Topic 5 Flashcards
Strategy to ________ how an organization to _______ its own capabilities with the opportunities in the market place to _______ its objectives
specify
match
accomplish
Strategy to _______ how an organization can create value for its customers while differentiating itself from its competiors.
describe
To _______ its strategy, an organization must first thoroughly understand its industry: 5 forces: competitors, potential entrants into the market, equivalent products, barganing power of customers, and bargaining power of input suppliers
formulate
To ______ to these challenges, the company must choose between two basic strategies: differentiating its product or achieving cost leadership
respond
Product differentiation to _____ products or services its customere perceive to _______ superior and unique
offer
be
Managers use differentiation to ________ brand loyalty and _______ higher prices.
increase
charge
Cost leadership is to _______ lower costs relative to competitors through productivity and efficiency improvements, elimination of waste, and tight cost control.
achieve
To _______ the success of its strategy, a company must trace the sources of its profitability to product differentiation or cost leadership.
evaluate
To _______ cost leadership strategy, the company must further improve its own internal capabilities
achieve
Reengineering is the fundamental rethinking and redesign of business processes to ______ improvements in critical measures of performance, such as cost, quality, service, speed, and customer satisfaction.
achieve
To _____ successful, reengineering efforts must focus on an entire process, change roles and responsibilities, eliminate unnecessary activities and tasks, use information technology and develope employee skills
be
Balance scorecard translates an organization’s mission and strategy into a set of performance measures to _______ the framework for implementing its strategy.
provide
Balance scorecard to ________ financial objectives and its also highlights the nonfinancial objectives to _______ and _______ its financial objectives
achieve
meet
sustain
The set of measures used to _______ performance depend on strategy is called a “ a balanced scorecard”
trace
Balance scorecard to __________ the use of financial and nonfinancial performance measures to ________ short-run and long-run performance in a single report
balance
evaluate
Strong improvement in nonfinancial measures usually to _________ future economic value
create
A strategy map is a diagram to _______ how an organization creates value by connecting strategic objectives in explicit cause-and-effect relationships with each other in the financial, customer, internal-business-proces, and learning-and-growth perspecitives.
describe
The strategy map help to ________ whether these activities are generating financial returns
evaluate
Finanacial perspective to _______ the profitability of the strategy and the creation of shareholder value
evaluate
Customer perspective to _______ targeted customers and maret segments and to _______ the company’s success in these segments
identify
measure
Internal - business - process perspective focuses on internal operations to _______ value for customers that, in turn, help to ______ financial performance
create
achieve
The problems with non-financial performance measures
- Wide choice of non-financial _______ available
- Their development can be _______ and undirected
- Managers must necessarily make trade-offs between achieving some measures and not others
- Some measures lack integrity
+ Accuracy of the data, opportunity for manipulation
- Some measures not easily translated into financial outcomes
measures
ad-hoc
VISION AND MISSION
- Before determining the objectives and measures, an organization should already have a ______ and ______ statement
+ And a general idea of its strategy
- These high-level statements can then be translated into detailed objectives and measures
- The exact definitions of vision and mission can vary, but the following examples should provide helpful guidelines
vision
mission
VISION
- A concise statement that defines the mid to long-term (______ year) goals of the organization
- The vision should be ______ and ________ and should express, often in colorful or “visionary” terms, how the organization wants to be perceived by the world
3 - 10
external
market-oriented
MISSION
- A concise, _________ statement of how the organization expects to compete and deliver value to customers
- It often states the reason for the organization’s existence, the basic purpose towards which its activities are directed, and the values that guide employee’s activities
internally-focused
PUTTING VISION IN ACTION
- The Vision and Mission set the general direction for the organization
+ They are intended to help shareholders, customers, and employees ________ what the company is about and what it intends to achieve
- But these statements are far too vague to guide day-to-day actions and resource allocation decisions
- Companies start to make the statements operational when they define a strategy of how the vision and mission will be achieved
understand
STRATEGY AND THE BSC
It identifies and makes explicit the hypotheses about ____________ relationships between:
- Outcome measures in the Financial and Customer perspectives
+ E.G., ROI and customer loyalty
- and the _________ of those outcomes that are measured in the Internal and Learning & Growth perspectives
+ Such as zero defect processes, short cycle times, and skilled, motivated employees
the cause and effect
performance drivers
OBJECTIVES
- Are concise statements that articulate what the organization hopes to accomplish
- Best stated as action phrases
+ May include the means and the desired results
- Tell the story of the strategy through the cause-and-effect relationships in each of the four balanced scorecard perspectives
E.g: ________
Obj. 1=> To achieve a 40% market share within 5 years.
