Flashcards
Balance scorecard
Cards in this deck (35)
- 1Balance scorecardTranslates an organization’s mission and strategy into a set of performance measures that provides the framework for implementing its strategy
- 2What are the four perspectives a balance scorecard measures?1. Financial
2.Customer
3. Internal Base Processes
4. Learning & Growing - 3For profit companies’ primary goal of the balance scorecardIs to sustain long-run financial performance
- 4Strategy mapIs a diagram that describes how an organization creates value by connecting strategic objectives in explicit cause and effect relationships with each other in the financial customer internal business process and learning and growing perspectives
- 5Product differentiationAn organization’s ability to offer products or services perceived by its customers to be superior and unique relative to the products or services of its competitors.
Leads to brand loyalty and the willingness of customers to pay high prices - 6Cost leadershipAn organization’s ability to achieve lower cost relative to competitors through productivity in efficiency improvements, elimination of waste and tight cost control. Leads to lower selling price.
- 75 aspects of industry analysis1. Number and strength of competitors
2.Potential entrants to the market
3.Availability of a equivalent products
4. Bargaining power of the customer
5. Bargaining power of the input suppliers - 8Financial PerspectiveEvaluates profitability of the strategy (includes budgets of course), Uses the most objective measures in the scorecard, other three perspectives eventually feedback into this dimension these are the links the cause-and-effect relationships
- 9Customer perspectiveIdentifies targeted customer and market segments and measures the company success in these segments
- 10Internal business perspectiveFocuses on internal operations that create value for the customer that in turn furthers the financial perspective by increasing shareholder value includes three sub- processes: innovation, operations, and post-sales service
- 11Learning and growth perspectiveCapabilities the organization must excel at to achieve superior internal processes that create value for customers and share holders.
Intellectual assets & an asset that you don’t see on the balance sheet - 12What is EVA?Economic value added
- 13What are the income and investment measures as part of the financial perspectiveEconomic value added and return on investment
- 14Customer perspectiveMarket share, customer satisfaction,customer retention percentage, time taken to fulfill customer requests and number of customer complaints
- 15Learning and growth perspectiveEmployee measures: employee education and skill levels, employee satisfaction ratings, employee turnover rates, percentage of employees suggestions implemented, percentage of the compensation based on individual and team incentives
Technology measures: information system availability, percentage of processes with advanced controls - 16Why is it called the balance scorecardBecause it balances the use of financial and nonfinancial performance measures and short run and long run measures to evaluate performance
- 17What are some non-measuresNet promoter score employee retention employee satisfaction
- 18Can a scorecard be a dashboard?Yes
- 19What does a balanced scorecard do?Helps communicate the strategy to all members of the organization by translating the strategy into a coherent and linked set of understandable and measurable operational targets
- 20Features of a good balance scorecardMust motivate managers to take actions that eventually result in improvement in financial performance predominately applies to for-profit entities but has some application to not for profit as well,
limits the number of measures identifying only the most critical ones ( KPI’s ) and highlights less than optimal trade off that managers may make when they failed to consider operational and financial measures together example squeeze cost but sacrifices safety - 21Strategy definition1. Specifies how an organization matches it’s own capabilities with the opportunities in the marketplace to accomplish its objectives
2. A thorough understanding of the industry is critical to developing a successful strategy - 22Financial perspectiveIncome Measures: Operating income, gross margin percentage
Revenue and cost measures: revenue growth, revenues from new products, cost reduction in key areas return
Income and investment measures: economic value added,(EVA), return on investment - 23Balanced scorecard implementation pitfalls1. Manager should not assume the cause-and-effect linkage are always precise
2. Manager should not seek improvements across all of the measures all of the time
3. Managers should not use only objective measures: subjective measures are important as well for example employee satisfaction - 24What are the three components to strategic analysis of operating income1. Growth component 2. price recovery component
3. productivity component - 25Growth componentMeasures the change in OI attributable solely to the change in the quantity of output sold between the current and prior periods (also market size versus market share)
- 26Price recovery componentMeasures the change in operating income attributable Solely to change in prices of inputs and outputs between their current and prior periods
(Product Differentiation) - 27Productivity componentMeasures the change in cost attributable to a change in the quantity of inputs between the current and prior periods. That is, are inputs being used more efficiently and /or is capacity being reduced (cost leadership)
- 28What two components are fairly easy to grasp and which component requires a bit more thought?Growth and price recovery are fairly easy to grasp and productivity component is the one that takes a little bit more thought
- 29GrowthJust because operating income increased does not necessarily mean strategy was successfully implemented and vice versa
- 30GrowthJust because operating income decreased does not necessarily mean strategy was unsuccessfully implemented
- 31Management of capacityManagers can reduce capacity-based fixed costs by measuring and managing unused capacity
- recall that unused capacity is not always a bad thing
-Managing capacity =peak shaving and outsourcing - 32What is unused capacityIs the amount of productive capacity available over and above the productive capacity employed to meet consumer demand in the current period.
- 33What is downsizingRightsizing – is an integrated approach of configuring processes, products, and people to match cost to the activities that need to be performed to operate effectively and efficiently in the present and future
(after an acquisition = synergies) - 34What are engineered costs?Results from a cause and effect relationship between the cost driver and the resources used to produce that output.
Examples are manufacturing, distribution - 35What are the two parts of discretionary cost?1. They arise from periodic (annual) decisions regarding the maximum amount to be incurred
2. they may have a little measurable cause-and-effect relationship between Output and resources used
-examples are advertising, R&D
Information
- Description
- Flashcards on Balance scorecard, created by Roxann Daniello on 29/04/2018.
- Created by
- Roxann Daniello
- Views
- 31
- Rating