Deck 15: Strategic Performance Management

Question 1

Cycle time is the time it takes to

A) collect the account after the sale
B) turn inventory over
C) deliver the product after it is sold
D) produce one unit of product

Answer 1

D

Question 2

Hampton, SA., manufactures a product that experiences the following activities: The manufacturing cycle efficiency (MCE) for the product is

A) 0.33
B) 0.27
C) 0.25
D) 0.18

Answer 2

C

Question 3

When a computer company selects a mix of strategies in order to create sustainable competitive advantage, it is following a

A) focusing strategy.
B) low-cost strategy.
C) differentiation strategy.
D) strategic positioning strategy.

Answer 3

D

Question 4

When a computer company maintains the internal storage space for a lower price, it is following a

A) focusing strategy.
B) low-cost strategy.
C) differentiation strategy.
D) strategic positioning strategy.

Question 5

An example of a lag measure is

A) hours of employee training
B) customer profitability
C) employee capabilities
D) none of the above

Question 6

The five key core objectives of the customer perspective of the Balanced Scorecard do NOT include which of the following?

A) increase market share
B) increase customer satisfaction
C) increase customer retention
D) increase customer contact

Question 7

Richards, SA., manufactures a product that experiences the following activities: The manufacturing cycle efficiency (MCE) for the product is

A) 0.48
B) 0.45
C) 0.42
D) 0.30

Question 8

_____ involves choosing among alternative strategies with the goal of selecting a strategy, or strategies, that provides a company with reasonable assurance of long-term growth and survival.

A) Strategic decision making
B) Strategic cost management
C) Competitive advantage
D) Customer value

Question 9

Hugh, SA., recently evaluated its manufacturing process and determined the following about its main product: The manufacturing cycle efficiency (MCE) for the product is

A) 1.00
B) 0.75
C) 0.67
D) 0.50

Question 10

Which of the following anticipates the emerging and potential needs of customers and creates new products and services to satisfy those needs?

A) the innovation process
B) the operations process
C) the postsales process
D) none of the above

Question 11

When a computer company targets customers in the South, it is following a

A) focusing strategy.
B) low-cost strategy.
C) differentiation strategy.
D) strategic positioning strategy.

Question 12

_____ describe the relationships of a firm's value chain activities that are performed with its suppliers and customers.

A) External linkages
B) Internal linkages
C) Industrial value chain
D) Both a and b

Question 13

_____ are relationships among activities that are performed with a firm's portion of the value chain.

A) External linkages
B) Internal linkages
C) Industrial value chain
D) Both a and b

Question 14

_____ is creating better customer value for the same or lower cost than competitors or creating equivalent value for lower cost than offered by competitors.

A) Strategic decision making
B) Strategic cost management
C) Competitive advantage
D) Total product

Question 15

_____ is the use of cost data to develop and identify superior strategies that will produce a sustainable competitive advantage.

A) Strategic decision making
B) Strategic cost management
C) Competitive advantage
D) Customer value

Question 16

A competitive advantage has been established when

A) customers see the variation as important and the value added to the customer exceeds the cost of providing differentiation.
B)
B) a high-cost strategy increases customer value by minimizing customer sacrifices.
C) a low-profit item is dropped from the product line.
D) both a and

Question 17

Unlike tangible products, services have the characteristic of perishability. This means that services

A) may lose their value over time
B) may lose their value due to improper conservation
C) cannot be stored for future use
D) none of the above

Question 18

The industrial value-chain analysis

A) recognizes only complex linkages within the firm.
B) is not compatible with differentiation strategies.
C) determines a linked set of value-creating activities.
D) requires a firm to operate across the entire value chain.

Question 19

When a computer company increases the internal storage space for the same price, it is following a

A) focusing strategy.
B) low-cost strategy.
C) differentiation strategy.
D) strategic positioning strategy.

Question 20

Cycle time is calculated as

A) Total production time/Number of units sold
B) Total production time/Number of units produced
C) Total production time/Number of units in inventory
D) Total production time/Number of direct labour hours used

Question 21

Roberts, SA., manufactures a product that experiences the following activities: The MCE for the product is

A) 0.48.
B) 0.45.
C) 0.42.
D) 0.30.

Question 22

In the customer perspective, objectives and measures that drive the creation of customer value are

A) customer survey ratings.
B) postpurchase cost.
C) on-time deliveries.
D) all of the above.

Question 23

At the beginning of 2004, Peters Company installed a JIT purchasing and manufacturing system. The following information has been gathered about one of the company's products. The company's on-time delivery percentage is

A) 100.0%.
B) 95.5%.
C) 94.7%.
D) 50.0%.

Question 24

Cycle time is

A) the time it takes to collect the account after the sale.
B) the time it takes to turn inventory over.
C) the time it takes to deliver the product after it is sold.
D) the time it takes to produce one unit of product.

