CEJM - Th1 Chap5 : Finalités et performance de l'entreprise

The Company’s Purpose and Performance

The lesson explains how a company defines its objectives, balances stakeholder expectations, and assesses its overall performance.

1. The Company’s Objectives

Companies pursue two broad categories of objectives:

• Economic and financial objectives: Generate profit, support the company’s development and long-term survival, and provide resources for reinvestment and rewards to partners and shareholders. These can be translated into operational goals such as:

  • Increasing operating profit and returns on capital
  • Growing market share
  • Improving brand awareness and image

• Social and environmental objectives: Consider employees’ needs and the company’s impact on society and the environment. These form part of corporate social responsibility (CSR):

  • Social aims include employee well-being, training, career development, employability, professional integration, and purchasing power.
  • Environmental and ethical aims include reducing negative environmental effects through energy savings, responsible resource use, recycling, and circular-economy practices. These measures can help reduce the company’s carbon footprint and support the energy transition.

2. Stakeholders and Governance

Stakeholders are people or groups connected to the company, each with their own expectations.

Internal stakeholders participate directly in the company’s production process:

• Shareholders: Seek returns on their investments, capital gains, and dividends.
• Employees and their representatives: Value workplace well-being, skills development, training, employability, and purchasing power.
• Creditors: Want their claims to be secure and repayments to be reliable and timely.
• Managers: Pursue profitability targets, influence, bonuses or stock options, and professional reputation.

When a company prioritizes shareholders over other stakeholders, its approach is described as shareholder governance.

External stakeholders do not participate directly in production:

• Customers: Expect good-quality products, reasonable prices, and effective, prompt service.
• Suppliers: Value product or service quality and durable business relationships.
• The State and its administrations: Seek compliance with rules and regulations to help maintain fair competition and balance among market participants.

A company that responsibly and ethically considers the interests of its broader stakeholder group follows partnership governance.

3. Company Performance

Performance is an organization’s ability to achieve its objectives optimally. The performance triangle links objectives, resources or means, and results. It involves three related concepts:

• Relevance: Whether the resources mobilized are aligned with the objectives.
• Effectiveness: Whether the intended results are achieved, regardless of the means used.
• Efficiency: Whether results are achieved while using resources economically.

Overall performance combines these three capabilities.

4. Measuring Performance

Companies use both quantitative and qualitative indicators, such as:

• Commercial indicators: Prospecting effectiveness, customer acquisition, and customer conversion rates.
• Financial and economic indicators: Return on capital, return on equity, and value created for shareholders.
• Qualitative indicators: Customer and supplier feedback, and the company’s reputation.

Indicators can be brought together in a dashboard to support company management, decision-making, and corrective action. The Balanced Scorecard, developed by Norton and Kaplan, is presented as a framework for combining qualitative and quantitative indicators to assess overall company performance.

Speakers and Sources

• Presenter/narrator: One speaker delivers the lesson; the subtitles do not name the speaker.
• Framework referenced: Norton and Kaplan’s Balanced Scorecard.