Hershey Foods vs. Tootsie Rolls - Free Essay Example

Sample details Pages: 4 Words: 1340 Downloads: 7 Date added: 2017/09/15 Category Business Essay Type Compare and contrast essay Did you like this example? Investment: Heshery Foods versus Tootsie Rolls Financial Comparison A comparison of 2004 Hershey’s and Tootsie Roll, questions needed to determine which company is better off: Are the company’s operations profitable? To consider this I will be looking at the Income Statement. If the company’s revenue exceeds its expenses it will report net income or will report a net loss. This will report on the success or failure of the company’s operation by reporting its revenue and expenses. Hershey Foods reports a net income of $590,879 and Tootsie Roll Industries report a net income of $64,174. Overall, both company’s report a net gain. However, Hershey Foods net income is larger than that of Tootsie Roll Industries by $526,705. Does the company rely primarily on debit or stockholders’ equity to finance its assets? To consider this I will be looking at Balance sheet. Comparing the amount of debt versus the amount of stockholders’ equity to determine whether the company relies more on creditors or owner for it financing. This reports the company’s resource and claims to those resources. The two types of claims are liabilities and stockholders’ equity. Don’t waste time! Our writers will create an original "Hershey Foods vs. Tootsie Rolls" essay for you Create order Hershey Foods reports a balance sheet of assets of $3,797,531, liabilities of $2,708,229 and stockholders’ equity of $1,089,302. Tootsie Roll Industries reports a balance sheet of assets of $811,753, liabilities $241,574 and stockholders’ equity $570,179. Hershey Food relies more on creditors versus Tootsie Roll whom relies on its own financing. How does the company’s earnings performance suggest performance? A high measure suggests improved performance and low measure suggests weak performance. Hershey Foods reports Earnings per share and earnings of $2. 30 versus Tootsie Roll Industry earning of $1. 3. Overall, Hershey Foods has a higher performance over Tootsie Roll Industry. Can the company meet its near-term obligations? To consider this I will be looking at current assets and current liabilities. Higher ratio suggests favorable liquidity. Hershey Foods current assets are $3,797,531 and current liabilities are $2,708,229 which Current ratio is 1. 4:1. This r atio shows a favorable liquidity. As for Tootsie Roll the current assets are $811,753 and current liabilities are $241,574 this gives the current ratio of 3. 4:1 suggest a favorable liquidity. In short Tootsie Roll Industries has a more favorable liquidity. Can the company meet its long-term obligation? To consider this I will look at total debt and total assets. By looking at this as a ratio lower value suggests favorable solvency. Hershey Foods Debt to total assets ratio is 74 % represents an unfavorable solvency. As for Tootsie Roll Industries ratio is 29. 8% represents a favorable solvency. Overall, Tootsie Roll Industries has a more favorable solvency over Hershey Foods. How much cash did the company generate to expand operation, pay off debts or distribute dividends? To consider this I looked at free cash flow which comes from cash provided by operation activities, cash spent, on fixed assets and cash dividends. The amount of free cash flow indicates greater potential to finance new investment and pay additional dividends. Hershey Foods free cash flow is $56,989, this is low and indicates low potential to finance new investment and pay additional dividends. As for Tootsie Roll Industries $54,837 is also low. Overall Hershey Foods has a higher amount of free cash flow. Is the price of goods keeping pace with changes in the cost of inventory? To consider this we need Gross profit and net sales. The ratio suggests the average margin between selling price and inventory cost is increasing. Too high of a margin results in lost of sale. Hershey Foods gross profit is 20. 4%, this percent is low which indicates a gain of sales. As for Tootsie Roll Industries the percent is 41. 8% which indicates in a lost of sales. Overall, Hershey Foods has a lower lost of sales. Is the company maintaining an adequate margin between sales and expenses? To consider this we need to look at net income and net sales. A higher value suggests favorable return on each dollar of sales. Hershey Foods profit margin ratio 13. 