5. Business Measures Flashcards
(13 cards)
Balanced Scorecard
P. 55
Organizational metrics into four perspectives:
- Financial
- Customer
- Internal Business Process
- 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.
