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Ch 13 and 19 Solutions Horngren 13th Edition

Ch 13 and 19 Solutions Horngren 13th Edition - Ch 13 and 19...

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Ch 13 and 19 Solutions Horngren 13 th Edition 13-1 Strategy specifies how an organization matches its own capabilities with the opportunities in the marketplace to accomplish its objectives. 13-2 The five key forces to consider in industry analysis are: (a) competitors, (b) potential entrants into the market, (c) equivalent products, (d) bargaining power of customers, and (e) bargaining power of input suppliers. 13-6 The four key perspectives in the balanced scorecard are: (1) Financial perspective—this perspective evaluates the profitability of the strategy, (2) Customer perspective—this perspective identifies the targeted customer and market segments and measures the company’s success in these segments, (3) Internal business process perspective—this perspective focuses on internal operations that further both the customer perspective by creating value for customers and the financial perspective by increasing shareholder value, and (4) Learning and growth perspective—this perspective identifies the capabilities the organization must excel at to achieve superior internal processes that create value for customers and shareholders. 13-8 A good balanced scorecard design has several features: 1. It tells the story of a company’s strategy by articulating a sequence of cause-and-effect relationships. 2. 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. 3. It places strong emphasis on financial objectives and measures in for-profit companies. Nonfinancial measures are regarded as part of a program to achieve future financial performance. 4. It limits the number of measures to only those that are critical to the implementation of strategy. 5. It highlights suboptimal tradeoffs that managers may make when they fail to consider operational and financial measures together. 13-9 Pitfalls to avoid when implementing a balanced scorecard are: 1. Don’t assume the cause-and-effect linkages are precise; they are merely hypotheses. An organization must gather evidence of these linkages over time. 2. Don’t seek improvements across all of the measures all of the time. 3. Don’t use only objective measures in the balanced scorecard. 4. Don’t fail to consider both costs and benefits of different initiatives before including these initiatives in the balanced scorecard. 5. Don’t ignore nonfinancial measures when evaluating managers and employees. 6. Don’t use too many measures. 19-1 Quality costs (including the opportunity cost of lost sales because of poor quality) can be as much as 10% to 20% of sales revenues of many organizations. Quality-improvement programs can result in substantial cost savings and higher revenues and market share from increased customer satisfaction.
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