Module 13 Flashcards
(25 cards)
What quantity of information should be provided to make decisions?
enough, but not so much for there to be info overload.
What measures should be used?
Should be controllable i.e. a catalyst for management action.
name a danger of non-financial performance indicators?
managers become blind to overall strategy, too focused on indicators.
What is the balanced scorecard?
performance measurement system. uses a range of measures so that management do not result short term manipulative behaviour.
Is the balanced score card standardised?
semi standardised. Management can create their own but ideas behind it are the same.
What is the most popular version of the balanced score card?
Third generation
What are the features of the third generation score card?
- A destination or vision statement (what are the long term priorities)
- A strategic linkage model (use goals to create shorter term strategic objectives and the activities to meet them)
- Definitions for each strategic objective (should link to each area of the business)
- Definitions for how each objective will be measured
What should the review process of the third generation score card do?
- Compare actual results against target
- Question whether measures do drive behaviour
When should measures be reviewed?
Regularly, not just at the end of the period
What is the risk of the balanced scorecard method?
Management will set lower expectations to make sure targets are met.
What are key performance indicators?
measures which reflect the success of progress of an organisation in relation to a specific goal. May be included in balanced scorecard.
Can be both financial and non-financial.
What is the net promoter score?
Tool which looks at a customers loyalty to brand. Would they recommend
What is the NPS range?
-100 to 100. Anything greater than 0 is good.
What is a transactional question?
as soon as the transaction has been completed
What is a relationship question?
asked at a specific point in time i.e. monthly or annually.
What is the formula for NPS?
(Number promoters- number detractors)/total repsondents *100
promoter gives 9 or 10
detractor gives 1-6
What are the disadvantages of NPS?
- Survey fatigue
- shouldnt assess an individual
What is the advocacy index?
based on NPS, for telephones.
3 point scale
What is benchmarking?
Comparing business performances to that of other companies
What are the two most common types of benchmarking?
Strategic- specific industry
Functional - support functions e.g. cost of processing payroll
What are the disadvantages of benchmarking?
-hard to get data
-may be impacted by diff accounting policies
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What is the customer churn rate?
key indicator for businesses with customers who pay on a regular basis (Netflix). How likely customers are to repeat their payment
What is a data dashboard?
online tool used to track and analyse KPIs - real time
What are the disadvantages of Non-financial performance indicators?
Must be considered alongside financial!
Can be backwards looking
Interpreted in so many ways, that management could use to show perceived success
May be costly and need enough responses
