Performance Management Harvard Case Solution & Analysis

Factors Attract the Shareholders

            There are various factors that attract the shareholders while they are investing in companies; it is up to the shareholder to opt a company among the industry that best favors him in order to generate more revenues. They choose the company on the basis of its actual performance within the industry. Shareholders usually prefer the company that has a superior brand image. Some of the factors that attract the shareholders are as under:

  • Earnings per share
  • Share price
  • Dividend

Earnings per share (E.P.S)

            It is the monetary value of each share of the company’s common stock. It is one of the significant factors for shareholders to consider while investing in any company. Every shareholder checks the E.P.S figures before investing in a company. The higher the E.P.S; the more chances are there that a shareholder will invest in the company. Higher E.P.S also ensures greater amount of performance management within an organization. Before investing in any company, shareholders evaluate and compare the E.P.S of different companies in the industry and select the company that has a higher E.P.S. If a company is able to maintain a sufficient amount of earnings per share, then it will result in effective performance management.

Share price

            It is the price of a single share of the company; it is also a vital factor that can attract shareholders. It is up to the company, if it has high share price then shareholders are very much interested to invest, but if the share price of a company is on the lower side, then it will not attract shareholders and they will not invest in the company. Sufficient share price gives a positive message to shareholders regarding the performance of the company.

Dividend

            It is basically a payment made by the company to shareholders against profits. Every company wants to give a higher amount of dividend to shareholders in order to achieve success in the long term. Shareholders always want to receive a higher amount of dividend. The amount of profit that a company gives to shareholders as a dividend attracts them a lot in order to become a part of the company. Usually the company is giving sufficient amount of dividend to shareholders when their performance is up to the mark and they perform extra ordinary in the market. Lower amount of dividend payment to shareholders means that company’s performance is on the lower side as compared to its competitors in the industry. When there is effective performance management practices in an organization then shareholders attract a lot and keen to become a part of that organization on a long term basis.

Performance Management and Stakeholders Value

            Organizations have various stakeholders both internally and externally. Some of the stakeholders are affected directly by an organization’s performance while other are affected indirectly. Some of the stakeholders of the company are:

  • Employees
  • Customers
  • Suppliers
  • Government
  • Local Community

Employees

            Employees are a vital part of any organization, it is not possible for any firm to grow and develop their business without the participation of their employees. If an organization is able to motivate the employees efficiently and effectively on a continuous basis, then it will lead to long term success. The more the employees participate in the decision making process; the more chances are there for the company to achieve its objectives and goals efficiently. Those organizations that treat their employees as servants are not able to get success in the long run as it will negatively effect on that organization’s performance.

Customers

            Just like employees, customers are also very significant stakeholders of any company. Organizations usually treat their customers like kings; they always want to attract customers to become a stakeholder of the organization on a long term basis. Customers also evaluate the performance of the companies with the passage of time; they are also interested to approach the companies that suit them. One of the factors that attract customers is the brand image, hence, the more strong the brand image; the more customers a company has. Companies do not want to lose their customers at any stage of the business, that’s the reason they always want to adopt various practices that ensure better quality standards and effective performance.

Suppliers

            Suppliers are also one of the important stakeholders of a company; they usually prefer to become a part of any company and this practice facilitates them in the long run. Efficient performance management practice in a company creates a positive image on suppliers. Companies also want to build a positive relationship with its suppliers.......................................

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