Thursday, September 2, 2010

Firm Performance

Performance measurement in business research developed on the basis of various indications. Picture of absolute performance such as return of investment (ROI), sales volume, and the market (market share) is relatively difficult to comparable between companies with the condition that company size different operating areas of different markets, the use of accounting standards different, and the determination of the market that also has many differences. Then, still many debates that new strategies and realities competition has shifted from the concept of trust in the financial-based measurement, the indications of non-financial basis, such as variable quality, manufacturing effectiveness, innovation and customer satisfaction (Eccles 1991; Kaplan and Norton 1992).

However, each method has certainly done own advantages and disadvantages (Doyle, 1994) and should each method measurements still provide the freedom to be used as an option strategies (Eccles, 1991). Point of view of resource-based strategy suggested measurement by combining size, financial performance and non-financially for the actual economic benefit.

This means that the choice of performance measurement in general should also taking into account factors or indications of attainment gains. Profitability or profitability still popularly used in many studies, because has a double meaning, namely as the objectives to be achieved and as a performance evaluation mechanism. However, profitability measurement retains absolute conceptual weaknesses, methodologist, and practical weaknesses (Doyle 1994).

In a study by Menon et al (1999, P.18-40), performance is measured on a scale of three indicators, where the level of achievement or strategy performance met expectations for the overall achievement or performance, sales and profits. According to Menon et al (1999) recent research stated that the assessment of managerial finance and marketing performance is consistent with performance measurements or achieving an objective. The concept of a more simple and practical also described Ferdinand (2002) which states that marketing performance well expressed in the three main quantities: the growth of subscribers, sales growth and market share, which in turn leads to company profits.

Therefore, this study used the measurement of relative performance and combining financial and performance measures based on market-based (Market-based performance). Form of implementation, the four indicators were used, ie: sales growth, market growth, market share, and profitability. To clarify the indicators measuring the performance variables marketing, then the dimension shown in Figure 2.1 below.

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