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ACCA APM > Chapter 11 - Non-financial performance indicators > Flashcards

Chapter 11 - Non-financial performance indicators Flashcards

1
Q

What does a balanced scorecard include?

A
  • Financial measures
  • Non-financial measures
  • Internal information
  • External information
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2
Q

What are the four perspectives of the balanced scorecard?

A
  • Financial perspective
  • Internal business process
  • Innovation & learning
  • Customer perspective
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3
Q

What is the financial perspective?

A

How we look to our shareholders

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4
Q

What is the Internal business process perspective?

A

What must we excel at?

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5
Q

What is the Innovation and learning perspective?

A

Can we continue to improve and create value?

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6
Q

What is the Customer perspective?

A

How do our customers see us?

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7
Q

What should a business seek to do with each of the balanced scorecard perspectives?

A
  • Identify a series of goals/CSF’s
  • Establish appropriate measures/KPI’s
  • Each should be in line with the overall strategic objectives and vision of the organisation
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8
Q

Give three possible CSF’s and corresponding KPI’s for the customer perspective

A

CSF: Low cost products
KPI: Benchmark vs competitor

CSF: High quality products
KPI: % defects

CSF: Responsive service
KPI: % on time deliveries

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9
Q

Give two possible CSF’s and corresponding KPI’s for the internal perspective

A

CSF: Operational excellence
KPI: Production cycle time

CFS: Employee satisfaction
KPI: Staff turnover %

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10
Q

Give two possible CSF’s and corresponding KPI’s for the innovation and learning perspective

A

CSF: Innovation
KPI: % of income from new products

CSF: Internal learning
KPI: Time spent on staff development

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11
Q

Give three possible CSF’s and corresponding KPI’s for the Financial perspective

A

CSF: Growth and development
KPI: Quarterly sales growth

CSF: Survival
KPI: Cash flow

CSF: Profitability
KPI: ROCE

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12
Q

What are 6 advantages of the balanced scorecard?

A
  • Includes financial and non-financial measures
  • Includes internal and external information
  • What gets measured gets done
  • Harder to manipulate
  • Adapt to reflect changing priorities
  • Aligned with overall strategic objectives
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13
Q

What are 9 disadvantages of the balanced scorecard?

A
  • Difficult to record and process
  • Information overload
  • Conflict between measures
  • Poor communication
  • Lack of commitment
  • Costly to implement
  • Lack of some key perspectives
  • Alignment of measures
  • Focus is on strategic levels
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14
Q

What are the two ‘downstream results’ dimensions in the building block model?

A

-Competitiveness
-Financial performance

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15
Q

What are the four ‘upstream determinants’ dimensions in the building block model?

A
  • Quality of service
  • Flexibility
  • Resource utilisation
  • Innovation
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16
Q

What are the dimensions in the building block model?

A

The critical success factors

17
Q

Give an example of a measure for competitiveness

A

Relative market share

18
Q

Give an example of a measure for financial performance

A

Turnover growth

19
Q

Give an example of a measure for Quality of service

A

Product reliability

20
Q

Give an example of a measure for Flexibility

A

Delivery time

21
Q

Give an example of a measure for Resource utilization

A

Productivity

22
Q

Give an example of a measure for innovation

A

New product numbers

23
Q

What do we mean by standards in the building block model?

A

The KPI’s set for each Dimension

24
Q

What are the three characteristics of the standards in the building block model?

A
  • Ownership
  • Achievability
  • Fairness
25
Q

What do we mean by rewards in the building block model?

A

The motivators for employees to work towards the standards set

26
Q

What are the three characteristics of the rewards in the building block model?

A
  • Clarity
  • Motivation
  • Controllability
27
Q

What is the performance pyramid?

A

It is based on the belief that each level of the organisation has different concerns but they must support each other in order to achieve the overall objective (vision) of the organisation.

28
Q

What is level 1 of the performance pyramid?

A

Corporate vision: How it will achieve long term success

29
Q

What is level 2 of the performance pyramid?

A

Market and Financial measures

30
Q

What is level 3 of the performance pyramid?

A

Customer satisfaction, flexibility and productivity

31
Q

What is level 4 of the performance pyramid?

A

External effectiveness: Quality and delivery
Internal efficiency: Cycle time and waste

32
Q

What are three advantages of the Pyramid?

A
  • It is hierarchical (All levels)
  • Process focussed
  • Recognises how financial and non-financial measures support each other
33
Q

What are the drawbacks of the Pyramid?

A

Same as the first 6 drawbacks of balances scorecard.

ACCA APM (14 decks)

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