Deck 11: Performance Evaluation and the Balanced Scorecard

Question 1

A product line is generally considered a profit centre.

Answer 1

True

Question 2

The accounting department for a department store chain is likely to be considered an investment centre.

Answer 2

False

Question 3

Companies that decentralize split their operations into different divisions or operating units.

Answer 3

True

Question 4

An advantage of decentralization is that it

A) creates greater responsiveness to local needs.
B) focuses managers' attention on the organization as a whole.
C) reduces the cost of gathering information.
D) leads to decision making consistent with company goals.

Question 5

Which of the following statements is FALSE?

A) A centralized structure does not empower employees to handle customer complaints directly.
B) A decentralized structure forces top management to lose some control over the organization.
C) Decentralization slows responsiveness to local needs for decision making.
D) Decentralization can increase motivation by allowing managers to exercise greater individual initiative.

Question 6

All of the following are benefits of decentralization EXCEPT

A) it creates greater responsiveness to local needs.
B) it decreases management and worker morale.
C) it sharpens the focus of managers.
D) it leads to better supplier relationships.

Question 7

Goal congruence is more likely to be achieved at a decentralized organization rather than a centralized organization.

Question 8

Decentralization helps keep a company's costs down since each business unit may have its own purchasing department.

Question 9

Goal incongruence frequently exists in centralized organizations.

Question 10

The reservations department for a hotel chain is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 11

Decentralization allows top management to hire workers with expert knowledge for each business unit.

Question 12

The taxation department for department store chain is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 13

Which of the following is a disadvantage of decentralization?

A) Management does not have time to concentrate on long-term strategic planning.
B) Unit managers may not understand the big picture of the company.
C) Unit managers have decreased motivation and retention.
D) Managers receive training and experience to allow advancement in the organization.

Question 14

Pillsbury produces cookies, pizza, bread, and other food items. Pillsbury was acquired by General Mills in 2001 for $10.4 billion. Pillsbury is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 15

The local McDonald's restaurant is likely to be considered to be an investment centre.

Question 16

Small companies tend to use centralized decision making.

Question 17

The laundry department for a Ritz-Carlton hotel is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 18

Duplication of costs is a disadvantage of decentralized organizations.

Question 19

Decentralization allows top management to concentrate on long-term strategic planning.

Question 20

Which of the following is FALSE concerning profit centres and cost centres?

A) A profit centre can exist within a decentralized organization.
B) A cost centre can exist within a centralized organization.
C) A cost centre can exist within a decentralized organization.
D) If a profit centre exists within a centralized organization, there cannot be any cost centres in the organization.

Question 21

The production line at Dell Computers is most likely treated as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 22

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 23

Which of the following is a potential advantage of decentralization?

A) Benchmarking
B) Promotes goal congruence and coordination
C) Provides feedback
D) Provides training

Question 24

The central reservation office at American Airlines is most likely treated as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 25

Discuss two potential problems associated with decentralization.

Question 26

The manager of the accounting department at Nike would be in charge of a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 27

A product line at Coca-Cola (such as the Diet Coke product line) is most likely treated as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 28

List and describe five reasons why a company might choose to decentralize.

Question 29

The manager of the Walt Disney World Resorts (a corporate division) would be in charge of a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 30

Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

Question 31

The manager of the corporate division of Hollister would be in charge of a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 32

Which of the following is a potential disadvantage of decentralization?

A) Benchmarking
B) Duplication of costs
C) Provides feedback
D) Provides training

Question 33

The manager of the Midwest sales region at Pace Food would be in charge of a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 34

The manager of a local Walmart would be in charge of a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 35

Match the following:

A) Decentralized
B) Centralized
1) Having formal training programs for lower level managers the company has a policy that they promote from within the company whenever possible.
2) The company is divided into several operating units.
3) Johnson Enterprises is a small molding manufacturer. The owner is also the senior manager.
4) Managers have the authority to make decisions about product offerings and pricing.
5) In order to avoid duplication of services the company has "flattened" its organization structure and now has only one Payroll Department, one Human Resource department and one administrative headquarters.

Question 36

Comparing a company's achievements against best practices in the industry is called benchmarking.

Question 37

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

Question 38

The human resources department for car dealership is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 39

The Frito-Lay division of PepsiCo is most likely treated as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 40

The convenience store owned by a national chain is likely to be classified as a(n)

A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Question 41

List and describe the goals of performance evaluation systems.

Question 42

The change in the amount invested in research and development is an example of a leading performance indicator.

Question 43

Performance evaluation systems are a way for management to control the organization.

Question 44

Which of the following aspects of a performance evaluation system best describes when targets are compared to actual results?

A) Communicating company's expectations
B) Motivating managers
C) Promoting goal congruence
D) Providing feedback

Question 45

Providing bonuses to subunit managers who achieve performance targets would be an example of

A) promoting goal congruence and coordination.
B) motivating managers.
C) providing feedback.
D) benchmarking.

Question 46

Which of the following aspects of a performance evaluation system best describes when a company's actual results are compared to the results of competitors?

