Lecture 2.7 - Strategic Performance measurement

Question 1

Porters Generic Strategies (1980)

Answer 1

Strategic target y axis
with particular segment only and industry wide
Strategic advantage x axis with uniqueness perceived by customer and low cost position

Top left box differentiation leadership
Top right cost leadership
Bottom two b boxes focus

Question 2

Cost leadership

Answer 2

Achieving low costs relative to competitors

By
- Productivity and efficiency improvements
- Elimination of waste
- Tight cost control
- Economies of scale, small product range

Question 3

Product differentiation

Answer 3

Offering products and services that are perceived by customers as being superior and unique to those of its competitors

By
- Better product
- Better features
- Better delivery
- Marketing

Question 4

Focus

Answer 4

Offering a specialised service to a niche market split into cost focus or differentiation focus

Question 5

The balanced scorecard

Answer 5

Helps management monitor and manage the interplay between an organisations strategic intent and its actual performance

Question 6

4 steps to prepare a balanced scorecard

Answer 6

Objectives - Define them what you want to achieve?

Measures and targets - Decide appropriate measures of success

Initiatives - Undertake initiatives to achieve success

Evaluation - Review performance by comparing actual and target performance

Question 7

Features of a good balanced scorecard

Answer 7

Tells the story of a company’s strategy
Strong emphasis on financial objectives and measures
Limits the number of measures used by identifying only the most critical

Question 8

Pitfalls in implementing a balanced scorecard

Answer 8

do not assume the cause and effect linkages to be precise
Do not seek improvements across all measures all the time
Do not only use objective measures on the scorecard

Question 9

Other factors that contribute to achieving strategic goals

Answer 9

Suppliers
Regulators
Community and environmental issues
Competitors