3% represents a low favorable return on each dollar of sales. As for Tootsie Roll Industries the ratio is 15. 3% which is low. However, Hershey Foods ratio is less favorable than Tootsie Roll Industries. How long is an item in inventory? To consider this we need cost of goods sold; beginning and ending inventory. The higher the ratio or lower average days in inventory suggest that management is reducing the amount of inventory on relative to sales. Hershey Foods inventory ratio is 4. 80 and days in inventory are 76 days. As for Tootsie Roll Industries the inventory ratio 4. 5 and days in inventory is 81 days. Both represents that management is not reducing the amount of inventory compare to sales. Overall, Hershey Foods is better of then Tootsie Roll. Are collections being made in time fashion? To consider this we need net credit sales and average receivable balance. This ratio indicates average collection period should be consistent with corporate credit policy. An increase suggests a decline in financial health of customers. Hershey Food Receivable turnover ratio is 10. 8 and average collection period is 33. 8. As for Tootsie Roll the ratio is 10. 8 and average collection period is 33. 8. Overall, both companies have low ratios which indicate there is no decline in financial health of customers. Is the company using its assets effectively? To consider this we need net income and average assets. The ratio represents if there is a high values which suggests favorable efficiency-use of assets. Hershey Foods return on asset ratio is 0. 16 as for Tootsie Roll the ratio is 0. 08. Both represent that there is not a favorable efficiency in the use of assets. Overall, Hershey is better off then Tootsie Roll. How effective is the company at generating sales its assets? To consider this we need net sales and average total assets. The ratio indicates the sales dollars generated per dollar of assets. A high value indicates the company effectiveness in using its resource to generate sales. Hershey Foods asset turnover ratio is 1. 17 as for Tootsie Roll is 0. 2. Both are low which represents ineffectiveness in using its resource to generate sales. Overall, Hershey is better off than that of Tootsie Roll. Can the company meet its obligations in the long-term? To consider this we need interest expense and net income before interest and taxes. High ratio indicates ability to meet interest payment as scheduled. Hershey Foods Time interest earned ratio is 1. 02 as for Tootsie Roll the rati o is 193. The low ratio of Hershey indicates that the company does not have the ability to meet interest payment as scheduled. However, Tootsie roll has the ability to meet interest payment as scheduled. Tootsie is better off. What portion of its earning does the company pay out in dividends? To consider this we need net income and total cash dividends on common stock. A low ratio suggests the company is retaining its earning for investment in future growth. Hershey Foods Payout ratio is 0. 36 as for Tootsie Roll is 0. 23. Both have low ratios which indicate that they are retaining its earning for investment in future growth. Overall, Tootsie Roll ratio is better off than Hershey Foods. Is the company generating sufficient cash provided by operating activities to meet current obligations? To consider this we must look at cash provided by operating activities and average current liabilities. A high value suggests good liquidity. The numerator contains a flow measure; it provides a good supplement to the current ration Hershey Foods current cash debt coverage ratio is 0. 29, as for Tootsie Roll 0. 32. Both companies have a low liquidity. Overall, Tootsie is better off. Is the company generating sufficient cash provided by operating activities to meet its long-term obligations? To consider this we need to look at cash provided by operating activities and average total liabilities. A high value indicates the company is solvent; that is, it will meet its obligation in the long-term. Hershey Foods cash debt coverage ratio is 0. 3 as for Tootsie roll the ratio is 0. 3. Both companies are low which indicates that both companies are not solvent to meet long-term obligations. Neither company has its advantages. To conclusion I believe that Tootsie Roll is better off then Hershey Foods. The best chose for investment is Tootsie Roll.

