Performance Measures

Question 1

how an organization uses its activities and resources to achieve its objectives (usually to ethically maximize financial value)

Answer 1

Strategy

Question 2

the performance measures used to ensure hte strategy of the organization is being executed and to monitor perofrmance

Answer 2

Execution

Question 3

Balanced scorecard perspective that focuses on return on investment and other supporting financial performance measures (ex. profitability, ROI, revenue growth)

Answer 3

Financial perspective

Question 4

Balanced scorecard perspective that focusdes on performance in areas that are most critical to hte customer (ex. customer satisfaction, customer retention)

Answer 4

Customer perspective

Question 5

Balanced scorecard perspective that focuses on operating effectively and efficiently and includes performance measures on cost, quality and time for processes that are critical to the customers (ex. #defects, cycle time)

Answer 5

Internal business processes perspective

Question 6

Balanced scorecard perspective htat focuses on perofrmance measures relating ot employees, infrastructure, teaming and capabilities necessary for hte internal processes ot achieve customer and financial objectives (ex. employee satisfaction, training, IT expenditures/employee

Answer 6

Learning and growth perspective

Question 7

The sequence of business processes in which usefulness is added to products/services of a company ahnd includes innovation, operations, and post-sales

Answer 7

value chain

Question 8

Diagrams of the cause-and-effect relationships between strategic objectives

Answer 8

strategy maps

Question 9

The use of only financial performance measures in a strategic management system (i.e. only those that add financial vlaue)

Answer 9

Value-based managment (VBM)

Question 10

A Value-Based Managment performance measure that is based on the premise of “pay for performance” and is often used for incentive compensation, resource allocation, and investor relations

Answer 10

Economic Value Added (EVA)

Question 11

Net income (income after taxes)- interest on investment

Answer 11

Residual income

Question 12

The difference between ROI and the required interest rate (cost of capital)

Answer 12

Spread

Question 13

A grapical way to look at the relationship between residual income and ROI

Answer 13

Residual Income profile

Question 14

Accounting profit-cost of capital

Answer 14

Economic profit

Question 15

The difference between “cash in” and “cash out”

Answer 15

Market value added (MVA)

Question 16

The original cost of the investment

Answer 16

Gross book value

Question 17

Original cost less accumulated depreciation

Answer 17

Net book value

Question 18

measures hte percentage of each sales dollar remaining after payment for hte goods sold

Answer 18

Gross margin

Question 19

measures the eprcentage of each sales dollar that remains after the payment of all costs and expenses except for interest and taxes

Answer 19

Operating profit margin

Question 20

measures the dividend paid in relation to net earnings

Answer 20

Dividend payout ratio

Question 21

Measures a firm’s ability to make contracual interest payments

Answer 21

Times interest earned

Question 22

Evaluation of a firm’s ratios and trends over time

Answer 22

Horizontal analysis

Question 23

Benchmarking a firms’ ratios against ratios of similar firms at a point in time

Answer 23

Cross-sectional analysis

Question 24

Comparing similar operatiosn within idfferent units of the same organization

Answer 24

Internal benchmarking

Question 25

Targeting processes and methods used by an organization’s direct competitors

Answer 25

Competitive benchmarking

Question 26

Comparing similar functions within the same broad industry

Answer 26

Functional or Industry benchmarking

Question 27

Comparting processes that are independent of industry

Answer 27

Gneric benchmarking

Question 28

The best ways to perform a process

Answer 28

Best practices

Question 29

A statistical measure expressing how close a product comes to its quality goal (3.4 defects/million)

Answer 29

Six sigma

Question 30

A series of standards agreed upon by the International Organization for Standardization

Answer 30

ISO 9000 Series

Question 31

ISO standard developed to control the impact of an org’s activities on the environment and focuses on reducing hte cost of waste managemnt, conserving energy and materials, and lowering distribution costs

Answer 31

ISO 14000

Question 32

The japanese art of continuous improvment

Answer 32

Kaizen

Question 33

Diagrams used to systematically list the different causes that can be attributed to a problem (or effect)

Answer 33

Cause-and-effect (fishbone or Ishikawa) diagrams

Question 34

a bar graph that ranks cuases of process variations by the degree of impact on quality

Answer 34

Pareto chart

Question 35

statistical plots derived from measuring facotry proceses

Answer 35

Control charts

Question 36

a discipline for making designs “production proof” by building in tolerances for manufacturing variables that are known to be unavoidable

Answer 36

Robust design

Question 37

involves making the workplace mistake-proof

Answer 37

Poka-yoke

Question 38

methods used to maximize operating income when faced with some bottleneck operations; objective is to increase throughput contribution

Answer 38

Theory of constraints

Question 39

Any resource or operation where the capacity is less than the demand placed upon it

Answer 39

Bottleneck resources

Question 40

Revenue minus the direct materials COGS

Answer 40

Throughput contribution

Question 41

Examines the overall flow of work to find ways to improve hte flow

Answer 41

Workflow analysis