Usage of the Price-to-Earnings Ratios in Business

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Introduction

Organizations are faced with an uphill task of transforming and maintaining good performance. Obstacles may come from within or outside the organization. Leadership inadequacies, organizational culture, and unwilling investors are some of the factors that hinder transformation of an organization. Reframing organizations is a delicate process that requires prudent leadership, choice and passion to bring change (Levin & Gottlieb, 2009). Well executed transformation brings success back to a company.

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This essay will discuss how to monitor progress in a struggling company that is faced with a possibility of shutting down. It will give an insight on what urgency should be kept up when monitoring the struggling company. The essay will also discuss the parameters to gauge the success of the company.

Monitoring the company’s progress

It is an important step to monitor the progress of the company so that it can realize profits. This company is making a loss. Therefore, monitoring will help to know the factors that could be looked into to transform the company. There are different approaches for monitoring the progress of an organization (Levin & Gottlieb, 2009).

Computer software for tracking business progress has been adopted in modern businesses (Bolman, & Deal, 2011). The software encompasses entry of information which is computed to obtain some valuable and indicative figures. These figures are compared with previous figures to discern the direction the business is taking. Recording details in spreadsheets is another method of monitoring the progress of a company.

Details recorded in spreadsheets can easily be visualized for changes in finance, transactions and success. Benchmarking is an effective way of tracking changes in a company. It involves formulating short term goals that will give an idea of accomplishment. Employees are very important in a company. Their success and challenges need to be tracked as part of the overall monitoring of a company. This implies that it is not only money and proceeds that should be tracked in a company. The adoption of the internet in businesses has eased the way businesses are managed and tracked (Bolman, & Deal, 2011).

There are websites which provide tools for monitoring a business. For instance, PerformanceHub provides case studies from other businesses that can be studied to help monitor another business (Kotter & Cohen, 2002).

Creating an urgency

Companies need to create a sense of urgency in their attempt to transform. However, there are roadblocks to creating sense of urgency. These roadblocks are; complacency and wrong sense of urgency. It requires the input of well trained managers to circumvent the roadblocks (Kotter & Cohen, 2002). A sense of urgency should be communicated and acted upon effectively. It should be followed up immediately and actions created in order of priority. Employees have to be motivated in the company. They need to appreciate that they are playing a key role in the progress of the organization. Motivation can be done in several ways.

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Instead of telling employees that the company needs to increase sales and profits, they need to be made aware of specific goals that can be used to achieve that. The goals can be individual-based (micro goals) and each employee can achieve independently. At the end of it all, the individual goals will contribute towards the success of the company. Employees can be rewarded for achieving their goals. This way, they will be motivated to work for the company.

The company’s price earning (PE) ratios should be calculated as a matter of urgency. The PE ratios will give the current performance of the company in light with the investors’ investment. Transforming the company may involve adopting technologies, process changes, and reengineering the company into many units. Realignment of company’s culture may be important in transforming it into a viable venture (Levin & Gottlieb, 2009).

Yardsticks to gauge success of the company

All companies worldwide are purposed to succeed. A successful business is a clear sign that investment put into the establishment is paying off (Levin & Gottlieb, 2009). Profit is a key yardstick to gauge the success of a company. If, after paying the operating costs, there is surplus money, then the company is making a profit. This profit made must be compared with what was made in the previous months to get a clear percentage of the rise or drop in the gains. Increase in number of customers could also mean that the company is doing well. Current numbers are compared with previous numbers to make a conclusion. If customers are satisfied, then they respond by coming back for transactions and bring with them other customers. This is an indication that the company is making success (Levin & Gottlieb, 2009).

Conclusion

In order to transform a struggling company, the change agent needs to monitor its progress and create a sense of urgency. The urgency should be acted upon fast. Plans should be formulated to transform the company so that it may start succeeding. Finally, there should be ways to monitor the success of the company.

References

Bolman, L. G., & Deal, T. E. (2011). Reframing organizations: Artistry, choice and leadership. San Francisco, CA: Jossey-Bass.

Kotter, J. P., & Cohen, D. S. (2002). The heart of change: Real-life stories of how people change their organizations. Boston, MA: Harvard Business Press.

Levin, I., & Gottlieb, J. Z. (2009). Realigning organization culture for optimal performance: six principles & eight practices. Organization Development Journal27(4), 31.

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BusinessEssay. (2022, January 22). Usage of the Price-to-Earnings Ratios in Business. Retrieved from https://business-essay.com/usage-of-the-price-to-earnings-ratios-in-business/

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BusinessEssay. (2022, January 22). Usage of the Price-to-Earnings Ratios in Business. https://business-essay.com/usage-of-the-price-to-earnings-ratios-in-business/

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"Usage of the Price-to-Earnings Ratios in Business." BusinessEssay, 22 Jan. 2022, business-essay.com/usage-of-the-price-to-earnings-ratios-in-business/.

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BusinessEssay. (2022) 'Usage of the Price-to-Earnings Ratios in Business'. 22 January.

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BusinessEssay. 2022. "Usage of the Price-to-Earnings Ratios in Business." January 22, 2022. https://business-essay.com/usage-of-the-price-to-earnings-ratios-in-business/.

1. BusinessEssay. "Usage of the Price-to-Earnings Ratios in Business." January 22, 2022. https://business-essay.com/usage-of-the-price-to-earnings-ratios-in-business/.


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BusinessEssay. "Usage of the Price-to-Earnings Ratios in Business." January 22, 2022. https://business-essay.com/usage-of-the-price-to-earnings-ratios-in-business/.