5. Business Measures Flashcards
(13 cards)
Balanced Scorecard
P. 55
Organizational metrics into four perspectives:
1. Financial
2. Customer
3. Internal Business Process
4. Learning and Growth
Key Performance Indicators
P. 56
Financial and nonfinancial metrics that reflects an organization’s key business drivers (KBD), also cretical success factors (CSF)
-Quantitative and measurable
-Goal based
-Strategy based
-Time based
SMART (KPI)
P. 56
-Specific
-Measurable
-Achievable yet aggressive
-Relevant
-Time bounded
Customer Loyalty Metrics
P. 59
-Customer referrals
-Customer abandonment rate (customer churn)
-Customer retention rate
-Customer renewal rate
-Repeat customer
-Share of wallet (loyalty of other product)
Lagging Indicators
P. 60
Indicator follows an event, after the fact.
Leading Indicators
P. 60
Indicator predicts or infers a future event.
Common Financial Measures
P. 62
-Percent profit margin (net profit / net sales)
-Percent gross margin (gross profit / net sales)
-Percent operating margin (operation profit / net sales)
-Percent net margin (net profit / net sales)
Net Present Value
P. 64
PV= F (1 + i)^ -n
F- Amount to be received n periods from now
i- Annual interest rate expressed as a decimal
ROI
P. 65
Income - Cost / Cost (%)
Cost-Benefit Analysis (CBA)
P. 65
SUM NPV all benefits anticipated / SUM NPV of all costs anticipated = benefit per dollar expended
Cost of Quality (removed)
P. 67
-Appraisal costs (inspection)
-Prevention costs
-Internal failure costs
-External failure costs (while customer owns the product)
Hard Dollars (cost savings)
P. 69
-A prior baseline of spending must be established
-The dollars must have been planned and in the budget
-Cost saving must affect bottom line
- Cost take out
- Revenue Growth
- Working capital / cash flow
Soft Dollars (cost avoidance savings)
P. 70
- Budget impacting
- Non-budget impacting.
- Cost avoidance results from productivity / efficiency.
