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Flashcards in Implementing Strategy Deck (20):
1

Overview of Strategic Performance measures

A good starting point on what to measure will be the Corporate Objectives

These are linked through to the mission and vision so vertical consistency

Outputs in the form of KPI are linked to CSF and achievement of strategic targets

2

Explain the Balance Scorecard

Financial - How should we create value for S/h to be seen as succseeding financially

Customer - To achieve vision, how should we appear to customers (what do they value - cost, quality reliability)

Innovation & Learning - To create value and maintain competitive position

Internal Business Process - Process we must excel at to achieve financial and customer objectives

3

What are the steps to setting up a Balance Scorecard

  • Identify the CSF
  • Identify the core competences needed
  • Develop KPI's
  • Caputre Data needed to measure KPI
  • Reporting to indicators to staff
  • Develop improvement programmes

4

What are the internal and external factors when looking at the performace pyramid

Internal

  • Financial Measures
  • Flexibility & Productivity
  • Process Time & Waste

External

  • Market satisfaction
  • Customer satisfaction & Flexibity
  • Quality and Delivery

5

What does the Peformance Pyramid useful for?

Highlights the links between Vision and Corporate strategy

Promote and ensure goal congruence

6

What are some of the criticisms of the BS & PP

  • Costly to set up and maintain
  • Information overload and may lose sight of the objective
  • May slow down decision making

7

Briefly describe Single & Double Loop Feedback (cybernetic control)

Single - results in the system behaviour being alterted to meet plan

Double - the plan itself is changed

8

Emmanuel et al decribed 4 conditions that must be satisfed when looking at process controls

Objectives - must exist

Output must be Measurable

Predictive model needed

Capability of taking actions

9

What is the purpose of performance management

  • Motivation for staff
  • Provides feedback
  • Communication to stakeholder groups
  • Linked to incentives

10

Neely summarised the purpose of Performance Management into the 4 CP's

Check Position - how are we doing. Fin and NF

Communicate Position - to stakeholders

Confirm Priorities - Set targets and plans to achieve

Compel Progress - driver for change

11

In Fitzgerald and Moon Building Block Model - what are the Dimensions and what is it used for?

Results

  • Financial performance
  • Competetiveness

Determinants

  • Quality
  • Flexibility
  • Resource Utilisation
  • Innovation

Controlling and improving performace in Determinants should lead to better Results

12

In Fitzgerald and Moon Building Block Model - what are the Standards & Rewards and uses

Standards

  • Ownership
  • Achivability
  • Fairness

Rewards

  • Clarity
  • Motivated
  • Controlability

13

What is Target cost

This is what the cost of a product should be over its entire PLC

14

What are the issues with using Performance Measures

  • Tunnel Vision - Focus on performance measure to the detriments of others
  • Sub-optimisation - Focus on new biz rather than existing
  • Myopia - Short term focus (max rev rather than innovation)
  • Gaming - Underperforming in one period to ensure taregts are kept low
  • Ossification - Rigid system and unwillign to change
  • Misrepresentation - of facts to be favour of business
  • Measure fixation - Focus on  the measure rather than underlying goals (cost of audit)

15

What are the strengths and weaknesss of ROI

Strengths

  • Comparable against other unequal division
  • Easily understandable
  • Useful for external investors

Weakness

  • Lead to dysfunctional behaviour

16

What are the accounting adjustments in EVA

DEPN added back whilst charging economic DEPN

R&D, Training, Marketing and Promo all capilatised (added back to profit)

Provisions (Added back to capital employed)

Non-cash items added back to profit (goodwill)

Operating leases added back to Cap Employeed

17

What is Market Value Added (MVA)

The difference between the market value of a company and the economic book value of capital employeed 

(difference between what investors put in and what they woudl get out of they sold now)

18

What are the 3 criteria for Transfer Pricing

  • Equity
  • Neutrality
  • Admin simplicity

19

What is the 3 step process for choosing a business strategy

  • Assess current position
  • Evaluate strategic choices
  • Decide one course of action to implement

20