A) Motivating unit managers
B) Promoting goal congruence
C) Benchmarking
D) Communicating expectations

Question 47

Which of the following is not a leading performance indicator?

A) Revenue growth
B) Number of new innovations
C) Hours of sales staff training
D) Customer satisfaction

Question 48

Which of the following aspects of a performance evaluation system best describes when subunit performance targets are aligned with company strategy?

A) Benchmarking
B) Communicating expectations
C) Promoting goal congruence
D) Providing feedback

Question 49

Describe the limitations of financial performance measurement.

Question 50

The balanced scorecard considers both financial and operational performance measures.

Question 51

Companies benchmark their performance against the performance of their competitors and against their own past performance.

Question 52

Which of the following aspects of a performance evaluation system best describes when subunit managers are provided with performance targets?

A) Benchmarking
B) Communicating company's expectations
C) Promoting goal congruence
D) Providing feedback

Question 53

Corrective actions are sometimes taken as a result of which of the following goals of a performance evaluation system?

A) Benchmarking
B) Communicating expectations
C) Promoting goal congruence
D) Providing feedback

Question 54

Comparing actual results to the results of competitors and comparing actual results to industry standards would be an example of

A) promoting goal congruence and coordination.
B) motivating managers.
C) providing feedback.
D) benchmarking.

Question 55

What is a limitation of financial performance measurements?

A) They are not useful for benchmarking.
B) They do not motivate managers.
C) They tend to focus on long-term performance.
D) They tend to be lag indicators.

Question 56

Financial measures are lead indicators for companies.

Question 57

Which of the following aspects of a performance evaluation system best describes when the company's actual results are compared to industry standards?

A) Benchmarking
B) Motivating unit managers
C) Promoting goal congruence
D) Providing feedback

Question 58

Providing subunit managers with performance results and comparing targets to actual results would be an example of

A) promoting goal congruence and coordination.
B) motivating managers.
C) providing feedback.
D) benchmarking.

Question 59

Aligning subunit performance targets with company strategy would be an example of

A) promoting goal congruence and coordination.
B) motivating managers.
C) providing feedback.
D) benchmarking.

Question 60

Which of the following goals of a performance evaluation system is accomplished when bonuses are provided to subunit managers who achieve performance targets?

A) Benchmarking
B) Motivating unit managers
C) Promoting goal congruence
D) Communicating expectations

Question 61

Which of the following is a feature of a good balanced scorecard?

A) It tells the story of a company's strategy by articulating costs along the value chain.
B) It helps to communicate the strategy to all members of the organization by translating the strategy into a coherent and linked set of understandable and measurable operational targets.
C) The scorecard measures match those of other companies.
D) It provides cause-and-effect linkages that are precise.

Question 62

Employee satisfaction is a measure of the internal business process perspective of the balanced scorecard.

Question 63

Employee satisfaction would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth

Question 64

Operations is one factor of the internal business perspective of the Balanced Scorecard.

Question 65

The number of repeat customers would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth

Question 66

The number of on-time deliveries would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth

Question 67

Customer satisfaction, operational efficiency, and employee excellence are often measured as part of the balanced scorecard approach.

Question 68

The ultimate purpose of the balanced scorecard is to give management a balanced view of the company's performance.

Question 69

The purpose of the balanced scorecard is BEST described as helping an organization

A) develop customer relations.
B) mobilize employee skills for continuous improvements in processing capabilities, quality, and response times.
C) introduce innovative products and services desired by target customers.
D) translate an organization's mission and strategy into a set of performance measures that help to implement the strategy.

Question 70

Key Performance Indicators are used to assess how well a company's objectives have been achieved.

Question 71

KPI in the Balanced Scorecard stands for Key Performance Indicator.

Question 72

The percentage of market share would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth

Question 73

Which of the following is the name given to the approach that recognizes that both financial and operational performance measures should be considered when evaluating company performance?

A) The financial and operational approach
B) The total approach
C) The balanced scorecard approach
D) The complete approach

Question 74

The number of defects found during the manufacturing process would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth

Question 75

Which of the following perspectives from the balanced scorecard helps managers answer the question, "How do we look to shareholders?"

A) Learning and growth perspective
B) Internal business perspective
C) Customer perspective
D) Financial perspective

Question 76

Which of the following perspectives from the balanced scorecard focuses on determining if customers are happy after the sale takes place?

A) Learning and growth perspective
B) Internal business perspective
C) Customer perspective
D) Financial perspective

Question 77

Which of the following perspectives from the balanced scorecard focuses on continuing to improve and create value?

A) Learning and growth perspective
B) Internal business perspective
C) Customer perspective
D) Financial perspective

Question 78

Which of the following perspectives from the balanced scorecard focuses on determining the company's "climate for action"?

A) Learning and growth perspective
B) Internal business perspective
C) Customer perspective
D) Financial perspective

Question 79

The number of new products developed would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth

Question 80

The percentage of products with on-line help manuals would be an example of measuring which perspective?

A) Financial
B) Customer
C) Internal business
D) Learning and growth