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A LevelBusinessAQARevision Notes7. Analysing the Strategic Position of a Business (A Level)7.2 Assessing the Internal Position of a BusinessAssessing Overall Business Performance

Assessing Overall Business Performance (AQA A Level Business): Revision Note

Exam code: 7132

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

Updated on

Elkington's Triple Bottom Line

  • The Triple Bottom Line model highlights that business performance may be measured in a number of ways in relation to

    • Its finances

    • Its environmental impact

    • How socially responsible it is in relation to employees

  • Elkington argued that only a company that was measuring performance in all three areas of people, profit and planet was considering the full costs of its activities

    • If all these areas are measured, business owners and employees are likely to pay attention to them and change their behaviour accordingly,  rather than just focusing on profit

    • As a result, sustainability both within the business and, if adopted widely, across the economy as a whole, should be improved

The Triple Bottom Line model

Venn diagram showing sustainability at the intersection of three circles: Planet (Environmental), People (Social), Profit (Economic) performance.
Elkington's Triple Bottom Line model suggests that businesses should consider their impact on people and the environment alongside financial metrics to fully understand their performance

Criticisms of Elkington's model

Criticism

Explanation

Hard to measure fairly

  • There is no standard way to count 'people' or 'planet' metrics

  • One firm may report volunteer hours, another staff diversity, so comparisons are unfair

Conflicting goals

  • Aiming to improve social or environmental outcomes, such as paying farmers more, can cut into profits

  • The model gives no guidance on which priority wins

Risk of greenwashing

  • Firms can highlight small eco-projects, like tree-planting, under 'planet' while continuing harmful practices, such as releasing harmful emissions

Too complex and costly for smaller firms

  • Tracking extra figures alongside financial performance can overwhelm a small business

  • This diverts time and budget from real improvements

Not fully integrated

  • Triple Bottom Line often ends up as a standalone annual report rather than shaping day-to-day decisions

  • Sales or profit objectives may still dominate managers' choices

Other methods of assessing overall business performance

Method

How it works

Example

Balanced scorecard

  • Measures performance across four linked perspectives to ensure profit does not dominate decision-making

    • Financial

    • Customer

    • Internal processes

    • Learning and growth

  • It balances short- and long-term goals and links day-to-day activities to a business's overall strategy

  • UK supermarket Lidl tracks quarterly sales growth (Financial), Net Promoter Score (Customer), shelf-restocking speed (Internal processes) and staff training hours (Learning and growth)

Performance prism

  • Considers performance against five elements

    • Stakeholder satisfaction

    • Strategies

    • Processes

    • Capabilities

    • Stakeholder contributions

  • Ensures all key stakeholders’ needs and contributions are recognised

  • Sortware company EA Games surveys users (Stakeholder satisfaction), defines product development goals (Strategies), streamlines the process of game development (Processes), invests in coding skills (Capabilities) and tracks each group’s inputs (Stakeholder Contributions)

GRI Standards (Global Reporting Initiative)

  • Provides detailed guidelines for reporting on economic, environmental and social impacts, with specific categories

  • These include emissions, labour practices and community engagement

  • Creates transparent, comparable sustainability reports that stakeholders can trust

  • Unilever publishes an annual GRI report covering its greenhouse-gas emissions, water use, sustainable sourcing and community programmes

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    Author
    Reviewer
    Lisa Eades

    Author: Lisa Eades

    Expertise: Business Content Creator

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

    Steve Vorster

    Reviewer: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.