Chapter 13 Flashcards
Who came up with the balanced scorecard
kaplan & norton
4 perspectives in kaplan & norton
financial perspective
customer perspective
internal business perspective
innovation and learning perspective
definition of financial measures
successful strategies create value for SHs. measures look at survival ( cash flow), success( sales or profit ), prosperity ( shareholder value)
definition of customer measures
often focus on quality, delivery time, performance, service
definition of internal business measures
processes that are important to meet customer expectations
definition of innovation and learning measures
improving key internal processs by innovation and achieving long term targets
advs of scorecard
links performance measures to strategy
disadvs of scorecard
can be hard to select which / how many measures to include ( dont want info overload)
no of diff indicators makes interpreting overall performance difficult
doesnt take employee needs or CSR into account
activity based management definition
the entire set of actions that can be taken, on a better informed basis, with activity based cost information. ABM enables the organisation to accomplish the outcomes with fewer demands on organisational resources so the organisation gets the same outcome for lower costs
benefits of activity based management
useful for :
design products meeting customers needs for a profit
identify where improvements in quality is needed
negotiating with customers
limitations of activity based management
it will not by itself reduce costs - it just helps to understand costs
large amount of work to set it up
organisational / behavioural consequences - hard to put ownership on someone
what is the underlying principle of value based management
the value of the company is measured by the discounted cash flows, an value is only greater when the capital invested in has generated more returns than the cost of capital
