ch16 - Chapter 16 Strategic Performance Measurement...

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Unformatted text preview: Chapter 16 Strategic Performance Measurement LEARNING OBJECTIVES Chapter 16 addresses the following questions: Q1 What is strategic decision making? Q2 How are financial and nonfinancial measures used to evaluate organizational performance? Q3 What is a balanced scorecard? Q4 How is a balanced scorecard implemented? Q5 What are the strengths and weaknesses of the balanced scorecard? Q6 What is the future direction of cost accounting? These learning questions (Q1 through Q6) are cross-referenced in the textbook to individual exercises and problems. COMPLEXITY SYMBOLS The textbook uses a coding system to identify the complexity of individual requirements in the exercises and problems. Questions Having a Single Correct Answer: No Symbol This question requires students to recall or apply knowledge as shown in the textbook. e This question requires students to extend knowledge beyond the applications shown in the textbook. Open-ended questions are coded according to the skills described in Steps for Better Thinking (Exhibit 1.10): Step 1 skills (Identifying) Step 2 skills (Exploring) Step 3 skills (Prioritizing) Step 4 skills (Envisioning) 16-2 Cost Management QUESTIONS 16.1 Financial measures provide information measured in dollars or ratios of dollars. Examples are ROI, operating margin, total sales, and so on. Nonfinancial measures provide performance information about activities that cannot be measured in dollars. Examples would be defect rates, market share, and employee retention rates. 16.2 Four potential perspectives for a balanced scorecard are financial, customer-related, learning and growth, and internal business processes. These are related because success in learning and growth and internal business processes should increase customer satisfaction and finally financial performance. 16.3 Financial perspective : Operating margin, Cost per mile per ton transported Customer perspective : Customer satisfaction surveys, market share, growth in return customers, growth in new customers Internal business perspective : Percent on-time deliveries, number of complaints about food damage from loading and unloading Learning and growth perspective : Driver safety records (number of tickets or accidents), driver training hours, number of process improvements annually. 16.4 Core competencies are the organizations strengths relative to competitors. The vision is the purpose of the organization. The strengths should support the purpose and values of the organization. 16.5 The sales force may increase satisfaction by reducing car prices, or directing potential customers to another dealership with lower prices to keep satisfaction ratings high. This would hurt financial performance. In addition, sales representatives might not apply pressure to close a sale when it might be appropriate to do so, because they may worry about the customer satisfaction ratings....
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This note was uploaded on 07/28/2011 for the course ACCT 101 taught by Professor Tuttle during the Spring '09 term at San Diego.

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ch16 - Chapter 16 Strategic Performance Measurement...

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