Mgmt 530 Conference Decision Week 1 Case Analysis - 607 Words

MGMT530 – Conference Decision Week 1 Case Analysis Template 1) Define the decision problem? As indicated by the scenario it seems that the decision problem is a matter if the accounting systems annual conference that is previously scheduled to occur on September 13-16,2005 should be canceled, due to the fact Hurricane Katrina has occurred and demolished building and homes leaving them in ruin in the city of New Orleans, Louisiana. The primary issue thus becomes does the board or committee moves the conference to a future date or have conference at another location that would thus incur higher costs for hotel for patrons of the conference in addition to it would be a price increase for flights that were already scheduled to New†¦show more content†¦This conference seems to be the pinnacle point for participants to a) network/connect with current customers in addition to establishing new ones b) the distribution of new product concepts/designs that are promising for the future of that industry. If the final solution to this problem into being to move the conference to another date, there is a possibility that managers will have difficulties scheduling the speakers that were originally lined up. In addition to another time for participants to reschedule flights at economical rate and be with to use there are paid money towards another hotel location. 6) Describe the dependencies on other decisions? The decision to hold the conference depends on certain other decisions. The management has worked with the Local Convention amp; Visitor’s Bureau and the hotel for the conference and wants to help them recover the destruction. The management may want to hold the conference in the same city at some future date in order to provide an opportunity to overcome the destruction by holding the conference. The decision will also be influenced by the cost of holding the conference and the willingness of the attendees to attend the conference if the management plans to hold the conference in a different city. The decision with respect to date will also affect the holding of the conference in the same city or a different city. The management may plan theShow MoreRelatedHedge Fund Introduction12750 Words   |  51 PagesHedge Funds Class London February 2007 February 9, 2007 SECTION 1 Class Agenda Agenda â™ ¦ 9:00 - 10:30 â™ ¦ 10:30 - 10:45 â™ ¦ 10:45 - 12:15 â™ ¦ 12:15 - 1:30 â™ ¦ 1:30 - 2:15 â™ ¦ 2:15 – 3:00 â™ ¦ 3:00 - 3:15 â™ ¦ 3:15 - 4:00 â™ ¦ 4:00 - 4:45 â™ ¦ 4:45 - 5:00 Hedge Fund Basics Coffee Break Basics Continued Lunch Continued Hedge Fund Services Coffee Break Fund of Funds Stuart Trueman Joe Troccolo Tamera Hodges Joe Troccolo Joe Troccolo Hedge Funds Corp Finance Laurent Charbonnier Wrap-up / Optional ExamRead MoreProject Mgmt296381 Words   |  1186 PagesCross Reference of Project Management Body of Knowledge (PMBOK) Concepts to Text Topics Chapter 1 Modern Project Management Chapter 8 Scheduling resources and cost 1.2 Project defined 1.3 Project management defined 1.4 Projects and programs (.2) 2.1 The project life cycle (.2.3) App. G.1 The project manager App. G.7 Political and social environments F.1 Integration of project management processes [3.1] 6.5.2 Setting a schedule baseline [8.1.4] 6.5.3.1 Setting a resource schedule 6.5.2.4 Resource

Semco Transformational Plan

Question: Discuss about theSemcofor Transformational Plan. Answer: Introduction The purpose of this report if to identify the leadership and management styles adopted by Ricardo Semler and their effects on the tactical choices of Semco. It will also discover various risks taken in executing the new regime at Semco and the possible causes of imbalance generated by the styles of administration and leadership plus their collective applicability and the effects caused by the organization. Semco is an equipment manufacturing company that was established by Antonio Semler in 1912 and is found in Sao Paulo, Brazil. The company was taken over by Ricardo Semler year 1980 after his father resigned from being the COO of the company. He afterward established a management system that allowed employees to have power and was employee friendly. It has come to design a worker empowerment pattern that is free of any political discourse which was common during the 19th century in the industry of economy. The sales have grown at a 24% annual rate since he assumed the role as the pr esident of the firm. (Semler, 2009) Semcos Implementation of the Transformational Plan Is the transformational plan implemented at Semco Universally applicable? Yes, the transformational plan implemented at Semco is universally applicable. Transformational leadership is a style by which the organizational manager or the overall leader works with the juniors to ascertain any change that needs to be implemented, generates a vision to chaperon through inspiration and put forth change in line with dedicated team members. Richard Semler as a transformational leader had the aspiration, resolution, and expertise to execute the necessary changes and recognise the basics of his leadership. With this, he accomplished the degree of change needed in the dynamic environment and was able to handle crisis critically. The type of transformational plan that Richard employed started off with an idea, he put all his enthusiasm and energy into the idea with an outlook of the expectations that will