Previous Midterm pt 1 Flashcards
What part of the strategy triangle is the balanced scorecard under?
The GOALS section
What is the balanced scorecard?
A strategic planning system used to align business activities to the vision and strategy of the organization
What are the 4 measures of the balanced scorecard?
- Financial: data must be timely, accurate, and provided regularly
- Customer: stresses importance of customer focus and satisfaction so you don’t lose them to competitors
- Internal Processes: based on the mission, do products conform to customer requirements
- Innovation & Learning: Based on employee training and corporate cultural attitudes
What activities are included under the financial measure of the balanced scorecard?
- Revenue growth
- Cost management
- Asset management
What activities are included under the customer measure of the balanced scorecard?
- Market share
- Customer retention
- Customer acquisition
- Customer satisfaction
- Customer profitability
What activities are included under the internal processes measure of the balanced scorecard?
- Quality
- Productivity
- Delivery
- After sales service
What activities are included under the innovation & learning measure of the balanced scorecard?
- Employee capabilities
- Information technology
- Motivation
- Alignment
What is a leading indicator?
A metric or event that signals future events
What is a lagging indicator?
A signal that follows an event. Useful for confirming a specific pattern of events is appearing
Which of the balanced scorecard measures is a lagging indicator and why?
Financial is a lagging indicator because it reports on the results of actions already taken. The performance of the other 3 signal possible performance of financial.
What are the two measures that make up the performance matrix?
Operating performance and organizational health
What is operating performance?
The hard or quantitative measures of financial and market performance
What are some typical measures of operating performance?
- Profitability (profit margin, ROE, value added)
- Financial position (leverage, liquidity)
What is organizational health?
Softer or more qualitative measures of performance.
What are some typical measures of organizational health?
Management and worker enthusiasm, problem solving, learning ability, sustainability
How is the performance matrix used to assess organizational performance?
Classifies operating performance and organizational health as positive or negative
What 3 questions are asked by the performance matrix?
- Where was your business 3 years ago?
- Where is your business today?
- Which way is your business currently moving?
What quadrant of the performance matrix are you in if you have high organizational health and operating performance?
Quadrant 1: Desired state
What quadrant of the performance matrix are you in if you have high organizational health and low operating performance?
Quadrant 2: Complacent organization
What quadrant of the performance matrix are you in if you have low organizational health and high operating performance?
Quadrant 3: Troubled organization
What quadrant of the performance matrix are you in if you have low organizational health and operating performance?
Quadrant 4: Crisis
How does the output of the performance matrix help strategy formulation?
- If in quadrant 1, the firm should focus on looking into the future
- If in quadrant 2, there may be recognition that change is needed but people may not want to face changes to increase performance and getting a strategy review may be difficult
- If in quadrant 3, you may be doing more work with fewer people leaving everyone burnt out. May need to give thought to employee skills or work processes
- If in quadrant 4, you need immediate and comprehensive action implemented quickly
What are the four basic functions of a general manager as it applies to strategy?
- Setting direction
- Assessing performance
- Creating strategy
- Implementing change
Which of the four basic functions of a general manager should be used as a starting point for strategic management analysis and why?
Assessing performance is the starting point because it tells you where you are and how bad the situation is
What is included under the assessing performance function of the general manager?
- Understanding how the company is really doing
- Operating performance - scorecarding, profitability, etc
- Organizational health
Leads into performance matrix, lets you know how urgent it is for you to act
What is included under the setting direction function of the general manager?
- Creation of a mission and vision to solidify the purpose of the business, its reason for being
- Creating values which express the basic beliefs that govern the group and shape how the vision is reached
What is included under the creating strategy function of the general manager?
- Choosing a solution from a number of alternatives
May be performed through Diamond-E analysis
What is included under the implementing change function of the general manager?
- How they implement the chosen strategy
