Exam 18: Business Strategy, Performance Measurement, and the Balanced Scorecard

As an organization fine-tunes its strategies and defines its objectives, management will disseminate these strategies and objectives to various levels of the organization. While distributing tasks to other employees, management should ensure outcomes remain congruent with their intentions. Which of the following best represents one of the steps used to make sure this succeeds?

Below is a list of measures used by organizations to evaluate their objectives: The list contains both financial and nonfinancial measures and measures that are either quantitative or qualitative. What categories do each of the objectives fall into: financial or nonfinancial and quantitative or qualitative? (Choose one from each set.) If a company wanted to evaluate employee satisfaction, then would any of the objectives above help measure that?

A local lawn care business is considering changing their credit policy for customers. Their accountant gathered the following information to help management decide. The lawn care business would like to switch to an all-cash sales system since they are collecting only 72% of their credit sales. The management team is not unanimously on board with the idea of making this change. Which of the following reasons is the most likely reason the management team is not on the same page?

After completing a SWOT analysis, a company begins to set its strategy to advance from its current position. Porter describes a strategy spectrum whereby a company has two choices: cost leadership and product differentiation. Which of the following is a company who is not purely a cost leader or a product differentiator but somewhere in the middle of the spectrum?

The accounting department of Stryker Inc. is putting together a financial analysis for management. They are focusing on performance measures and pulled together information from the two most recent years. If the accounting department wants to focus solely on financial measures, then how would you respond?

One of the most crucial components of having employees is to make sure their evaluations are both fair and appropriate. From an employee's perspective, there are five significant aspects of the performance evaluation process. Which of the following best represents the compensation perspective?

A small textile manufacturer just completed their balanced scorecard (BSC) for the upcoming year. After evaluating feedback from customers and employees, they have decided to focus their efforts on several areas. If the company wishes to improve employee satisfaction, then which of the following pairs would be the most effective initiative and the best measure to use?

Sacha is a manager for Foto Corp., a company that sells decorative and engravable picture frames. The company has just completed its fifth year in business. Management is very pleased to learn that the company has exceeded the financial goals it outlined at the beginning of last year. This was the first year the company chose to use a balanced scorecard to help their planning and strategy efforts. Below are two sections from their completed balanced scorecard along with the actual final value of the metric for each: Use this information to answer the following questions. a. As you evaluate the results of the balanced scorecard, how would you say Foto performed on its financial objectives, and how did it perform on its customer objectives? Provide as much detail as possible for both. b. If a balanced scorecard was completed thoroughly, then should there be links connecting parts of the customer and financial perspectives? How well do Foto's customer objectives link or relate to its financial objectives? c. How was Foto able to produce the results shown in the financial perspective while generating the results in the customer perspective? Is this a combination that is likely to be present in future years?

The College of Business at a local college has an objective of generating a $500,000 surplus earmarked for a new technology center. The College's technology is severely lacking compared to other area schools. Who would be responsible for ensuring the College of Business meets its objectives?

Fabulous You, Inc. sells women's clothing online with a target demographic of young professionals entering the workforce after graduation. Within the past year, management has noticed a decline in sales for items including t-shirts and maxi dresses, while suits and leggings have seen an increase in sales. They want to evaluate the overall financial health of the company, so they look at their inventory and their efficiency at managing that inventory through fluctuations in sales. Management wants to know if decreases in sales for some items are of concern or if increases in sales of other items offset them. What is the inventory turnover for each year, and how should management interpret this?

Sarah is a receptionist at a doctor's office and collects a salary of $48,500 per year. Last year, she started a gourmet cupcake business where she runs a small stand on weekends and takes online orders during the week with the help of a part-time assistant. Demand for the bakery continues to increase, and she is considering whether to leave her receptionist job and start baking full-time. Making this her full-time career would allow her to grow her business, but she would no longer be able to keep her additional part-time assistant. Below are her average monthly results based on sales of 1,305 units: Does it make financial sense for Sarah to leave her full-time job and pursue being a full-time baker?

An insurance company owns and operates an office building downtown. The company employs its own staff to perform tasks including building cleaning and maintenance. This organization also operates its insurance business unit from within that building. Management is evaluating the type of compensation offered to individuals with various roles within the company. Which of the following is the most appropriate type of compensation for the insurance agents charged with selling policies?

An insurance company owns and operates an office building downtown. The company employs its own staff to perform tasks including building cleaning and maintenance. This organization also operates its insurance business unit from within that building. Management is evaluating the type of compensation offered to individuals with various roles within the company. Which of the following would be the most appropriate type of compensation for the janitorial staff who are utilized to clean and maintain the building?

Cost accounting principles are an important component of any organization that assist management in their decision-making. Additionally, managers rely on accountants to interpret data and provide information to help them understand their business in greater depth. Which of the following choices best represents an operating plan?

Kevin is an employee in the finance department at Easy Trader Co. and is performing some financial analysis on their current year's performance. Before he can begin looking at a variety of nonfinancial factors, including customer conversion rates and internal promotion scores, he will need to evaluate some financial performance measures. Which of the following provides the most accurate rationale for evaluating Economic Value Added?

In addition to Porter's Five Forces and related strategy spectrum, a company could choose to use the complementary framework of customer value proposition. This method requires that each company detail their mix of products, prices, services, relationships, and image. In what way is this strategy like Porter's strategic choices?

The College of Business at a local college has an objective of generating a $500,000 surplus earmarked for a new technology center. The College's technology is severely lacking compared to other area schools. How will the person in charge of meeting this goal be held accountable and with what potential result?

A company's chosen strategy is the route it uses to arrive its destination. A guiding set of principles for laying out the long-term goals is known as Porter's Five Forces. Which of the following best represents the threat of new entrants?

A company wishes to assess certain financial performance measures to assess their operations for the current year. Management believes this will be an effective way to assess certain aspects as the financial measures are both objective and measurable. If the organization would like to evaluate how effective the organization is at collecting receivables, then which of the following performance measures should they use?

Braxton Inc. is a factory that produces trendy and decorative kitchen cabinet hardware. They just finished their third year of operations, so management decided it would like to thoroughly evaluate the performance of the organization, both financial and nonfinancial. They are planning to use a balanced scorecard (BSC) for the first time, and they are currently working on the customer perspective. What are two appropriate objectives Braxton could identify for the year? Additionally, what initiatives, measures, and targets would help them to evaluate their performance?