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Key Performance Indicators example in business
What are Key Performance Indicators and how to utilize them to your advantage? 馃檪 MySkills Academy will explain the meaning of and potential behind KPIs. We will also give you advice on how to work with Key Performance Indicators in your everyday work life. Hopefully, after reading this article, you will also be able to apply useful KPIs in your private life.
KPI is a business abbreviation for the term: Key Performance Indicator. Key Performance Indicators are commonly used by companies to track their performance and set internal goals. As an example for a KPI that is used as an internal target, we can refer to a company鈥檚 monthly, quarterly or yearly profit. By setting a quantifiable targets, all stakeholders, from CEO to investor, can easily analyse and compare expectations with the reality. After they are able to define new targets for the upcoming period. As a result, some strategic and tactical steps will be implemented to the company鈥檚 activity in order to reach the desired KPIs. What can be done to increase the company鈥檚 profitability? Let鈥檚 look at some examples:
1. The company could increase the marketing budget to find more customers interested in their product, thus sell more and earn more. A company must always keep a balance between its spending and the benefits resulting from it.
2. Finding new suppliers which are cheaper than the current ones will help to decrease production costs, thus increasing profit.
3. Outsourcing of secondary activities to external companies could also decrease spendings and increase income.
KPIs example in private life
These were only basic examples of activities companies might undertake while pursuing a positive development of a profitability KPI. An entire strategy is more complex and usually includes many other Key Performance Indicators. However, all people are able to define own KPIs in their private life and compare the achievements in a short-term or long-term perspective, for example:
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1. Set goals for a desired salary in a time horizon (one to five years).
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2. Plan the amount of saved money on your bank account within a set time horizon.
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3. You can even define the number of countries you want to visit within a selected time period.
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Setting Key Performance Indicators in business and private life can only be limited by your imagination 馃檪
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