Performance Measurement (3) Flashcards
Why growing emphasis on NFPI? (Concentration)
Concentration on too few variables
Why growing emphasis on NFPI? (Lack)
Lack of information on quality
Why growing emphasis on NFPI? (Cost)
Changes in cost structures
Why growing emphasis on NFPI? (Competitive)
Changes in competitive environment
Why growing emphasis on NFPI? (manufacturing)
Changes in manufacturing environment
Why growing emphasis on NFPI? (indicator)
NFPIs are a better indicator of future prospects
If performance measurement systems focus entirely on those items which can be expressed in monetary terms?
Managers will concentrate on only those variables and ignore other important variables that cannot be expressed in monetary terms
What do traditional responsibility accounting systems fail to provide?
Information on quality or importance of operations
What does modern technology require?
Massive investment and product life cycles have become shorter
Changes in cost structures and a greater proportion of costs are sunk?
A greater proportion of costs are sunk and a large proportion of costs are planned, engineeered or designed into a product/service before production/delivery
When is it too late to control costs?
At the time the product/service is produced/delivered
What do financial methods not convey?
The full picture of a company’s performance, especially in a modern business environment
What do new manufacturing techniques and technologies focus on?
Minimising throughput times, invnetory levels and set up times
How can managers reduce the costs for which they are responsible for?
By increasing inventory levels through maximising output
What if a performance measurement system focuses principally on costs?
Managers may concentrate on cost reduction and ignore other important strategic manufacturing goals
What do financial performance indicators tend to focus on in terms of term/
They focus on the short-term
Why are NFPIs considered superior compared to variance reports?
Can be provded quickly for maangers, easier to calculate and easier for non-financial amangers to understand
Problem with NFPIs (Information)
Too many measures can lead to information overload for managers
Problem with NFPIs (Operational goals)
May lead managers to pursue detailed operational goals at expense of overall corporate strategy
Problem with NFPIs (Financial measures)
Need to be linked with financial measures
Problem with NFPIs (Developed and refined)
Need to be developed and refined over the to ensure remain relevant
