1.1 Margin- this measures how well the company is

1.1  IntroductionManagement performance means achievements or outcomesachieved in relation to organizational goals set. How successful the managementhas achieved the organizational objectives which are therefore involves a clearevaluation of performance.1.2  FinancialPerformance MeasuresFinancial performance is the achievements oroutcomes achieved in relation to monetary/economic terms. In evaluating thefinancial performance, users are normally intended to analyze the financialhealth of the organization for a specified period of time normally a year.

Users of financial information may have different perspectives in evaluatingthe financial performance of the company, but the most common financialmeasures specific to profitability includes; ·            GrossProfit Margin- this measures how well the company is able togenerate profit and producing at low cost as it involves money earned afterdeducting the cost of sales (direct cost). ·            NetProfit Margin- this measures the organizational strength ongenerating profit after deducting all cost relating to production alsoassociated cost for bring the product to the market. ·            Returnon Capital Employed- it is the most common measure used to analyzethe profitable investments, as it influence on investors’ decision in analyzinga profitable investment among alternatives.·            Returnon Asset- this measures how the company is able to utilize the asset togenerate profit as it includes net income with total assets of the company. The measures above comprisesthe profit generated from operations, and the profit itself is realized afterdeducting all cost in all level, it is therefore worthy to classify it as costmeasures as well.1.

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3  Non-financialPerformance MeasuresStudies have been conducted on the contributionnon financial measures to organizational performance, with other researchersargues that this measures have a significant impact on firm performance whileother still believing on the traditional approach. But studies supporting thisapproach have recognizing the significant impacts made by product quality,customer satisfaction, product innovation and leadership in firmperformance.  In the study conducted by Gijsel(2012) argued that, managers have been increasing reliance on non financialmeasures by revealing that these measures are better off during the economiccrises and are also vital in evaluating firm future performance.

1.4  ResultsBased ObjectivesResult Based on objectives is a managementstrategy that is aimed at achieving a significant change in the way the companyoperates as the central target is to improve performance through expectedresults (objective set).  This approachprovides a framework to management for strategic plans, risk management and howto monitor and evaluate the performance. The primary purpose of this model is to improve efficiency andeffectiveness through accountability and performance reporting. For a companyto succeed in this approach then they must ensure that every stakeholder isinvolved in the cycle and be defined according to the expected results. Thisapproach borrow from the system theory as it follow a consequentialrelationships as the terms involved are not used interchangeably nor out of theseries. Inputs ? Activities Outputs ?Shot-term outcome ? Medium term outcome ? Long-term outcomeThe success of this approach isthe ability of the organization to create a management culture that focus onresults as the model require more than the adoption of new administrative andoperational system.

This involves designing a results oriented managementculture. 1.5  BalanceScore Card (BSC)The BSC created by Kaplan is one of the bestknown and widely used multidimensional models for measuring performanceworldwide. Its contributions to measure performance on a balanced andintegrated system  using fourperspectives of an organization has made a significant stem from the oldfinancial performance measure. The importance of this model is that it recognizescustomers and employees as crucial to organizational achievements.

The modelalso has given opportunity to use non financial measures by succeeding theprevious metrics such as the Economic Value added (EVA). (Kumar, 2004)This model has been used bygovernments, non-profit organizations and wide business industry. Unlike thetraditional approach which analyzes the past performance, BSC has able tosupplement both past and future performance with objectives and measuresderived from the organizations’ vision and strategy.      Financial; thisinclude measures, objectives and initiatives on how to succeed financially andappear healthy to their shareholders. Customer; thisincludes measures, initiatives and objectives on how should the company appearto the customer and achieve their vision (customer satisfaction)InternalBusiness Processes; this includes measures, initiatives andobjectives on which business processes must the company excel at to satisfytheir customers and shareholders.Learningand Growth; this includes measures, targets, initiativesand objectives on how will the business sustain and the company ability toimprove and achieve their vision. According to Kaplan (1992), theBSC model gives the top manager a fast and wide view of the organization’sbusiness.

The model includes measures that analyze past performance and futureactions by establishing a balanced and integrated form between customersatisfaction, financial performance, innovations, improvements and the internalprocesses- with all measures derived from the organization’s vision andstrategy.The critic of this approachfrom various researchers is that, the model is incomplete as it lacks a formaldependence on some theory of the company behavior. But the mention limitationcannot set off the positive contribution made by this approach. In a studyconducted by Dowing (2001), reveal that 52% of companies worldwide were usingthe BSC, with 21% planning to use and 23% considering using. 1.6  Valuefor MoneyValue for money is a performance measurementapproach that has been mostly used by donors and government authoritiesparticularly in procurement and implementation of programs.

