What is the concept of organizational performance?

1 Answer

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The concept of organizational performance is connected to the ideas of effectiveness and efficiency.  A business organization must produce the right things and it must produce them using the fewest possible inputs if it is to have a strong organizational performance.

Businesses typically try to perform well in a number of areas of organization.  First, they try to perform well financially.  That is, they need to realize a good return on their investment.  They need to add as much value as possible in their production process.   Second, they try to perform well in terms of the market.  What this means is that they must gain as much market share as they can (consistent with the goals of their firm).  They must be producing a product that is in demand and they must be producing it at a price that allows them to compete on the market.  Finally, they need to perform well in terms of creating value for their shareholders.  They need to make money that can be distributed in the form of dividends.  They also need to have their stock price rise at a reasonable pace.