Strategic management and the balance scorecard

Question 1

What is strategic management?

Answer 1

building and sustaining a competitive advantage through cost leadership or differentiation

Question 2

The Strategic Planning Framework

Answer 2

Step 1: Establish mission, objectives etc
Step 2: Analyse capabilities
Step 3: Strategy options- if you seek to be the lowest cost or produce unique products
Step 4: Plan, such as budgets
Step 5: Review and control
E,A,S,P,R = ending a strategic planning road

Question 3

Traditional vs strategic management

Answer 3

traditional is historical, looking at things with a narrow scope, whereas strategic is forward looking, having a broad scope of possibilities. Strategic relies upon financial and non financial measures however traditional has an emphasis on too much financial measures.

Question 4

The balanced scorecard

Answer 4

helps organizations translate their vision and strategy into a set of performance indicators, by Kaplan and Norton

Question 5

Financial indicators

Answer 5

ROI (return on investment), RI (residual income) and profit.

Question 6

Limitations of financial indicators

Answer 6

different policies could lead to different profit figures being reported.
Basing decisions on financial metrics can have limited dataset

Question 7

Why use a balanced scorecard

Answer 7

Focuses on key to future performance and measures what matters. Sets goals, however success does depend on the extend to how much customer needs are met

Question 8

4 Quadrants

Answer 8

Financial (creating value for shareholders), customers (what do customers value from us), learning and growth (how can we create future value), internal business processes (what processes must we excel in)
IFCL

Question 9

Cause and effect relationship

Answer 9

-improvements in learning and growth leads to improvements in internal business processes
-improvements in internal business processes lead to improvements in customer satisfactions
-improvements in customer satisfaction leads to a improvement in financial metrics= profit

Question 10

internal business processes

Answer 10

e.g. recognition to meet demand based on emerging customer needs like to be more sustainable
post sales service

Question 11

financial perspective

Answer 11

e.g. increase asset use measured by ROI can keep track of uour profits

Question 12

the customer perspective

Answer 12

improve delivery times measured by % of on time deliveries

Question 13

delivery performance measures

Answer 13

looks at throughput time, which measures the time required to convert raw materials into completed products
and delivery cycle time, which measures the length of time between when a order is first recieved to when the order is completed and shipped

Question 14

manufacturing cycle efficiency

Answer 14

value added time/manufacturing cycle time. Assumption that time can be shorted by removing non value adding activities
If its less than 1 theres non value added time in the process

Question 15

learning and growth perspective

Answer 15

improving employees by training courses and motivation by % of employees achieving goals

Question 16

Strategy maps

Answer 16

a tool to help managers explore the ‘if’ ‘then’ relationship in more detail. links actions and outcomes

Question 17

Limitations of the balanced scorecard

Answer 17

cause and effect is unproven. non financial measures are not evaluated

Question 18

limitations of the scorecard

Answer 18

managers can use it to achieve a self serving result.