3 Strategic Review and Implementation

Question 1

Balanced scorecard: 4 elements

Answer 1

Financial Perspective - how to create value for shareholders
Customer perspective - how to appear to customers
Innovation & Learning Perspective - how to continue to create value & maintain competitive position through improvement and change
Internal Business Processes - what business processes must we excel at to achieve financial & customer objectives

Question 2

Problems with the balanced scorecard model

Answer 2

 Prioritisation of KPIs is unclear
 Potential conflicts between KPIs
 Too many KPIs may lead to demotivation
 Potential focus on short-term measures
 Non-financial KPIs may be subjective and difficult to measure

Question 3

Supply chain management is the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities.

Supply chain management can be summarised under the following headings:

Answer 3

Facilities
This involves the property, plant and equipment used in production. It is important to consider location, capacity, cost, etc.

Inventory
A business must carefully consider how much inventory to hold and where.

Transportation
It must be decided whether to outsource transportation or keep it in house, as well as which form of
transportation is most suitable.

Information
A business must decide what information is needed to help manage its supply chain, as well as how
much should be shared with its suppliers and customers and how.

Sourcing
Sourcing involves deciding which parts of the business to outsource, as well as who to outsource them to. This also covers which suppliers and customers to work with.

Pricing
It must be decided how to price goods, with consideration for the effect on demand.

Question 4

TQM is a philosophy of getting it right the first time, every time. The various costs of quality must be balanced and can be summarised as follows:

Answer 4

 Prevention costs – costs which are incurred to prevent the production of products that do not conform to specification being produced (e.g. staff training; extra costs of acquiring higher quality raw materials).
 Appraisal costs – costs incurred in order to ensure that outputs produced meet required quality standards (e.g. costs of inspection).
 Costs of internal failure – costs incurred as a result of outputs not meeting required quality standards, but where these deficiencies are identified before a product is transferred to the customer (e.g. costs of repair and re-inspection; work stoppages caused by defects).
 Costs of external failure – costs resulting from products or services failing to meet requirements or to satisfy customer needs, but where these deficiencies are only identified after the products or services have been delivered to the customer (e.g. costs of handling customer complaints;
cost of repairing/replacing products returned from customers).