Obj. 2=> To achieve an ROI of 10% within 5 years.
Typical objectives found in each of the four BSC perspectives include:
- Increase revenues through expanded sales to existing customers ( __________ perspective)
- Become service oriented ( __________ perspective)
- Achieve excellence in order fulfillment through continuous process improvements ( _________ perspective)
- Align employee incentives and rewards with the strategy ( _________ perspective)
Financial
Customer
Internal
Learning & Growth
MEASURES
- Describe how ________ in achieving an objective will be determined.
- Provide specificity and reduce the _________ that is inherent in word statements
- Specifying exactly how an objective is measured will give employees a __________ focus for their improvement efforts
- Once the objectives have been translated into measures, managers select _________ for each measure
success
ambiguity
clear
targets
NON-FINANCIAL MEASURES for OPERATIONAL CONTROL
- Customer satisfaction ---> Measured by survey administered to customers - \_\_\_\_\_\_\_\_\_\_ measures ---> Measurement of faults in a product that occur during the manufacturing process ---> Support a \_\_\_\_\_\_\_\_\_ strategy - Quality ---> Periodic inspections or testing of products - Accident report ---> Safety statistics - Multi-skilling ---> Number of employees who have attained skills to allow them to undertake a range of operational tasks - Machine downtime & Productivity ---> Number of hours, or percentage of total production hours, that machines are unable to operate ---> Labour Productivity - Delivery on time ---> Prompt delivery to customers is an important driver of customer value
Defect
high-quality
FINANCIAL PERSPECTIVE
- Reflects perspective of the shareholder
- Summarises the financial outcomes of decision and actions
- Measures include various cost and product measures, __________, cash flow measures, shareholder value measures.
return on investment
CUSTOMER PERSPECTIVE
- Measures the company’s success in ________ customer value
- Outcome (lag) measures include customer profitability, market share, number of _________.
- Lead indicators include on-time delivery, number of defects
achieving
new customers
INTERNAL BUSINESS PROCESSES
- Objectives relate to ________ processes that contribute to achieving customer and financial objectives
- Processes critical to delivering products to customers and achieving financial strategies
- Product design, operations, marketing, sales, customer service processes
- Measures of cost, product quality, time-based measures, ________ development
specific
new product
LEARNING AND GROWTH
- Focuses on the capabilities of the organisation to achieve ____________ that create both customer and shareholder value.
- To deliver long-term growth and ________
- Measures focus on employee capabilities, capabilities of information systems and organisational climate
- Employee satisfaction, training, skills, employee suggestions
superior internal processes
improvement
Measures in the balanced scorecard provide balance between
- Short-term and ________ objectives
- Financial and customer measures, and measures of business processes, and learning and growth
- Objective and easily quantified measures and subjective performance measures
- Outcome measures and _______ of those outcomes, i.e. lead and lag measures.
long-term
drivers
LAG INDICATORS
- Monitor progress towards the organisation’s ________.
- Difficult to monitor directly
- Summary financial measures, market share, customer satisfaction
objectives
LEAD INDICATORS
- Measures that drive the outcomes and provide information that is actionable and manageable
- Relate to the _______ and _______ of the business
- Improvements in these measures should, over time, flow through to improvements in lag indicators
processes
activities
