Title:

FOUNDATION 1-8: Performance Measures

Assignment:

What performance measures should be used by your stakeholders to assess your companys performance? What are their relative importance to each other? The simulation offers 8 performance measures:

1. Cumulative Profit Ending Market Share Average ROS Average Asset Turnover Average ROA Average ROE Ending Stock Price
2. Ending Market Capitalization

You will find a brief explanation for each measure on the website under Homework |Success Measures. Prioritize these measures by applying a weight between 0% and 40%. The percentages across all measures must add up to 100%. For example, you might set Profit to 30%, Market share to 20%, ROS to 10%, ROE to 10%, Stock price to 10%, and Market Capitalization to 20%. Scores are calculated using two methods. Final Score Relative: This method also use a three-step process:

1. The system determines a raw score for each category by dividing the team's score ("Team's Value") by the by the highest scoring team in that category ("Highest Value"). For example, if the "Team's Value" for Profit is $5,000,000 and the "Highest Value" is $10,000,000, the team receives a raw score of .5 ($5,000,000 $10,000,000 = 0.5). Next, the system multiplies the raw score by the success measure entry. Continuing with the previous example, if the team's success measure ("Team Weighting ") is 12.0, multiplying 12 by 0.5 will derive a "Score" of 6.
2. The scores for each category are added, and the resulting sum appears in the Total row.

Final Score Ranking: This method displays charts that compare each team's results against each team's set of weights. Specifically, the Andrews chart will show every team's performance based on Andrew's success measures, the Baldwin chart will show every team's results based on Baldwin's measures, etc. The final chart, "Overall Scoring," shows each team's performance based on their individual criteria, allowing an "across the board" comparison. Final Score Ranking calculations use a three-step process:

1. The system determines a raw score for each category:

• Generally, each team gets 1 point for itself and 1 point for each inactive team however, teams with negative results could fall beneath this level.
• Teams get an additional point for each active (participant or computer) team they beat.

There will be times when the first and second place team for a category are very close. Nevertheless, the first place team will always receive a score of 6 and the second place team a score of 5. The system creates an adjusted score for each category by multiplying the team's raw score by its success measurement weight. For example, if Andrews' ROE weight were 20%, and if it were first in that category (scoring 6 raw points), it would receive 1.2 points. The adjusted scores for each category are added together. The resulting score will always be between 1 and 6