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Strategic Case Study > E3 - 8. Strategic Control > Flashcards

E3 - 8. Strategic Control Flashcards

1
Q

What are critical success factors?

A

The components of strategy where the organisation must excel to outperform competition

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2
Q

What are the 4 elements of the balanced scorecard?

A

Financial, customer, internal, innovation and learning

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3
Q

What are 3 examples of financial KPIs from the balanced scorecard?

A
  1. Cashflows
  2. Profits
  3. Sales growth
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4
Q

What are 3 examples of customer KPIs from the balanced scorecard?

A
  1. Delivery time
  2. Churn rate
  3. Complaints
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5
Q

What are 3 examples of internal KPIs from the balanced scorecard?

A
  1. % Reduction in cycle time
  2. Capacity utilisation
  3. Order response time
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6
Q

What are 3 examples of innovation and learning KPIs from the balanced scorecard?

A
  1. Speed to market
  2. % of revenue from new products
  3. Training days per employee
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7
Q

What are 4 disadvantages of the balanced scorecard?

A
  1. Number of KPIs make it hard to see a clear picture
  2. Difficult to understand some KPIs
  3. Some measures may conflict
  4. Can take attention away from maximisation of profit
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8
Q

What is strategy mapping?

A

An extension of the balanced scorecard that identifies BSC objectives based on a long term key objective of the organisation

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9
Q

What are the 2 aspects and 4 levels of the Performance Pyramid?

A

External vs internal effectiveness

  1. Day to day operations
  2. Operating and internal systems
  3. Business units
  4. Commercial organisation/corporate vision
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10
Q

What is benchmarking?

A

Making comparisons to measure relative levels of performance and hence identify best practises to improve performance

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11
Q

What are the 4 main benefits of benchmarking?

A
  1. Challenging assumptions
  2. Helping cut costs
  3. Helping simplify processes
  4. Improving services
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12
Q

What is gap analysis?

A

Comparing actual performance with potential future performance

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13
Q

What are the 3 possible types of gap?

A
  1. Efficiency gap
  2. Expansion gap
  3. Diversification
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14
Q

For what 2 reasons is RI better than ROI?

A
  1. Linked to cost of capital
  2. Results in fewer dysfunctional decisions
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15
Q

For what 3 reasons is ROI used over RI?

A
  1. Gives an easy to understand % answer
  2. Allows comparison between size of division
  3. Does not require a cost of capital to be estimated
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16
Q

What figures for profit and investment are used in ROI?

A

Controllable profit (attributable/non attributable) and replacement asset value (average)

17
Q

What are the 3 benefits of EVA?

A
  1. Linked to cost of capital - shareholder wealth
  2. NOPAT closer to cash flow
  3. Reflects economic reality
18
Q

What are the 3 limitations of EVA?

A
  1. Single period leads to short term view
  2. Involves potentially many adjustments
  3. Difficult to compare divisions of differing sizes
19
Q

What are the 6 main drivers of shareholder value added?

A
  1. Sales growth
  2. Life of projects
  3. OP margin
  4. Asset investment
  5. Taxation
  6. Cost of capital
20
Q

What are the 2 most important aspects of effective performance targets?

A
  1. Achievable but challenging
  2. Clearly communicated
21
Q

What are the 3 main problems that can occur in target setting?

A
  1. Tunnel vision
  2. Myopia (short term)
  3. Manipulation of results

Strategic Case Study (27 decks)

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