13 - Strategic Control and performance management

Question 1

Fourfold approach to control

Answer 1

Analysis
Audit
Assessment
Assurance

Question 2

4 suggested dimensions for understanding of analysis

Answer 2

Effectiveness
Efficiency
Qualitative
Quantitative

Question 3

What does audit perspective of strategic control relate to?

Answer 3

Control methods

Question 4

2 dimensions of how controls can be inserted into systems (control methods)

Answer 4

Internal awareness (single-loop system)

External awareness (double-loop system)

Question 5

What is meant by internal awareness (single-loop system of internal control)?

Answer 5

The control sits as part of the problem solving and is built into the system itself

Question 6

Example of internal awareness (single-loop system of internal control)?

Answer 6

Machine automatically switching off after set production volume is met

Question 7

What is meant by external awareness (double-loop system of internal control)?

Answer 7

External sense checks are built into systems

Question 8

Example of external awareness (double-loop system of internal control)?

Answer 8

Machine alerts operator when certain criteria are met, who can decide whether to proceed or not

Question 9

3 stages (and order) of traditional single feedback loop for strategy

Answer 9

Develop strategy
>
Implement strategy
>
Control strategy
>
back to develop

Question 10

What does GAP analysis assess?

Answer 10

The differences between the expected path and the actual path from A to B - how and why various influences and forces delivered the variations

Question 11

4 core requirements for a KPI to be used for measurement, assessment and control

Answer 11

• KPI must be Key: closely defined measures agreed by all parties
• KPI based upon accurate and reliable data and info
• Business management aspect covered by a KPI must be relevant to core strategic drive
• KPI must have forward impact (simple measure of the past is not useful)

Question 12

Why should a balanced scorecard be used when measuring performance?

Answer 12

Allows for an optimal combination of quantitative and qualitative measures

Question 13

4 standard perspectives (elements) of balanced scorecard

Answer 13

• Customer perspective
• Internal business perspective
• Innovation and learning perspective
• Financial perspective

Question 14

What is the balanced scorecard used for?

Answer 14

Balanced set of metrics that better align with strategy than pure financials can become targets and can be effectively used by managers and directors to direct activity and justify performance

Question 15

How should a balanced scorecard look - what are the 3 aspects of each perspective?

Answer 15

Objective

KPIs

Strategic initiatives

Question 16

Balanced scorecard - customer perspective - objective

Answer 16

Enhance customer satisfaction and loyalty to drive business growth

Question 17

Balanced scorecard - customer perspective - KPIs (3)

Answer 17

• Customer satisfaction index
• Customer retention rate
• Number of customer complaints

Question 18

Balanced scorecard - internal business perspective - objective

Answer 18

Improve operational efficiency and internal processes to support business objectives

Question 19

Balanced scorecard - internal business perspective - KPIs (3)

Answer 19

• Process cycle time
• Quality control metrics
• Employee productivity

Question 20

Balanced scorecard - innovation and learning perspective - objective

Answer 20

Foster a culture of innovation and continuous learning to maintain competitive advantage

Question 21

Balanced scorecard - innovation and learning perspective - KPIs (3)

Answer 21

• Number of new products developed
• R&D expenditure as a percentage of sales
• Employee training hours

Question 22

Balanced scorecard - financial perspective - objective

Answer 22

Achieve financial sustainability and growth to enhance shareholder value

Question 23

Balanced scorecard - financial perspective - KPIs (3)

Answer 23

• Revenue growth rate
• Profit margin
• Return on investment

Question 24

Step by step answer for balanced scorecard question (5)

Answer 24

• Discuss difficulty of selecting metrics to measure success of strategy
• Discuss weaknesses of profit and loss method
• Why use a balanced scorecard? extending analysis beyond financial
• List each perspective, with objective, KPIs and potential strategic initiatives
• Conclude and state ‘not a tick box exercise’