Deck 17: The Balanced Scorecard and Strategy Maps

Question 1

The basis of a balanced scorecard is continuous strategic analysis from as many perspectives as possible.

Answer 1

B

Question 2

The purpose of a balanced scorecard is to translate organisational vision and strategies into performance objectives that can be monitored over time.

Answer 2

A

Question 3

A balanced scorecard usually contains four perspectives: customer, financial, internal business process, and learning and growth.

Answer 3

A

Question 4

The internal business process perspective in a balanced scorecard concentrates principally on employees.

Question 5

An organisation's core competencies can include productivity, reputation, and regulatory advantages.

Question 6

Well-run organisations evaluate performance based mainly on financial measures because they are more objective than non-financial measures.

Question 7

The nature of an organisation's strategies influences the types of performance objectives managers establish.

Question 8

Stakeholders in the strategic decision making process include suppliers, customers, and the community.

Question 9

Learning and growth measures, if incorporated in a balanced scorecard, cannot focus on employees.

Question 10

Successful organisations communicate their vision, strategies, goals, and objectives to upper-level employees.

Question 11

Once balanced scorecard measures have been chosen, they should not be changed for at least five years.

Question 12

The balanced scorecard's financial perspective is focused primarily on measures of economic and accounting profits.

Question 13

The first step in implementing a balanced scorecard is developing measures for each of the perspectives.

Question 14

Balanced scorecard initiatives are sometimes seen as temporary fads by employees.

Question 15

In implementing a balanced scorecard, managers should establish performance targets after analysing the first set of scorecard data.

Question 16

Part of strategic decision making is periodically clarifying organisational vision and core competencies.

Question 17

Non-financial measures are typically not objective enough to serve as effective performance measures.

Question 18

The balanced scorecard links short-term and long-term performance objectives to organisational vision and strategies.

Question 19

One of the balanced scorecard's biggest advantages is the small amount of time and money involved in its implementation.

Question 20

Managers should focus on finding the "one best measure" of performance based on the type of responsibility centre they manage.

Question 21

Which of the following measures would be most likely to be found in the internal business process perspective of the balanced scorecard?

A) Training days per employee
B) Residual income
C) Change in market share
D) Percent capacity utilisation

Question 22

Balanced scorecards, when properly implemented, can guide managers in making more effective decisions.

Question 23

Non-financial measures include:
I $\text {Cost variarices}$
II $\text {Defect rates}$
III $\text {Customer satisfaction surveys}$

A) II and III only
B) I and III only
C) I and II only
D) I, II, and III

Question 24

Financial and non-financial indicators are used to assess organisational performance and effectiveness under which of the following approaches?

A) Balanced scorecard
B) Variance analysis
C) Balanced budget
D) Proforma financial statement

Question 25

Managers have traditionally relied on which of the following measures to evaluate performance?

A) Financial measures
B) Non-financial measures
C) Qualitative factors
D) Core competencies

Question 26

Financial measures used for organisational evaluation can pertain to: $\begin{array}{llcc} \text { I } & \text { Divisions } \\ \text { II } &\text { Product liNes } \\ \text {III } &\text { Departments } \\\end{array}$

A) II and III only
B) I and III only
C) I and II only
D) I, II, and III

Question 27

Which of the following measures would be most likely to be found in the learning and growth perspective of the balanced scorecard?

A) Training days per employee
B) Residual income
C) Change in market share
D) Percent capacity utilisation

Question 28

Components of organisational strategy include:

A) Actual operations
B) Financial structure
C) Short-term financing
D) Comparing actual results to the budget

Question 29

The perspectives in a balanced scorecard:

A) Cannot be changed because of copyright restrictions
B) Include qualitative and quantitative
C) Can be adapted to an individual organisation's priorities
D) Are externally focused only in for-profit organisations

Question 30

The balanced scorecard approach to performance evaluation:
I $\text { Is less time consurming and expensive tharn other approaches}$
II $\text { Helps marnagers integrate strategies across divisions and furctions}$
III $\text {Assists marnagers in predictine possible future problerns}$

A) I and II only
B) II and III only
C) I and III only
D) I, II, and III

Question 31

Which of the following measures would be most likely to be found in the financial perspective of the balanced scorecard?

A) Training days per employee
B) Residual income
C) Change in market share
D) Percent capacity utilisation

Question 32

The primary aim of the balanced scorecard is to:

A) Use performance indicators that are highly objective
B) Translate elements of a company's strategic plan into measurable performance indicators
C) Put less emphasis on financial measures because they are too narrowly focused
D) Provide a truthful basis for evaluating managers' performance

Question 33

Balanced scorecards can improve communication and consensus throughout an organisation.