The model hasbrought debate among stakeholders as cost and value has been a majorconcern.  This approach involve arelationship between efficiency, economy, effectiveness and currently equity;the 4Es. ·            Economy:  management concern isminimizing cost to the lowest level without reducing the product quality·            Effectiveness:productproduced ensure customer satisfactions·            Efficiency:Maximizingoutput with low cost measures without reducing the product quality. ·            Equity:benefitobtained from the business is distributed equally to stakeholders.

 1.7  StakeholderBased Measures and Environmental Performance. Environmental performance has currently becomeone of the most important factor under the corporate social responsibilitieswhich consider the interest of stakeholders against their impacts on thatsociety. Companies are aware of the significance of environmental issues onfirm performance. The main reason to evaluate environmental performance is tobe ensured that the company is not exposed environmental risks.

Studies have been conducted to analyze theimpact of environment on firm performance with others with other researchersargues that good environmental measures also produce economic benefits. KeyEnvironmental Indicators includes; ·            Environmental impacts from company’ activities ·            Regulatory compliance·            Organizational processes (accounting, audit,reporting) 1.8  Evaluationof Suitable ApproachFrom this evaluation I recommend Balance scorecard as a significant to for performance evaluation as it considered importantstakeholders such as employees and customers as part and parcel of the companysuccess. Adding from the traditional approach, this model is able to evaluateboth past performance as well as future actions of the company. 1.

9  TransferPrice and Performance EvaluationTransfer pricing involves a mutual pricingprocedure on goods and service between tow companies or divisions of theorganizations. The term involves setting, analyzing, documenting and adjustingfor changes that are made between the two division on goods and servicessupplied. Companies normally use transfer pricing for saving on tax, remittanceof dividend, changes in exchange rates and goal congruent decisions.The problem caused by this practice includes; thereare situations where the market price is high compared to price of the divisionthis bring difficulties to decision making on division managers as they alwaysaim to sell at high price. Under some circumstances transfer price at marketvalue might provide incentives to use up the spare resources in order toprovide a marginal contribution to profit. 1.10              A CaseStudy on Evaluation of Financial and Non-financial Performance.

This part uses Simba Cement Company to evaluatethe financial performance from 2013 to 2016ProfitabilityRatiosSource: Simba Plc Financial StatementsThe findings reveal that the company profit has beendecreasing from 2013 to 2016. The reason behind this is inefficiency of thecompany to use their assets to generate revenue as it keep on decreasing overtime. The NPM also shows the impact made the decrease in sales volume as thecompany had a net profit margin of 17.76 in 2013 as compared to 2.

55 in 2016.According to chairperson statement of 2016, the market headwinds negativelyimpacted the company which reduces the sales by 20% in 2015-2016, the continuedincrease market competition and the lower infrastructure projects from thegovernment. Simba cement therefore has taken measures to increase operationalefficiency and reduce cost. LiquidityRatiosSource: Simba Plc Financial StatementsThe current ability to meet short term obligation hasdecreased from 4.42 times in 2013 to 1.31 times in 2016. This shows that thecompany will be struggling in meeting immediate obligations as a ratio of 1.

3times in three consecutive years not a good sign to lenders. The findings showthat from 2014 the company was unable to meet their immediate obligationswithout selling their inventories. The reason for this difficulty is thecompany actions to raise funds through borrowing and the negative balance intheir overdraft accounts Efficiency RatiosSource: Simba Plc Financial StatementsThedecrease in company turnovers shows that the company had to extend their creditlimits to their debtors as findings shows that the company had a turnover of19.41 xs in 2013 as compared to 10.

73 xs in 2016. In other words the findingsreveal that the company took 18days to collects their receivable in 2013 ascompared to 34days in 2016 although the ratio maybe attributed by the decreasein credit sales during that period. The company was less efficient in utilizingthe fixed asset to increase sales as the last three years the ratios was below1. This inefficiency in sales also observed in inventory turnover as the lowratios implies that the company is weak in sales.

Leverage RatiosSource: Simba Plc Financial StatementsThe leverage ratios show that as time goes on the companywas increasing the amount of borrowing to finance their operations. The companywas less leverage in 2013 as compared to 2016 where it was high leverage as thedebt to equity ratio was 1.37. in 2013 the company had no finance cost whichmeans that there was no borrowing during that year, but even when they borrowedin 2014 they were able to pay interest cost by 287 times from their operatingprofit.

But in 2015 and 2016 shows that the company was high leverage and theability to pay interest was low as interest coverage ratio was 1.79 and 1.4 in2015 and 2016 respectively.

    InvestmentsRatiosSource: Simba Plc Financial StatementsThe findings show that the amount of dividend paid per oneshare decrease during the period under analysis as the company declared adividend per share of 110 TZS in 2013 as compared to 80 in 2016. The reasonbehind this decrease is the decrease in profit for year, as resulted to thecompany declares a minimum amount of dividend as sometimes the company may optto retain dividend to finance other project as the company is in short offinance. The decision made on decrease in dividend actually affects the marketprice stock at the stock market.