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

Here are some objectives commonly found on strategy maps for companies in a variety of fields and industries: Which of the choices provided are important to most organizations and why? Would each organization follow the same trajectory to achieve their desired outcomes?

Nonfinancial performance measures are often helpful to organizations when they evaluate actions that are being taken now to achieve success later. Which of the following is most likely to be a nonfinancial performance measure utilized by the Sales and Marketing Department?

Simone is a staff accountant for a local factory, and she has been asked to gather data and perform some analysis by the end of the week for the annual financial performance evaluation. She compiled the following information: Assume that expenses do not include depreciation, amortization, or interest. What is the difference between earnings before interest, taxes, depreciation, and amortization (EBITDA) for Years 1 and 2?

A metaphor for the strategic planning process for a business could be a long and winding road where changes are unavoidable despite the best laid plans. In the beginning, management and/or the owners will strive to define the business mission and vision to outline how they plan to achieve this. What is a strategic plan, and what are the components it contains?

When a new business starts up, a time will come when its creators must determine what makes up the core of that business. Take a moment to reflect on the role that mission and vision play in a strategic plan created for an organization. Briefly describe why these components are such a crucial and integral part of a business.

Companies will investigate and integrate tools to effectively evaluate themselves from both a financial and nonfinancial perspective. Both come with various advantages and can assist in painting a more complete picture of how a business has performed. Why would a company choose to look at a financial measure?

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 currently collect only 72% of their credit sales. If they implement this change, then how would that impact the business?

A company's strategic plan is an integral part of their initial planning and is comprised of five components. Management builds their strategic plan around five specific components to meet their objectives. Which of the following best represents an incorrect ordering of some of these aspects of a strategic plan?

The balanced scorecard (BSC) commonly measures what a company considers important from four different perspectives. The BSC must integrate with the organization's mission, vision, and strategy, but it is predominantly a performance measurement tool to compare actual results against desired objectives. Which of the following supports the rationale for the learning and growth perspective?

Stucker Corp. just started their annual company-wide evaluation of the most recent year's performance. Management looks at many financial and nonfinancial measures as part of this comprehensive review. Their accountant compiled the following information: Sales: $9,320,568 Operating Expenses: $7,623,004 Weighted Average Common Shares Outstanding ($2 per share): $12,467,200 If the company has $52,000 of preferred dividends and there is no income tax, then how much will their earnings per share be for the year?

The balanced scorecard (BSC) commonly measures what a company considers important from four different perspectives. The BSC must integrate with the organization's mission, vision, and strategy, but it is predominantly a performance measurement tool to compare actual results against desired objectives. Which of the following questions would address the customer perspective?

A public university has an objective of increasing enrollment in its online programs. The university has an online division where each major program is represented, and they have a representative assigned to each program. How could the university most effectively implement this?

Trevor is an aspiring baker who eventually hopes to leave his current full-time job and bake instead. He knows that planning now will make all the difference as he moves towards making his dream a reality. He plans to begin by baking out of his house and eventually open a small brick-and-mortar location. According to Porter's Five Forces, which of the following represents the threat of substitutes for Trevor?

Kelsey has been making soy candles for friends and family for many years. Recently she debated making an official website to sell her candles to the general public. Her variable cost is $4.20 per unit, and she would sell each candle for $10.00. Her fixed costs will be $418.00 per month. How many units would she need to sell per month, on average, to completely replace her monthly salary of $4,268? Round your final answer to the nearest whole unit.

The management team for an Italian restaurant has started its annual review of the overall performance of the organization. In an effort to include both financial and nonfinancial measures, they will complete a balanced scorecard (BSC). If they are focusing on the learning and growth perspective, then which of the following would be an appropriate initiative and measure to increase employee satisfaction?

Florals Inc. is a specialty fabric store that services customers in the market for unique fabrics and patterns. They have an online presence and do not have any intention of opening a brick-and-mortar location, but they would like to increase sales over the next year. They have a small group of shareholders and are compiling information together so that they can set goals for the next fiscal year. Management would like to formulate a comprehensive plan within the next month. They have enlisted the assistance of department heads from across the organization. Please answer the following questions. a. What are the four perspectives of a balanced scorecard? Describe the general rationale for each. b. Provide one objective, initiative, measure, and target for each perspective in this scenario, and explain whether or not these perspectives must all be linked? c. What advice could you give to management about the goals and objectives you provided in part b, and are there any additional tools management could use to augment their balanced scorecard when setting company strategy?

Once a business is ready to grow, they hire qualified candidates to work for them. The type of compensation offered and any additional offerings will vary depending on the job. Why is it important for companies to select the correct type of compensation?

As a company begins to fine tune its strategy, it is prudent to identify their strengths and weaknesses in addition to outside opportunities and threats. This SWOT analysis will ensure they can effectively evaluate and deal with items that will either help or hurt their chances of success. Which of the following represents a Strength for a mobile dog grooming business?

Alison is a baker who specializes in gluten-free cakes. She wants to determine what strategy makes sense for her business and has created the following options: 1) a regular cake at $25.00 per cake or 2) a cake with a base price of $30.00 with modifications costing extra. If Alison decides to proceed with option 2, then what is an appropriate internal business process perspective goal for Alison?

Robert Kaplan and David Norton created the balanced scorecard (BSC) back in 1992 to help companies balance both financial and nonfinancial measures. Which of the following is unlikely to be considered one of the four perspectives in the BSC?