Question 34

Which of the following statements about performance evaluation is true?

A) Financial measures are less useful than non-financial measures because they are biased
B) A combination of financial and non-financial measures gives a more useful picture of organisational performance than either one alone
C) Non-financial measures are less useful than financial measures because they are not as objective
D) Only one or two non-financial performance measures should be used

Question 35

Which of the measures below would be most likely to be found in the customer perspective of the balanced scorecard?

A) Training days per employee
B) Residual income
C) Change in market share
D) Percent capacity utilisation

Question 36

A representation that provides a visual view of an organisation's strategy with a single-page view of how objectives in the four balanced scorecard perspectives integrate and combine to guide strategy is known as a:

A) Strategy map
B) Mission statement
C) Core competencies
D) Value chain

Question 37

The perspectives in a typical balanced scorecard include all of the following except:

A) Financial
B) Customer
C) Qualitative
D) Learning and growth

Question 38

Which of the following is a synonym for an organisation's vision?

A) Core competencies
B) Organisational strategies
C) Purpose and ideology
D) Operating plans

Question 39

Lack of senior management support is one of the major causes for failed balanced scorecard initiatives.

Question 40

The balanced scorecard's perspectives:

A) Are not linked in any meaningful way
B) Are a relatively unimportant part of the scorecard
C) Are linked through careful managerial analysis
D) Are exclusively focused on internal measures in not-for-profit organisations

Question 41

Which of the following measures would be least likely to be included in a balanced scorecard's financial perspective?

A) Percent of sales from return customers
B) Average revenue per customer
C) Customer satisfaction rating
D) Increase in sales by geographic region

Question 42

The measures in a balanced scorecard are guided by:

A) Budget plans
B) Shareholders
C) Vision and strategy
D) The board of directors

Question 43

An organisation's core competencies are related to its strengths relative to competitors. Those strengths can include: $\begin{array}{llcc} \text { I } & \text { Productivity and skills } \\ \text { II } & \text { Reputation ard legal rights } \\ \text { III } & \text { Mission and core purpose }\\\end{array}$

A) II and III only
B) I and III only
C) I and II only
D) I, II, and III

Question 44

Which of the following measures would be least likely to be included in a balanced scorecard's internal business process perspective?

A) Customer satisfaction rating
B) Percent capacity utilisation
C) Percent change in throughput time
D) Average waiting time per customer

Question 45

Which of the following statements is true?
I $\text {Traditionally, interial operations were fionitored to improve firancial perfornarice}$
II $\text {In the balanced scorecard approach, monitoring for irrprovernent is riot valued}$
III $\text {Maruagers believe that monitoring performance measures}$
$\quad$$\text { related to ary orgarnisations \({ } ^ { 2 }\) learing ard growth should lead to }$
$\quad$$\text {improvements in firancial performance}$

A) II and III only
B) I and III only
C) I and II only
D) I, II, and III

Question 46

An organisational vision is concerned with creating value for stakeholders, including: $\begin{array}{llcc} \text { I } & \text { The corrmurity and society} \\ \text { II } & \text { Ernployees and suppliers } \\ \text { III } & \text {Customers and onners }\\\end{array}$

A) II and III only
B) I and III only
C) I and II only
D) I, II, and III

Question 47

Steps in the operations cycle of the value chain include:

A) Designing products and services
B) Building products and services
C) Identifying customer preferences
D) Providing customer service

Question 48

An organisation's operating plans include all of the following except:

A) Actual operations
B) Short-term financing
C) Specific performance objectives
D) Short-term resource allocation

Question 49

The internal business process perspective in a balanced scorecard is often broken down into its value chain components. Those components include all of the following except the

A) Operations cycle
B) Post-sales service cycle
C) Innovation cycle
D) Budget cycle

Question 50

Which of the following are inputs to the development of organisational strategy?

A) Operating plans and core competencies
B) Actual operations and operating plans
C) Organisational vision and operating plans
D) Organisational vision and core competencies

Question 51

Analysis of the gaps between actual operations and performance objectives can be used to: $\begin{array}{llcc} \text { I } & \text { Corrpernate errployees} \\ \text { II } & \text {Prepare finaricial statements } \\ \text { III } & \text {Improve future strategies }\\\end{array}$

A) I and III only
B) II and III only
C) I and II only
D) I, II, and III

Question 52

Which of the following best describes the relationship between strategies and operating plans?

A) Operating plans are the same as strategies.
B) Strategies lead to operating plans.
C) Operating plans form the basis for strategies.
D) Strategies and operating plans are unrelated to one another.