motivate probable followers and later adapt to it. Initially, Semco had set rules and regulations that controlled every aspect of activities assumed in the company. H owever, Richard Semler after taking over the company embarked on transforming the firm to address the consistently poor performance experienced from the past. He started by dismissing all the top management and dismantling the existing management layers in the company. He eliminated all the job titles but the COO, which was made to be rotated among workers after every six months. This type of leadership style serves the purpose of enhancing the confidence of followers together with their job performance and motivation to execute their various duties. Semler aimed at addressing employee motivation through means that will encourage them to make the organisational goals their first priorities before their own goals. He managed to be successful because by doing the above he connected the teams feeling of identity and sense of character to a mission and the shared distinctiveness of the company. Richards leadership style is a rare one that succeeded in reforming the organisation continually to win in the world of the future generation. (Semler,2009) An organisation needs a skilled transformational leader as Richard Semler for it to be transformed that faster and prepared for future success. An organisations future depend on how many transformational leaders it has, it can be one or all of them. In this case, every team member at Semco learned to be an effective le ader in one way or the other the reason as to why they prove to be very substantial in cases of any changes and crisis management in the organisation. The transformational plan implemented is universally applicable because of the following reasons: As a result of the plan, there was improved transparency in salaries as workers were empowered in setting their working hours. The companys implementation of the reward strategy set to meet the targets set by the same team members resulted in an immediate decrease in costs, the rise in productivity and the lost profit. (Semler, 2009) Workers were motivated by the profit sharing system where the profits made were divided among workers according to what the elected committee decided. Decisions were now made after detailed discussion and debate unlike through a set of procedures as it was done in the past. As a result of its success that the company gave a group of Engineers the power to a group that had the mandate to act in any necessary way to advance innovation in technology at the plant. Changes That Improved Worker Motivation and the main changes at Semco that improved the motivation of workers. Motivation is the psychological process that stimulates people therefore guiding them towards specific goals. It inspires people to intentional engage with definite activities to keep on with them and eventually try to find benefits from doing these activities. After the retention of the COO title, the job position was made to rotate among workers every six months. This greatly improved their motivation as each strived to work harder and increase their productivity just to be selected as the next COO of the firm. The establishment of teams of workers that were self-managed also improved the motivation of workers. They were given the responsibilities of being fully in control of their production remit, which included controlling the budget and setting targets. They worked harder to achieve their targets because of the motivational aspect of the technique. This is a type of content theory of motivation defined by Herzberg, motivation factors like giving employees things like a sense of recognition, achievement or responsibility can increase job satisfaction. (Semler, 2009) The reward structure was later designed so that it could match the targets set by the teams. This is the greatest form of motivation, as each team would put in their best to reach their targets and be rewarded in return. Due to improved motivation, the firm got to gain back the lost profits and increase productivity. (Senge, 2014) Profit sharing was another new change that improved workers motivation. All the profit made was summed up and each division pf the business was given around 25% of the net profits then it was divided among workers as per the decision of a democratically elected committee. The equity theory of motivation was employed through the assessing of the team members levels of effort and then rewarding them for it. The profit sharing was the goal of the managers recognizing the need for employees to be seen being rewarded on a fair and equitable basis and adjusting any form of inequities. (Semler, 2009) The empowerment plan motivated workers to accept more responsibility given to them for managing multiple duties and putting in action their knowledge to generate new and innovative ideas on how to keep reducing costs and improving quality. The workers were given the power to hire or fire some people they deemed incompetent after a democratic vote from everyone. They were motivated to find ways in which they could tackle the challenges they faced in the company by organizing themselves. Workers who know and approve to the ideologies of their organization will organize themselves into teams needed to get the most out of their chances of accomplishing the teams desired goals. When workers have more control over their