Cost leadership, and value differentiation.
(1) Industry competitors, (2) new entrants, (3) substitute products, (4) supplier power, and
(5) customer power.
The key source of customer value.
Yes, this is generally true.
The value chain is a set of logically sequenced, value-adding activities that convert input
resources into products or services in a manner consistent with the chosen business
(1) List all activities and prepare the activity map, (2) Identify performance linkages
across activities, (3) Engineering activities, and (4) Determine activity-sourcing.
Product life-cycle analysis emphasizes that the objective is to maximize the profitability
of a product over its entire life cycle and not stage-by-stage.
(1) Development, (2) Introduction, (3) Growth, (4) Maturity, and (5) Decline.
Target costing as a structured approach to cost planning and management – it determines
cost by working backward from the customer’s value.
Because it’s important to know where we have been and where we are going. Lagging in-
dicators reflect past performance, whereas leading indicators are drivers of future per-
Financial measures are (1) aggregate, (2) are not always timely, and (3) do not provide
specific information about potential areas of concern.
Just like a pilot, managers need to attend to multiple measures and gauges of a perform-
ance to ensure that the company is headed in the right direction.
Critical success factors, also known as key performance indicators, are performance
measures that must go right for an organization to implement its strategy and successfully
achieve its mission. Outcomes of the critical success factors are the pulse of the organiza-
tion’s survival. Organizations have both short- and long-term critical success factors.
Critical success factors should be: (1) simple and easy to understand, (2) readily quantifi-
able, (3) easy to monitor, and (4) linked to strategy.
A balanced scorecard is a performance measurement system that includes a systematic
approach for linking strategy to planning and control. The four components, or perspect-
ives, are (1) financial, (2) customer, (3) internal business, and (4) innovation and learn-