Chapter 2 Flashcards
1
Q
Why do companies use performance Measurement systems?
A
- Communicate the company’s strategic objectives
- motivate employees to help the company achieve its strategic objectives
- evaluate the performance of managers, employees, and operating units
- Help managers allocate resources to the most productive and profitable opportunities
- provide feedback on whether the company is making progress in improving processes and meeting the expectations of cutomers and shareholders
2
Q
Balanced Scorecard
A
- the most widely adopted performance measurement system around the world
- measures organizational performance across four different but linked perspectives that are derived from the orgznization’s mission, vision, and strategy
- Financial
- Customer
- Process
- Learning and Growth
3
Q
Financial Perspective
A
- “What financial performance should we deliver for our shareholders?
- What do i want to achieve?
- indicate whethe company’s strategy and its implementation are increasing shareholder value
- Improves through two basic approaches
- Productivity Improvements and Revenue Growth
- A lag indicator (reporting the impacts of past decisions)
- Measures the tangible outcomes from the strategy
4
Q
Customer Perspective
A
- To achieve our vision and financial objectives, how must we deliver value to our customers?
- defines the source of value
- describes how a company intends to attract, retain, and deepen relationships with targeted customers by diferentiating itself from competitors
- reflects the heard of the strategy
- contain specific objectives and measures for the strategy’s “scope”
- represent the the strategy’s advantage
- should lead to improvement in the financial perspective objectives
5
Q
Process Perspective
A
- To meet our financial and customer objectives, at which processes must we excel?
- Describes “how” the strategy will be executed
- identifies the processes that are most important to meet the expectations of shareholders and customers
- create and deliver the value proposition for customers
- Achieve the productivity improvements for the finanical objectives
6
Q
Learning and Growth Perspective
A
- “How do we align and enhance our intangible assets to improve the critical processes?
- Uses a measures of employees’ capabilities to predict improvements in process quality and cycle times
7
Q
Strategy
A
- accomplishes two principal functions
- Creates a competitive advantage by positioning the compnay in its external environment where its internal resources deliver something to its customers that is better than or different from its competitors
- provides clear guidance for where internal resources should be allocated and enables all organizational units and employees to make decisions and implement policies that are consistent with achieving and sustaining the company’s competitive advantage in the marketplace
- Made up of the Mission (Internal Focus) and Vision (External Focus)
8
Q
Two essential components for any good strategy
A
- A clear statement of the company’s advantage in the competitive marketplace
- what it intends to do differently, better, or uniquely compared to competitors
- The scope for the strategy
- where the company intends to compete most aggresively, either for targeted customer segments, technologies employed, geographic locations served, or product line breadth
9
Q
Objectives
A
- Describe what is attempting to accomplish with its strategy
- objectives need to be translated into measures
10
Q
Measures
A
- describe in more precise terms how success in achieving an objective will be determined
- reduce the ambiguity that is inherent in word statements
11
Q
Targets
A
- establishes the level of performance or rate of improvement required for a measure
- should be set to represent excellent performance
- if achieved, should position the compnay as one of the best performers in iits industy
12
Q
Strategy Map
A
- illustrates the causual relationships among the strategic objectives across the four Balanced Scorecard perspectives
13
Q
Three Value Propsitions of Customer Perspective
A
- Low-Total-Cost
- Be a low cost supplier
- deliever consistent high quality
- provide a speedy, easy purchase
- offer appropriate selection
- Product Leadership Value Proposition
- offer high-performance products
- be first to market
- Customer Solutions Value Proposition
- Provide Customized Solutions
- Sell mulitple products and services to customers
- Deliver excellent post-sale services
- develop personalized relationships
14
Q
Operations Management Processes
A
- The basic, day-to-day processes that produce products and services and deliver them to cutomers
- examples:
- achieve superior supplier capability
- improve the cost, quality, and cycle times of operating (production) processes
- Improve asset utilization
15
Q
Customer Management Processes
A
- select, expand and deepen relationships with targeted customers
- 3 objectives for a company’s customer management process
- Acquire new customers
- satisfy and retain existing cutomers
- generate growth with customers