tasks, they will be motivated to become more productive and consequently more relaxed and, happy at the work site. David McClellands need theory is established in this context. It holds a great significance in understanding motivations. The need for power which is the desir e for control over others and yourself was promoted by the empowerment plan. (Semler, 2009) The manuals that used to define the factory life in the previous regime were disposed of, and a new system was adopted, decisions were made after a debate and a discussion rather than through a set of procedures as before. Payment is made by the sales percentage, this way, workers, were motivated to work hard to get the most sales to increase their payment. Possible Sources of Tension within the Existing Structure at Semco The Organisational Structure When Semler took over the company and started initiating his radical plan of running the business. He recognized that the firms highly turbulent markets needed a different organization structure to stay successful for a longer term. He reduced the size of Semcos administrative organizations by assigning its functions to the operative units. The organizations structure was redefined moving from hierarchical to business unit approach that put the team to the core. This caused a lot of tension, and as a result, Semco has no centralized data processing, there are no training departments, no rules, and no audits anymore. Because of the organizational structure changes implemented, the firm does not use a formal organization chart but rather sketch the structure of the company in pencil when it is only necessary and then dispense with it as soon as they are done. However, as a result, the ideas of self-governance and self-management were promoted, and responsibility into the overall strate gy of the organization was incorporated among the employees. (Semler, 2009) The management When he took over the firm, his first move was to dismiss all top management personnel and dismantle the existing layers of management, therefore, reducing the hierarchy from seven to three. The managers get to run their units with so much freedom from top management. This created tension in the firm, and as a result, almost an entire layer of middle managers left the business after almost a year because they felt that the newly empowered subordinates had undermined their authority.As it is well known by most scholars, the management of any initiativeneeds that someone exert control over the idea, the process, and the factors of construction in order for an economically possible product or service to materialise. Semler set up a new leadership system, the managers would put forth their plans to other members of the leadership team to get their opinion on the matter for approval. This was something that only the prerogative team used to do in the past regime. The system made leaders s how exactly how they added significance to the process because the leadership teams new roles encompassed setting budgets and therefore the management roles that were deliberated as being ineffective would be disregarded of. (Senge,2014) The Corporate Culture Semlers first moves included abolishing all the norms, manuals, rules and regulations. This caused tension because it can be very hard running an organisation without any rules and regulations. However most organisations have sets or rules and regulations that rarely solve problems. Richard expected that the workers would develop a sense of responsibility enough to take them use their common sense in every aspect.Semcos corporate culture is based on employee participation in management decisions, companywide profit sharing, and an open information culture. Semco managers and workers together make decisions The role of manager was changed and instead of the manager making all the decisions, he would have to ask the right questions for the support of the team members, this then formed a basis for decision-making in the firm. The new change in culture brought about tension, however, it brought about a competitive position build around the corporate culture that resulted in a creative RD process and a highly efficient manufacturing system. Changes in the corporate culture ensured that Semco employees were assured of representation through a democratically elected factory committee of each business unit. The workers were given the right to vote, choose and contribute to the decision making processThey were supposed to read the charter, take part, and ensure that their committee defended their interest effectively. These interests at times would not correspond to Semcos interests, therefore, bringing about a necessary and healthy conflict.