In your quest to encourage innovation and entrepreneurial behavior in the medium
ID: 454568 • Letter: I
Question
In your quest to encourage innovation and entrepreneurial behavior in the medium sized medical equipment company you founded five years ago, you see the need to develop specific measures of performance against which innovative products or services can be measured once they are developed. Explain how the following financial and non-financial measures will be used to assess and evaluate recent innovations:
Financial Measures
•Return on investment
•Growth in market share
•Profitability
Non-financial Measures
•Employee loyalty and commitment
•Breadth of employee participation
•Employee retention
•Employee willingness to change
•Strategic repositioning
•Competitive capabilities
•Potential creation of further breakthroughs
•Number of potential future innovations
Submit your report in a 5- to 6-page Microsoft Word document.
Explanation / Answer
Financial measures:
Return on Investment measures the efficiency of an investment.
ROI=( Net Profit/Invested Resource) x 100
Growth in market share:
Market share is the percentage of market share of the industry. It is calculated by taking the company's sales over the period and dividing it by the total sales of the industry over the same period.
Profitability:
The profit earned by the firm. Different profitability analysis are done; net profit margin,gross profit margin, operating margin, return on asset.
Non-Financial measures:
Employee loyalty and commitment:
It’s the commitment towards the success of the organization. Financial benefits have an indirect effect with commitment and loyality.
Breadth of employee participation:
Employee involvement and participation in the functioning of different functions of the company.
Employee retention:
A good firm always tries to retain employees through good HR practices.
Employee willingness to change:
Some employees will be unwilling to come out of their comfort zone, that may lead to adaptability issues and long term adjustment problems arise from that.
Strategic repositioning:
A good company always tries to adapt to the changing environment and adopt new techniques for the success of the firm.
Competitive capabilities:
How well we do in comparison with our competitive. To understand the strength and weakness of the competitor.
Potential creation of further breakthroughs:
Breakthrough always helps a firm to move forward with new innovations and findings.
Number of potential future innovations:
Proper forecasting of the future plans and development leads to success.