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Unformatted text preview: POLICY MIDTERM 1- ANSWERS Question 1: Define and describe the balance score card tool and elements. How does the concept of leading and lagging indicators apply to this tool and its relevance to strategy management analysis? The BSC is a subset from the “GOALS” section of the Strategy Triangle. The BSC is a strategic planning system used to align business activities to the vision and strategy of the organization. It aims at improving internal and external communications and monitors organization performance against strategic goals. The balanced scorecard includes 4 measures: • Financial – data must be timely and accurate and provided regularly o Revenue Growth o Cost Management o Asset Management • Customer – stresses importance of customer focus and satisfaction so that you don’t loose them to competitors o Market Share o Customer Retention o Customer Acquisition o Customer Satisfaction o Customer Profitability • Internal Business Processes – based on the mission, do the products conform to customer requirements o Quality o Productivity o Delivery o After Sales Service • Innovation & Learning – based on employee training & corporate cultural attitudes o Employee Capabilities o Information Technology o Motivation o Alignment The financial measure tells the results of actions already taken while the remaining three are operational measures that drive future financial performance. Each indicator is measured against the org’s goal in that particular area – if every indicator aligns to their goal, the scorecard is balanced. The BSC helps managers look at their businesses from these four perspectives and answers questions like: a) How do customers see us? b) What must we excel at? c) Can we continue to improve and create value? d) How do we appear to shareholders? *Managers ask themselves if improvements in one area have come at the expense of another Leading Indicator: signal future events (ex: yellow light is a leading indicator for a red light) Lagging Indicator: signal that follows an event, usually has the ability to confirm a specific pattern of events is appearing (ex: unemployment is a lagging indicator, if it increases it means the economy is doing poorly) The three operational factors tend to be more leading indicators because they drive future financial performance. The financial factor then is more of a lagging indicator since it tells the results of actions already taken. 2. Discuss and describe in details the two sets of measures that make up the Performance Matrix and how the tool is used to assess organizational performance. Describe how the outputs of this tool can influence strategy formulation and implementation....
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- Spring '11