(Senge, 2014) The Biggest Risks Taken By Richard Semler in Implementing the New Regime at Semco. One of the biggest risks taken by Richard Semler in implementing the new regime at Semco was starting by dismissing all the top management and dismantling all the existing layers of management for the reason of diversification. He dismissed almost every employee that had worked for the firm for a longer period and therefore had a better understanding of the business more than any new employees. It was a huge risk to take although it led to positive results. (Senge, 2014) The second risk he took was the transparency in salaries; this was something that was not common in the normal business practices. All financial information were discussed openly and freely and displayed for every person to see. Every person was able to know just how much the other is earning. He also took the risk of placing all the responsibility of overseeing processes, managing output and securing quality to the workers and later on extended it to managing salary levels, bonuses, decision-making processes. It was a huge risk to undertake in a business of such size. (Senge, 2014) He took the risk of empowering his employees by establishing self-managed teams of up to eight production workers to be fully in control over their production remit that included complete control over budgets and setting targets. (Semler, 2009) Semler took the risk of changing the work environment day by day , to some other people this will present itself as a risk towards job security, however, through these changes , he had gave all the workers, from top management to lower opportunities making every one of them do their work more sincerely. They all knew the importance of their work and therefore made wise decisions for other demographic factors, furthermore, the changes ensured that employees could not be dismissed without the proper procedure being adhered to.(Senge, 2014) Conclusion Semco is an unusual kind of organization because of its structure and the way things are done there. It managed to safely traverse through the challenging economic environment without incurring major organizational damages. It is very different from other traditional organized firms because of its open policies towards information sharing. Compared to other international companies, it is a small firm and it is not quite clear yet if the organizational principles employed by Semco and made it successful can be applied to other companies and gets the same results. It is unclear as to what the management principles at Semco cold do to a much larger organization, and it is, therefore, unclear as to whether the system could work in a highly competitive international economy due to the relatively young age of Semcos structure of an organisation. Reference Semler, R. (2009). The Seven-Day Weekend: Changing the Way Work Works. New York: Warner Books. Senge, P. A (2014). The Fifth Discipline Field book. New York: Currency Doubleday.

Marketing Metrics free essay sample

Marketing is no longer characterised by spontaneous investments. Marketing performance is controlled and diagnosed on a continuous basis, making the need for simple, but comprehensive measures/metrics to do so even more important. There are aspects of Marketing that can be identified, separated and measured. The effectiveness of a Company’s marketing department is often measured on the number of new clients and customers, the amount of leads generated and successful follow up on these leads. The main objective of any company that intends on being a major player is not only to create new customers, but to retain the ones they already have. By taking the cost of different marketing activities and comparing them against the number of sales or new customers, the success of these activities can be determined. In addition, it allows for comparison between different marketing initiatives. This facilitates the creation of an environment in which the customer can relate to the company and creates the appropriate condition for the making of sales. We will write a custom essay sample on Marketing Metrics or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The effectiveness of a company’s marketing department can be quantified by sales targets reached the enhancement of profits and improved bottom-line performance. This is achieved by making the marketing function more accountable as it ensures a continuous testing of its effectiveness through the application of scorecards. These scorecards, or metrics, allows for the development of a set of measures and provide a means through which the performance of marketing activities can be measured. One of the most important questions that should be asked is how many metrics should be used to enable measurement to be comprehensive. There are cast amount of different metrics, but not all of them are equally important or relevant. The key is to identify those metrics that are most relevant to the particular situation of the company and those that evaluate what is really important. Fundamental metrics should include quantifiable metric such as Return on Investment and number of new customers, but also non-quantifiable metrics such as brand awareness and brand equity. Most often these non-quantifiable metric are the ones that determine the long-term survival and profitability of a company. TABLE OF CONTENTS Item nrHeadingPage . Introduction5 2. How to ensure that marketing activities are measurable5 3. Reasons for growth in the use of marketing metrics5 3. 1 A corporate trend for greater accountability of value added activities 3. 2 Discontent with traditional metrics 3. 3 Availability of IT and Internet Infrastructure 4. The direction in which metrics can lead a company7 4. 1 From non-financial to financial 4. 2 F rom backward looking to forward looking 4. 3 From short-term to long-term 4. 4 From micro to macro data 4. 5 From independent metrics to causal chains 4. 