In order to recognize critical developments early enough, and enable management to react quickly, timely Performance Measurement is needed. Here, the emphasis is placed on cost-revenue control and budget control. The aim is to assess how effective the measures were.
The assessment relies on financial and non-financial key figures from both internal and external sources. Measurements that have an indispensable role for performance in certain areas, such as Customer Relationship Management or Supply Chain Management, are referred to as key performance indicators (KPI).
The causes of any deviations and their effects have to be analyzed carefully. The initial question to be answered is whether the goals can still be reached by employing additional or changed initiatives at the operational level. In other words, the original strategy remains in place but the firm tries other means of
Fulfilling its objectives. The central question is: “Are we doing things right?” This is also known as single loop learning.
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