Question 53

Steps in the post-sales service cycle of the value chain include:

A) Designing products and services
B) Building products and services
C) Identifying customer preferences
D) Providing customer service

Question 54

FPM's strategic plan includes the following statement: "We deliver high-quality and timely service to our internal and external customers." That statement is best described as a(n)

A) Specific performance objective
B) Operating plan
C) Mission statement
D) Strategy

Question 55

Steps in the innovation cycle of the value chain include:

A) Designing products and services
B) Building products and services
C) Delivering products and services
D) Providing customer service

Question 56

The steps and cycles in the value chain are most closely associated with which balanced scorecard perspective?

A) Customer
B) Internal business process
C) Financial
D) Learning and growth

Question 57

Which of the following measures would be least likely to be included in a balanced scorecard's learning and growth perspective?

A) Average training cost per employee
B) Percent of revenue from new products
C) Number of patent applications for new products
D) Rank in customer surveys

Question 58

Australia and New Zealand Banking Group Limited (ANZ) is the fourth largest commercial bank in Australia. ANZ assets total $46.1 billion, loans of $26 billion, and total deposits of $35.5 billion. It provides online, telephone, and traditional banking and investment services to both individuals and businesses in Australia. ANZ's mission is to create an exceptional customer experience internationally by providing solutions through leading technologies, offering a wide selection of financial products and services, and leveraging experience to meet customers' needs. Which of the following measures is least likely to be included in the financial perspective of ANZ's balanced scorecard?

A) Total loans outstanding
B) Profit margin
C) Prime interest rate offered
D) Total demand for deposits

Question 59

Which of the following measures would be least likely to be included in a balanced scorecard's customer perspective?

A) revenue growth by product line
B) Total operating income by product line
C) Customer satisfaction rating
D) Percent of repeat sales

Question 60

Australia and New Zealand Banking Group Limited (ANZ) is the fourth largest commercial bank in Australia. ANZ assets total $46.1 billion, loans of $26 billion, and total deposits of $35.5 billion. It provides online, telephone, and traditional banking and investment services to both individuals and businesses in Australia. ANZ's mission is to create an exceptional customer experience internationally by providing solutions through leading technologies, offering a wide selection of financial products and services, and leveraging experience to meet customers' needs. "Percent change in dollars spent on information technology" is most likely used in which balanced scorecard perspective?

A) Financial
B) Customer
C) Information technology
D) Internal business process

Question 61

In terms of motivation, one of the balanced scorecard's strengths is:

A) Aligning individual goals with organisational strategies
B) Convincing managers that the scorecard is more than a temporary fad
C) Improved financial performance
D) Having generally-defined objectives to increase motivation

Question 62

The balanced scorecard may be inappropriate for:

A) Motivating employees
B) Generating improved financial performance
C) Compensating employees
D) Improving communication

Question 63

Strengths of the balanced scorecard related to communication and linkages include: $\begin{array}{ll}\text { I } & \text { Encouraging clarification of vision and strategies} \\\text { I } & \text { Improving orgarisational conserisus } \\\text {III } & \text { Selecting measures that reflect the only strengths of the organisation }\end{array}$

A) I and III only
B) II and III only
C) I and II only
D) I, II, and III

Question 64

Strengths of the balanced scorecard can typically be summarised in three groups. Which of the following is not one of them?

A) Guidance for improvements
B) Motivation
C) Communication and linkages
D) Cost

Question 65

Balanced scorecard projects can motivate: I Employee effort
II Achievement of organisational strategies
III Managers to ignore biases and uncertainties

A) II and III only
B) I and II only
C) I and III only
D) I, II, and III

Question 66

Following are some of the steps in implementing a balanced scorecard. Which one of these steps would be performed last?

A) Collect and analyse scorecard data to monitor performance.
B) Clarify organisational vision and strategies.
C) Investigate variances and reward employees.
D) Establish action plans.

Question 67

In which order should the following steps be taken in implementing a balanced scorecard?
1 Develop links among the objectives of the organisation, divisions, departments, and individuals.
2 Provide feedback to employees and others.
3 Establish action plans and specific performance targets

A) 2, 1, 3
B) 3, 2, 1
C) 1, 2, 3
D) 1, 3, 2

Question 68

Australia and New Zealand Banking Group Limited (ANZ) is the fourth largest commercial bank in Australia. ANZ assets total $46.1 billion, loans of $26 billion, and total deposits of $35.5 billion. It provides online, telephone, and traditional banking and investment services to both individuals and businesses in Australia. ANZ's mission is to create an exceptional customer experience internationally by providing solutions through leading technologies, offering a wide selection of financial products and services, and leveraging experience to meet customers' needs. All of the following measures could be included in a balanced scorecard for ANZ. Which is the most subjective?

