16.4 The Balanced Socrecard Flashcards
Tool for communicating the company’s strategy throughout the organization
Balanced Scorecard
Which one of the following statements about a balanced scorecard is incorrect?
A. It seeks to address the problems associated with traditional financial measures used to assess performance
B. The notion of value chain analysis plays a major role in the drawing up of a balanced scorecard
C. It relies on the perception of the users with regard to service provided
D. It is directly derived from the scientific management theories
D. It is directly derived from the scientific management theories
Which one of the following statements best describes the definition of critical success factors?
A. Financial measures that track a company’s competitive performance
B. Financial and nonfinancial aspects of performance that are essential to have a competitive advantage
C. The key nonfinancial performance indicators on a balanced scorecard
D. The aspects of a business that are focused on measuring key costs
B. Financial and nonfinancial aspects of performance that are essential to have a competitive advantage
The balanced scorecard provides an action plan for achieving competitive success by focusing management attention on critical success factors. Which one of the following is not one of the perspectives on the business into which critical success factors are commonly grouped in the balanced scorecard?
A. Competitor business strategies.
B. Financial performance.
C. Internal business processes.
D. Employee innovation and learning.
A. Competitor business strategies.
A typical balanced scorecard classifies critical success factors and measures into one of four perspectives on the business: financial, customer satisfaction, internal business processes, and learning and growth.
Using the balanced scorecard approach, an organization evaluates managerial performance based on
A. A single ultimate measure of operating results, such as residual income.
B. Multiple financial and nonfinancial measures.
C. Multiple nonfinancial measures only.
D. Multiple financial measures only.
B. Multiple financial and nonfinancial measures.
The trend in managerial performance evaluation is the balanced scorecard approach. Multiple measures of performance permit a determination as to whether a manager is achieving certain objectives at the expense of others that may be equally or more important. These measures may be financial or nonfinancial and usually include items with four perspectives: (1) financial, (2) customer satisfaction, (3) internal business processes, and (4) learning and growth.
On a balanced scorecard, which is more of an internal process measure than an external-based measure?
A. Cycle time.
B. Profitability.
C. Customer satisfaction.
D. Market share.
A. Cycle time.
Cycle time is the manufacturing time to complete an order. Thus, cycle time is strictly related to internal processes. Profitability is a combination of internal and external considerations. Customer satisfaction and market share are related to how customers perceive a product and how competitors react.
On a balanced scorecard, each of the following is an example of the customer perspective measure except
A. Customer retention
B. Number of customer complaints
C. Economic value-added
D. Time taken to fulfill orders
C. Economic value-added
Economic value-added is an example of a financial measure, not a customer perspective. The customer perspective includes such things as market share, lead time, market research results, customer retention, and number of customer complaints.
A sign of the successful implementation of a balanced scorecard is the presence of cause-and-effect relationship. An example of this success for a hotel is meeting the target of
A. Increasing employee training hours, which causes employee compensation to increase
B. Decreasing a customer’s check-in time, which causes an increase in the number of implemented employee suggestions
C. Receiving more 5-star ratings from customers, which causes an increase in profit
D. Increasing profit, which causes an increase in employee job satisfaction ratings
C. Receiving more 5-star ratings from customers, which causes an increase in profit
The balanced scorecard is an accounting report that connects the firm’s critical success factors to measurements of its performance. Key performance indicators are specific, measurable financial and nonfinancial elements of a firm’s performance that are vital to its competitive advantage. A typical balanced scorecard has four perspectives: financial, customer satisfaction, internal business processes, and learning and growth.