Question 25

From the customer perspective, which of the following might be considered a core objective rather than a performance value?

A) decrease price
B) increase customer retention
C) improve image
D) improve product quality

Question 26

Which of the following would be a lead measure?

A) customer profitability
B) cost per employee
C) return on investment
D) employee training hours

Question 27

_______________ look backward at historical data.

A) Leading measures
B) Trailing measures
C) Financial measures
D) All of the above

Question 28

_____ are outcome measures that are a result of past efforts.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 29

_____ are outcome measures that relate to customers.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 30

Objectives for increasing revenue growth include

A) adopting a new pricing strategy.
B) reducing the cost per unit.
C) eliminating nonvalue-added activities.
D) reducing distribution channel cost.

Question 31

Which of the following is not a step in developing the Balanced Scorecard?

A) setting balanced objectives
B) outlining control procedures
C) setting target values
D) rewards

Question 32

On-time delivery performance is calculated as follows:

A) Orders delivered on time/Total number of orders delivered
B) Orders delivered on time/Total sales dollars
C) Orders delivered on time/Total production
D) Orders delivered/Orders delivered on time

Question 33

_____ are outcome measures that are expressed in monetary terms.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 34

Delivery performance can be improved by

A) decreasing cycle time.
B) increasing cycle time.
C) decreasing velocity.
D) increasing turnover.

Question 35

_____ are outcome measures that can be readily quantified and verified.

A) Objective measures
B) External measures
C) Financial measures
D) Lag measures

Question 36

_____ provide some idea of what to expect currently or in the near future.

A) Trailing measures
B) Leading measures
C) Financial measures
D) All of the above

Question 37

Which of the following would be a subjective measure?

A) customer satisfaction
B) market share
C) return on investment
D) cost per unit

Question 38

Which of the following would be a lag measure?

A) budget forecasts
B) sales per employee
C) plant investment
D) employee training hours

Question 39

Which of the following statements about a balanced scorecard is true?

A) The balanced scorecard gives managers a perspective of the organization's performance using a recurring set of criteria.
B) The advantage of a balanced scorecard approach is that it can best be used as a single, comprehensive measure of corporate performance.
C) The advantage of a balanced scorecard approach is that it eliminates the need for management accounting data.
D) The advantage of a balanced scorecard approach is that it leads management to focus exclusively on critical downstream issues such as consumer demand, and away from lesser upstream issues such as design and production.

Question 40

For a firm to have balanced measures, the measures selected must be balanced between

A) lag and lead measures.
B) objective and subjective measures.
C) financial and nonfinancial measures.
D) all of these.

Question 41

Clotheshound is a local clothing store in New England. Clotheshound has been experiencing increased competition form the national clothing chains. In an effort to improve performance, management intends to create a Balanced Scorecard. In a meeting, several measures were suggested by various managers.
Management has identified a key problem. Customers are taking too long to pay their department store's charge card bills, and the company has an abnormal amount of bad debts. If this problem were solved, the company would have far more cash to invest in store improvements. Investigation has revealed that much of the problem with late payments and unpaid bills is apparently due to disputes about incorrect charges on the customer bills. Incorrect charges usually occur because sales clerks enter data incorrectly on the charge account slip.
The performance measures suggested by the managers are given below:
Required:

a.
Build an integrated Balanced Scorecard using only performance measures suggested by the managers. You do not have to use all the measures, but build a Balanced Scorecard that reveals a strategy for dealing with the problems with accounts receivable and unsold merchandise.
b.
Construct a testable strategy by showing the causal links (with arrows) between measures in the different perspectives, and show whether the performance measure should show an increase or decrease.
c.
Assume that the company adopts the Balanced Scorecard. After operating for a year, there are improvements in some performance measures but not in others. What should management do next?

Question 42

Define value chain. What is the relationship among a value chain, processes, and activities?

Question 43

Strategic-based performance measures are balanced measures. Give examples of four types of balanced measures.

Question 44

Describe the basic features of the Balanced Scorecard.

Question 45

Allegro Industries is planning to change its manufacturing plant by automating and installing a flexible manufacturing system. The company is also changing its performance measures as well as its operating procedures. In an effort to evaluate performance and determine where improvements can be made, management has gathered the following data relating to activities over the last four months:
Many of these measures are new and the president has asked you to interpret the results. Throughput is the time it takes to turn materials into a completed product. Delivery cycle time is the time between receiving an order and shipping the goods.
Required:
Using the performance measures given, do the following:

a.
Identify the areas where the company seems to be improving.
b.
Identify the areas where the company seems to be deteriorating.

Question 46

List three benefits of a value chain perspective.

Question 47

Why does the Balanced Scorecard differ from company to company? Whose responsibility is the implementation?

Question 48

How does the Balanced Scorecard communicate strategy to the organization? How is strategy translated into performance measures?

Question 49

Briefly discuss the three major categories of cost drivers and how they relate to an organization's internal value chain.