What it involves | Effect on yearly costs |
|---|---|---|
| W | Buy cartons from an overseas factory whose working conditions have never been checked | Saves 260 000 dollars |
| X | Install solar panels, and cut packers' overtime | Saves 90 000 dollars (panels) and 100 000 dollars (overtime) |
| Y | Offer 3 of its 8 packers voluntary redundancy with paid retraining; redeploy the other 5 to its new online store | Saves 3 packers' wages of 80 000 dollars each, less retraining of 30 000 dollars |
| Z | Make 4 packers redundant with one day's notice and the legal minimum payout | Saves 320 000 dollars |
Korumburra Packaging must cut its costs by at least 200 000 dollars a year, and its owners want to act with corporate social responsibility. The table shows four plans. Which plan best meets both aims?
Next step
Questions people ask
Do I need to calculate KPIs in the exam?
Questions can give figures and ask what they show, so practise percentage change, market share and staff turnover until they are quick.
Which KPI goes with which strategy?
Link each to its cause: absenteeism and turnover to staff management, wastage and complaints to operations, market share and sales to the business's position.