WHAT IS CRITICAL SUCCESS FACTOR (CSF)?
Have you ever wondered why customers prefer to do business a company rather than the other? Well, the simple reason behind customers choosing a business over the other is the fact that they perceive value in what the business does over the other.
Those things that customers perceive to be of higher value are our critical success factors. Johnson, Scholes and Whittington define CSF as the product features that are particularly valued by customers. For a business to succeed in today’s harsh business environment, it must identify its critical success factors and then work hard to at least maintain them.
HOW TO USE CSF TO GAIN COMPETITIVE ADVANTAGE
There are six steps or approaches that can be taken when a company sets out to harness the potential of CSF. They are briefly discussed below:
- Identify those factors that are critical to the success of accompany. In other words, those features of a product or those things that a company must do well in other to succeed.
- Identify what must be done to ensure that optimum performance is achieved in the identified success factors.
- Now, develop a suitable critical competence that supports the achievement of meeting the required action to give competitive advantage
- Identify key performance indicators that are appropriate to the unique position of the company- remember that what cannot be measured cannot be managed.
- Concentrate on consolidating your core competencies to make it difficult for competitors to copy
- Continuously monitor your company result alongside the result of competitors and tweak your strategy as required.
There are many management accounting tools that helps managers and business leaders easily identify CSFs, one of such tools is Balanced Score card (BSC). With the aid of a BSC, useful relationships that exist between financial and non-financial objectives of a company are established. The BSC also helps in identifying KPIs that in turn assist in the proper use of CSF.