Book: Strategic Performance Management Flashcards
What are the three generic strategic positions
Cost leadership, differentiation, focuse
What does the cost leadership strategy entail
Be cheaper at all cost. Can be achieved through scale or favorable access to technology or materials
What does the differentiation strategy entail
Quality at all cost
What does a strategy of focus entail
To cator to the needs of a specific niche
What is strategic positioning
To optimally mix the three general strategies
What is a defender stratrgy
A mix of focus and cost leadership adapted to unchanging markets where the perfection of a small array of offerings is prioritized instead of fame and innovation
What is the prospector strategy
An adaptation to uncertain markets where innovation, marketing and adaptation to change is prioritized
What is the difference between a performance management system and a performance measurement system
Performance measurement is all about interpreting performance data while performance management is about what to do with the data
Mention a couple of performance management frameworks
The results/determinants framework, the performance pyramid, the balance scorecard and the performance prism framework
What is the most popular performance management system
The balance scorecard
What is the balance scorecard
A system where strategy is turned into objectives with measurements to fulfill them
Are numbers always objective and acurate
No
Do more measures add more value
Not necessarily
Should the same targets apply to everyone
No, targets should be adapted for accuracy and motivation in the situation
For what four perspectives does the balance scorecard create objectives
The financial shareholder perspective, the customer perspectives, the internal business perspective and the learning and growth perspective
How does the process of creating a balance scorecard look
You identify objectives to the strategic teams and create targets and initiatives to fulfill them from all perspectives
What are the three things that encourage the choice of business strategy
Revenue growth and mix, cost reduction and asset utilization
How do you improve revenue growth
You may increase the number of new products, develop new customers and markets and change to a more profitable product mix
How do you measure revenue development for improvement
Percentage if revenue per product, percentage of revenue per customer and measure the growth percentage through time for the different segments
How do you achieve cost reduction
Reduce cost per unit or reduce associated selling or administrative costs
How do you measure asset utilization
ROE and EVA
What are five generic customer related objectives
Increasing market share, customer retention, customer acquisition, customer satisfaction and customer profitably
What are four customer value propositions
Improved product functionality, decreased price relative to competitors, improve quality and improve delivery time
What are customer value propositions
Measures that make customers perceive the offer as more valuable
What three processes exists from the internal business perspective in the balanced scorecard
The innovation process, the operation process and the post sale process
How do you improve innovation
Increase number of new offerings, develop new markets and customers and decrease the development time
How do you improve operations
By increasing cost efficiency and or quality and by decreasing the time it takes
How do you improve post sale service
Increase quality efficiency and decrease cost and redundant time
What is the production efficiency ratio
Standard hours output divided by actual hours input
What is capacity usage ratio
Actual hours utilized / budgeted hours utilized
Why is only processing time value adding
Because only processing time creates what the customer wants
How is manufacturing cycle efficacy calculated
MCE = processing time / (processing time, inspection time, wait time and move time) aka process time / total time
How is employee capability mesured
Through employee satisfaction, retention and productivity
What are some learning and growth related objectives of improvement
Increase employee capabilities, information system capabilities as well as motivation, empowerment and alignment
How are information system capabilities meaured
Percentage of processes with realtime feedback capabilities and percentage of customer facing employees having access to costumer and product information
How is motivation and empowerment measured
Measures number of suggested improvements per employee and what share is implemented.
How is employee alignment measured
Measure number of employees with goals aligned with the scoreboard as well as what share fulfills them
What are lag mesures
Outcome measures of past actions
What are lead meaures
Current measures linking current performance to strategy
What is a strategy map
An illustration where the different parts of the balanced scorecard are linked with arrows linking cause to effect, showing how each measure improves the business
What does it mean that different perspectives are weighted in a balanced scorecard
To assign the percentual importance of each perspectives adherance to its target metrics. This relates to bonuses
What are the benefits of using the balanced scorecard
Un-abstracts strategy, non financial causes to measurable financial effects and makes it clear what measurements are necessary for what
What are some criticisms of the balanced scorecard
There is no time dimension, no empiric link between cause and effect, omission of environmental and social perspectives
