Book: Strategic Performance Management

Question 1

What are the three generic strategic positions

Answer 1

Cost leadership, differentiation, focuse

Question 2

What does the cost leadership strategy entail

Answer 2

Be cheaper at all cost. Can be achieved through scale or favorable access to technology or materials

Question 3

What does the differentiation strategy entail

Answer 3

Quality at all cost

Question 4

What does a strategy of focus entail

Answer 4

To cator to the needs of a specific niche

Question 5

What is strategic positioning

Answer 5

To optimally mix the three general strategies

Question 6

What is a defender stratrgy

Answer 6

A mix of focus and cost leadership adapted to unchanging markets where the perfection of a small array of offerings is prioritized instead of fame and innovation

Question 7

What is the prospector strategy

Answer 7

An adaptation to uncertain markets where innovation, marketing and adaptation to change is prioritized

Question 8

What is the difference between a performance management system and a performance measurement system

Answer 8

Performance measurement is all about interpreting performance data while performance management is about what to do with the data

Question 9

Mention a couple of performance management frameworks

Answer 9

The results/determinants framework, the performance pyramid, the balance scorecard and the performance prism framework

Question 10

What is the most popular performance management system

Answer 10

The balance scorecard

Question 11

What is the balance scorecard

Answer 11

A system where strategy is turned into objectives with measurements to fulfill them

Question 12

Are numbers always objective and acurate

Answer 12

No

Question 13

Do more measures add more value

Answer 13

Not necessarily

Question 14

Should the same targets apply to everyone

Answer 14

No, targets should be adapted for accuracy and motivation in the situation

Question 15

For what four perspectives does the balance scorecard create objectives

Answer 15

The financial shareholder perspective, the customer perspectives, the internal business perspective and the learning and growth perspective

Question 16

How does the process of creating a balance scorecard look

Answer 16

You identify objectives to the strategic teams and create targets and initiatives to fulfill them from all perspectives

Question 17

What are the three things that encourage the choice of business strategy

Answer 17

Revenue growth and mix, cost reduction and asset utilization

Question 18

How do you improve revenue growth

Answer 18

You may increase the number of new products, develop new customers and markets and change to a more profitable product mix

Question 19

How do you measure revenue development for improvement

Answer 19

Percentage if revenue per product, percentage of revenue per customer and measure the growth percentage through time for the different segments

Question 20

How do you achieve cost reduction

Answer 20

Reduce cost per unit or reduce associated selling or administrative costs

Question 21

How do you measure asset utilization

Answer 21

ROE and EVA

Question 22

What are five generic customer related objectives

Answer 22

Increasing market share, customer retention, customer acquisition, customer satisfaction and customer profitably

Question 23

What are four customer value propositions

Answer 23

Improved product functionality, decreased price relative to competitors, improve quality and improve delivery time

Question 24

What are customer value propositions

Answer 24

Measures that make customers perceive the offer as more valuable

Question 25

What three processes exists from the internal business perspective in the balanced scorecard

Answer 25

The innovation process, the operation process and the post sale process

Question 26

How do you improve innovation

Answer 26

Increase number of new offerings, develop new markets and customers and decrease the development time

Question 27

How do you improve operations

Answer 27

By increasing cost efficiency and or quality and by decreasing the time it takes

Question 28

How do you improve post sale service

Answer 28

Increase quality efficiency and decrease cost and redundant time

Question 29

What is the production efficiency ratio

Answer 29

Standard hours output divided by actual hours input

Question 30

What is capacity usage ratio

Answer 30

Actual hours utilized / budgeted hours utilized

Question 31

Why is only processing time value adding

Answer 31

Because only processing time creates what the customer wants

Question 32

How is manufacturing cycle efficacy calculated

Answer 32

MCE = processing time / (processing time, inspection time, wait time and move time) aka process time / total time

Question 33

How is employee capability mesured

Answer 33

Through employee satisfaction, retention and productivity

Question 34

What are some learning and growth related objectives of improvement

Answer 34

Increase employee capabilities, information system capabilities as well as motivation, empowerment and alignment

Question 35

How are information system capabilities meaured

Answer 35

Percentage of processes with realtime feedback capabilities and percentage of customer facing employees having access to costumer and product information

Question 36

How is motivation and empowerment measured

Answer 36

Measures number of suggested improvements per employee and what share is implemented.

Question 37

How is employee alignment measured

Answer 37

Measure number of employees with goals aligned with the scoreboard as well as what share fulfills them

Question 38

What are lag mesures

Answer 38

Outcome measures of past actions

Question 39

What are lead meaures

Answer 39

Current measures linking current performance to strategy

Question 40

What is a strategy map

Answer 40

An illustration where the different parts of the balanced scorecard are linked with arrows linking cause to effect, showing how each measure improves the business

Question 41

What does it mean that different perspectives are weighted in a balanced scorecard

Answer 41

To assign the percentual importance of each perspectives adherance to its target metrics. This relates to bonuses

Question 42

What are the benefits of using the balanced scorecard

Answer 42

Un-abstracts strategy, non financial causes to measurable financial effects and makes it clear what measurements are necessary for what

Question 43

What are some criticisms of the balanced scorecard

Answer 43

There is no time dimension, no empiric link between cause and effect, omission of environmental and social perspectives