Productivity Measurement Case Study Solution
Sales per Employee:
The number of products sold by each employee has a great influence on the revenue of the company. The employees of BBY has increased sales gradually with respect to time in minute ratios that has now reached a bit above average. The increase in the sales by each employee is expected year over year. Recently, sales per employee has reached approximately $36 million. The ranking of BBY in overall market is very low. It needs to take some important measures to have a better ranking place in market.
Net Income per Employee:
The net income of the employees of BBY has increased 15% and reached to an average of 10,800. This amount of income is still considered as below average based on company’s revenues. However, the standard of the net income any employee is on 5th rank in comparison to the net amount given to employees. The company needs to provide healthy amount to the employees as its earning good revenues year on year with increase in ratio. It can be predicted that the BBY is on his way to beat a number of top rated retailer companies.
Inventory to Sales Ratio:
A large number of retailer companies has attained greater ratios of inventory turnover. While for few months the BBY inventory turnover has declined the sale ratio to 7.44 from 7.9 shown in Appendix 3. This can great impact on the overall company sale that might affect the revenues.
Change in productivity measures:
The change in the productivity measures of any company means that any industry or company having enormous profits will result in the low price of the product. Therefore, the demand of the product increases that generates fruitful outputs. The change in productivity is entirely related to the sale ratio. If sales of any product is found lower than expected then some alterations need to make to increase the product productivity.
Conclusion:
It can be concluded that the Best Buy Company (BBY) has an average performance with respect to its productivity measures but it has the potential to improve and beat one of the top retailers like Amazon. The Best Buy Company is generating more revenues year over year but due to increase in their inventory, sales ratios has decreased but they are enough that can be leveled up again.
Appendices
Appendix 1
| Annual Income Statement of Best Buy from 2015 to 2019 | |||||
| 2015 | 2016 | 2017 | 2018 | 2019 | |
| Revenue | 40.34 B | 39.53 B | 39.4 B | 42.15 B | 42.88 B |
| Gross Income | 9.05 B | 9.11 B | 9.28 B | 9.88 B | 9.96 B |
| Net Income | 1.25 B | 807 M | 1.21 B | 999 M | 1.46 B |
Appendix 2:
| Best Buy | Amazon | |
| Revenue | 42.15 Billion | 232.887 Billion |
| No. of employees | 125,000 | 647,500 |
| Labour Productivity per year | 337,200 | 359,671 |
| Average Salary per hour | $12 | $15 |
| Average working hours per week | 32-40 | 55 |
Appendix 3:
| Inventory to Sale Ratio | ||||
| Nov 2018 | Aug 2018 | May 2018 | Feb 2018 | Oct 2017 |
| 7.44 | 7.9 | 7.77 | 7.78 | 7.55 |
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