A) Employee turnover
B) Leadership competence
C) Revenue growth
D) Quality improvement costs incurred

Question 69

One of the strengths of the balanced scorecard is its ability to provide guidance for improvements. Those improvements can be related to: $\begin{array}{llcc} \text { I } & \text { Cost reductions} \\ \text { II } & \text { Employee morale } \\ \text { III } & \text {Decision making }\\\end{array}$

A) I and III only
B) II and III only
C) I and II only
D) I, II, and III

Question 70

Which of the following is an implementation mistake related to the balanced scorecard?

A) Linking objectives to strategies
B) Defining objectives in too general a manner
C) Beginning by clarifying organisational vision
D) Integrating vision and strategies into operations in a more complete manner

Question 71

The balanced scorecard implementation process begins with:

A) Developing measures for each perspective.
B) Hiring an outside consultant.
C) Selecting an implementation team.
D) Clarifying organisational vision.

Question 72

Each perspective of the balanced scorecard normally contains:

A) The same number of measures as the other perspectives
B) Four to seven performance measures
C) A single, comprehensive measure to limit information overload
D) Either input measures or outcome measures, but not both

Question 73

The first step in implementing a balanced scorecard is to clarify organisational vision, core competencies, and strategies. The vision:

A) Is another name for the organisation's strengths and weaknesses
B) Provides an explicit plan for daily operations
C) Provides an overall direction for the organisation
D) Should explicitly incorporate all core competencies

Question 74

Australia and New Zealand Banking Group Limited (ANZ) is the fourth largest commercial bank in Australia. ANZ assets total $46.1 billion, loans of $26 billion, and total deposits of $35.5 billion. It provides online, telephone, and traditional banking and investment services to both individuals and businesses in Australia. ANZ's mission is to create an exceptional customer experience internationally by providing solutions through leading technologies, offering a wide selection of financial products and services, and leveraging experience to meet customers' needs. ANZ could develop a balanced scorecard for: $\begin{array}{ll}\text { I } & \text { The organisation as a whole } \\\text { I } & \text { Individual branches } \\\text {III } & \text { Domestic branches only } \\\text { IV } &\text { International branches only }\end{array}$

A) II, III, and IV only
B) I, II, and IV only
C) I, II, and III only
D) I, II, III, and IV

Question 75

Weaknesses of the balanced scorecard include all of the following except:

A) Inability to clarify vision and strategies
B) Lack of employee support
C) Expensive and time-consuming implementation
D) Doubt about links among the perspectives

Question 76

Following are some of the steps in implementing a balanced scorecard. Which one of these steps would be performed before the others?

A) Communicate and refine measures.
B) Establish performance targets and action plans.
C) Collect and analyse scorecard data.
D) Develop performance measures and objectives.

Question 77

Australia and New Zealand Banking Group Limited (ANZ) is the fourth largest commercial bank in Australia. ANZ assets total $46.1 billion, loans of $26 billion, and total deposits of $35.5 billion. It provides online, telephone, and traditional banking and investment services to both individuals and businesses in Australia. ANZ's mission is to create an exceptional customer experience internationally by providing solutions through leading technologies, offering a wide selection of financial products and services, and leveraging experience to meet customers' needs. Internal business process measures on ANZ's balanced scorecard would likely include: $\begin{array}{llcc} \text { I } & \text { Average wait time per customer} \\ \text { II } & \text {Training and development costs per intemal employee} \\ \text { III } & \text { Cost per customer served }\\\end{array}$

A) I and III only
B) II and III only
C) I and II only
D) I, II, and III

Question 78

Common biases associated with balanced scorecard projects include: I $\text {Resistarice to charige from individuals}$
II $\text {The balanced scorecard process beirig viewed as a terrporary fad}$
III $\text {Periodic performarice reviews}$

A) I and III only
B) II and III only
C) I and II only
D) I, II, and III

Question 79

The first step in implementing a balanced scorecard is to clarify organisational vision, core competencies, and strategies. The strategies:

A) Are most effectively developed in a decentralised organisation
B) Provide guidance for achieving the vision
C) Are the core competencies of the organisation
D) Should explicitly incorporate all core competencies

Question 80

The steps for implementing a balanced scorecard:

A) Should be customised for individual organisations.
B) Should not vary if the implementation is to be effective.
C) Are different in for-profit and not-for-profit organisations.
D) Begin with developing measures in each perspective.