6 From subjective to objective 5. An investigation of key metrics can put an organisation in the position to develop and refine new marketing initiatives to increase market share. Therefore it can be said that metrics lead the way to cost effective marketing and ensuring that marketing expenditures are worthwhile. The difference between a marketing department that is considered a highly valuable organisational asset and one that is not regarded as highly often depends on the intensity of the focus on applying marketing metrics as a measure of success. When choosing among different metrics to be used, one has to consider the cost of these as well. Marketers have previously relied heavily on applying subjective measures of performance, especially when measuring customer attitudes, product attributes and brand associations. 3. 3 Availability of IT and Internet Infrastructure. Technology facilitates the existence of new metrics. New developments such as Enterprise Resource Planning, Customer Relationship Management Software etc enables the company to make use of alternative, more immediate metrics. For instance, companies can measure the profit for each time a customer visits their stores. Therefore performance is measured more accurately.   From non-financial to financial: One of the key reasons for the undertaking of performance assessment is to ensure that corrective steps can be taken to improve it. Senior management should view marketing as actions taken in terms of financial impact and to view marketing investments the same as other types of investment will guarantee success. There has been a perception among marketers that their discipline is a â€Å"soft one† that has not been taken seriously by management. By accepting the more rigorous financial measures, they stand a better chance of gaining increased legitimacy and credibility with Top Management. Care should however be taken not to focus only on the use of financial metrics as future income can often not be predicted. Metrics measures must be non-financial (customer loyalty, market penetration) as well as financial (sales, costs and profits). The correct mix between the two needs to be determined according to the requirements of the situation. 4. 2From backward-looking to forward-looking It is better to create forward-looking estimates as the future competitive environment is different than the current one. These estimates need to take the following into account such as competitive dynamics, and initiatives such as new product launches and brand extensions. 4. 3From short-term to long-term It is more profitable to focus on the creation of long-term wealth. The challenge here lies with the fact that the longer the forecast horizon, the bolder the assumptions must be in preparing the estimates. It will continue to be a challenge to construct a valid current basis for the projection of future marketing performance. . 4From micro to macro data To succeed in a competitive environment, a company must keep in mind that often a small loss of market share can often conceal the fact that a huge number of major contributing customers have defected to the competition. 4. 5From independent metrics to causal chains This move will have major breakthroughs to effect in the areas of efficiency and control. This will allow all marketing activities to be evaluated in terms of their effect on the bottom line and will enable the selection of the most profitable actions. 4. 6From subjective to objective If an investment’s EVA is greater than zero, that option is worthwhile. EVA allows the marketing department to communicate to other departments and this increases the legitimacy of the marketing department in the eyes of the other functional departments. EVA is not used that frequently as it makes use of historical values. 5. 2The balanced scorecard approach This approach allows for the whole organisation to be looked at from different perspectives (customer perspective, innovation and learning perspective, internal business perspective and financial perspective). This allows for a more comprehensive view of the company’s situation. What makes this approach more viable is that it is partially forward looking and geared towards the long-term performance of the company. 5. 3Brand Equity Brand equity is often the biggest and most valuable asset for many companies. It can be measured by looking at customer loyalty and perceived product quality and is determined by investigating financial data showing the profits from the marketing of the brand and incorporates the value of future returns. The managing of Brand Equity is one of marketing’s most important functions, and facilitates the transfer of value in the market to the company’s customers and shareholders. 5. 4Relational Equity This equity comprises four different types of partnerships, namely supplier, lateral, internal and buyer partnerships. Swahney and Zabin (2002) define Relational Equity as the wealth creating potential that resides in the company’s relationships with its stakeholders. They also proposed the use of the Relational Maturity Model which provides a holistic measure to focus on the quality of customer relationships. This measure is primarily dependant on macro data and provides information that is generally of a subjective nature. 5. 5Customer equity This viewpoint states that the focus of the company should rather be on the customer than the brand. This is actually a valuable point as it is the customer that determines the value of the brand. The challenge for marketers would be to find the most dominant driver of customer equity for the company.