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BEC > Strategic Planning > Flashcards

Strategic Planning Flashcards

1
Q

What are conformance vs. nonconformance costs?

A

Prevention and appraisal are conformance to quality costs.

Internal and external failure are nonconformance costs

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2
Q

What are Balanced Scorecards perspectives?

A

By performance measures:

  1. Financial (profitability, ROI)
  2. Customer (surveys)
  3. Internal Strategy (strategic, averages, measuring cost times, promote innovation within firm)
  4. Learning and Growth (innovation)
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3
Q

A basic assumption of ABC is…

A

Products or services require the performance of activities

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4
Q

What is a master budget and what major budgets does it summarize?

A

A static budget for the company as a whole.
Operating- IS
Financial- capital budget, cash, BS

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5
Q

Explain static budgets

A

Analyze conditions for a specific level of activity (what would labor cost be if level of sales were x)
Do not change

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6
Q

Production Budget

A 
Budgeted sales (in units)
\+ desired EI 
= total needs
- BI 
= Number of units to be produced
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7
Q

Order budgets be prepared in…

A
  1. Sales budget
  2. Production budget
  3. DM purchases budget
  4. Cash disbursements budget
  5. Budgeted FS
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8
Q

Expected value

A

Various values are multiplied by the probability of that outcome occurring and adding the amounts together

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9
Q

List Quality Control programs

A
  1. Prevention costs
  2. Appraisal- costs of discovering which units don’t confirm to spec
  3. Internal Failure- nonconforming product discovered before shipment and reworked
  4. External Failure- nonconforming product discovered after shipment, rework of returned product
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10
Q

Prepare Operating Budget

A

Prepare sales forecast
Prepare desired end Inventory
Prepare production budget based on sales forecast (units to produce=desired EI+budgeted sales units-BI)
Prepare inventory costs based on production level
Prepare CGS budget
Prepare SGA
Prepare IS budget

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11
Q

Calculate annual purchases

A

CGS
+ EI
- BI
= Annual purchases

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12
Q

Balanced Scorecards commonly include…

A

Strategic objectives- statement of firms goals
Performance measures- yardstick to track if goals are met
Baseline performance- how well firm is doing under performance measure
Targets- the goal being sought
Strategic initiatives- changes firm will take to achieve objectives

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13
Q

Reward to Risk ratio

A

Mean return/SD

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14
Q

Coefficient of Correlation

A

R - measures the degree of linearity in the relationship between dependent and independent
- Only vary between +1 and -1 (think hedging for -1)

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15
Q

Coefficient of Determination

A

R^2 - square root of coefficient of correlation.
Lies between 0 and 1, closer to 1 gives higher level of assurance that independent (cost driver) accounts for most of the variability in dependent (total cost)

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16
Q

Regression Analysis

A
  • Estimates the relationship between a dependent variable (TC) and one or more independent variables (DL hours, etc) from a set of actual observations
  • Probable, not causal relationships
  • Simple= 1 cost driver, Multiple= many cost drivers
17
Q

List Forecasting Tools

A
  1. Probability theory
  2. Regression
  3. Coefficient of Correlation
  4. Coefficient of Determination
  5. Delphi Method
18
Q

Delphi Method

A
  • Collecting data from experts through questionnaires to minimize groupthink and bias
  • Requires judgment (Delphi is opinion)
19
Q

4 components of Strategic Management

A
  1. Environmental scanning (SWOT)
  2. Strategy development
  3. Strategy implementation
  4. Evaluation
20
Q

Trigger

A

Strategy development when organization questions its actions and course bc of a triggering event

21
Q

Environmental Scanning component of Strategic Management

A

The monitoring, evaluation of info regarding external and internal environment to identify Strategic Factors (impact future performance): SWOT analysis

22
Q

SWOT Analysis

A
  • List internal Strengths and Weaknesses
  • List external Opportunities and Threats
    SO>strategies use S to take advantage of O
    ST>strategies use S to circumvent T
    WO>strategies that overcome W to take advantage of O
    WT>strategies that minimize W to circumvent T
23
Q

Strategy Development component of Strategic Management

A
  • LT plans to take advantage of O and manage T depending on S and W
  • Develop a mission, objectives (quantifiable results with deadlines), strategies (plans to achieve the mission/objectives), and policies (guidelines for implementation and decision making)
  • Corporate/business/functional strategy
24
Q

Kaizen Budget

A

Incorporates continuous improvement goals

25
Q

Stability Strategy (under Corporate Strategy)

A
  1. Pause/proceed with caution- incremental change until situation is resolved
  2. No change- no obvious T or O
  3. Profit strategy- support profits during declining sales by limiting ST discretionary expenses, treat problems as temporary to not alarm stakeholders
26
Q

Portfolio Strategy

A

Multiple product lines/businesses are managed depending on various stages of product life cycle. Analyze assets like a portfolio

27
Q

Parenting Strategy

A

A Corporate Strategy that builds synergies among divisions within corporation, allocate resources, and share unit functions to take advantage of economies of scale

28
Q

Functional Strategy

A

Focusing on distinctive competency to maintain competitive advantage, adds value, and can be transferred to new products.
** If copied by competition, no longer DC, eventually becomes standard requirement

29
Q

List the Competitive Strategies within Business Strategies of Strategy Development

A
  1. Cost leadership- low cost, broad market, EOS, low prices are barrier to entry
  2. Differentiation- better quality in broad market, buyer loyalty serves as barrier to entry
  3. Cost focus- low cost in a narrow market, streamline operations
  4. Differentiation focus- superior value in terms of quality in a narrow market
30
Q

Strategy Implementation component of Strategic Management

A

Establish programs, budgets, and procedures

  • Programs are actions to implement strategy
  • Budgets are based on the programs
  • Procedures are steps to perform a task within a program
31
Q

Organizational Life Cycle

A

Similar to product/industry life cycle but these stages are not sequential and can change structures:
Birth> niche strat, simple structure
Growth>hor and vert growth, divisional structure
Maturity>concentrate strat, decentralized structure
Decline>profit then retrench, remnants of former
Termination> bank, no structure

32
Q

Evaluation and Control component of Strategic Management

A

Monitor performance, corrective actions, feedback from eval and control impacts future SWOT, strategy development, and implementation

33
Q

What is the expected monetary value of risk event?

A

Equal to its probability % multiplied by its expected cost if the risk occurs

34
Q

Responsibility Accounting

A
  • System recognizes decision centers (responsibility centers)
  • Trace costs (or revenues, A/L) to managers responsible
  • Only held responsible for controllable costs that are directly influenced by manager within time period
  • Cost, revenue, profit, investment centers
35
Q

Name 3 strategies of Strategy Development

A
  1. Corporate
  2. Business
  3. Functional
36
Q

List Corporate Strategies within the Strategy Development

A 
Growth
Stability
Retrenchment
Portfolio
Parenting
37
Q

List the broad Performance Measures of an organization

A
  1. Entity-wide- nature/content, balanced scorecards
  2. Quality control- cost categories, cost mngmt, inventory tracking (backflush)
  3. Best practices- organization, data capture, integration, etc
  4. Benchmarking- internal vs. external

BEC (7 decks)

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