3.1 The traditional bottom line
The mission of any organisation is to become financially sustainable. For commercial organisations, this generally means that they must make a profit for its owners. In other words, when all costs made to run the business are deducted from the earnings (the traditional bottom line) a positive number should remain. Non-commercial organisations do not have this profit motive. However, this does not mean that they can ignore the financial aspect. Like commercial organisations, non-commercial organisations must cover the expenses that occur, be it through subsidies, grants, donations or other kinds of fundraising activities. The difference is that at the end of the financial period no surplus is expected.
The supply chain can make an important contribution towards the financial sustainability of an organisation. We have proposed four measures to use in our financial perspective:
Activity 3 Personal impressions of financial performance
Using the four measures briefly mentioned above, please fill in Table 1. We do not want you to carry out any in-depth analysis of your organisation (or one that you are otherwise familiar with) at this point, but just to give your gut reaction to the headings.
For the rating, we want you to rate your organisational performance against the measure on a scale of 1 to 5, with 1 being very poor and 5 being excellent.
Make some notes on why you gave that rating and then consider what you could do to check your opinion.
Table 1 Personal impressions of an organisation’s financial performance
|Measure||Rating||Basis for your rating||How could you check your rating?|
Note that we are not asking you to share confidential information here. Rather, we want you to consider how you make these judgements without objective evidence to hand, and then what sorts of inquiry you might be able to undertake to confirm or modify your first impression.
There is no discussion for this activity.