Deck 17: Strategic Performance Measurement

Question 1

Nonfinancial measures are typically not objective enough to serve as effective performance measures.

Answer 1

False

Question 2

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

Answer 2

True

Question 3

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

Answer 3

True

Question 4

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

Question 5

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

Question 6

Well-run organizations evaluate performance based only on financial measures because they are more objective than nonfinancial measures.

Question 7

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

Question 8

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

Question 9

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

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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

Question 15

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

Question 16

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

Question 17

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

Question 18

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

Question 19

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

Question 20

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

Question 21

The primary aim of the balanced scorecard is to:

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

Question 22

Financial measures used for organizational evaluation can pertain to:
I) Divisions
II) Product lines
III) Departments

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

Question 23

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

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

Question 24

The balanced scorecard approach to performance evaluation:
I) Is less time consuming and expensive than other approaches
II) Helps managers integrate strategies across divisions and functions
III) Assists managers in predicting possible future problems

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

Question 25

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

A)Qualitative factors
B)Financial measures
C)Nonfinancial measures
D)Core competencies

Question 26

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

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

Question 27

Financial and nonfinancial indicators are used to assess organizational performance and effectiveness under which of the following approaches?

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

Question 28

Components of organizational strategy include:

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

Question 29

An organizational vision is concerned with creating value for stakeholders, including
I) The community and society
II) Employees and suppliers
III) Customers and owners

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

Question 30

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

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

Question 31

Balanced scorecards can improve communication and consensus throughout an organization.

Question 32

FPM Corporation'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)Mission statement
B)Specific performance objective
C)Operating plan
D)Strategy

Question 33

An organization's core competencies are related to its strengths relative to competitors. Those strengths can include:
I) Productivity and skills
II) Reputation and legal rights
III) Mission and core purpose

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

Question 34

Managers consider a few general strategy types in their decision-making processes, including
I) Cost leadership
II) Product differentiation
III) Target costing

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

Question 35

Nonfinancial measures include:
I) Cost variances
II) Defect rates
III) Customer satisfaction surveys

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

Question 36

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

Question 37

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

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

Question 38

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

Question 39

Which of the following statements about performance evaluation is true?

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

Question 40

Analysis of the gaps between actual operations and performance objectives can be used to
I) Compensate employees
II) Prepare financial statements
III) Improve future strategies

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

Question 41

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

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

Question 42

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

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

Question 43

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

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

Question 44

The perspectives in a balanced scorecard:

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

Question 45

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

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

Question 46

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

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

Question 47

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

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

Question 48

The balanced scorecard's perspectives:

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

Question 49

Steps in the innovation cycle of the value chain include:

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

Question 50

The measures in a balanced scorecard are guided by:

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

Question 51

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

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

Question 52

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

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

Question 53

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

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

Question 54

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

Question 55

Steps in the operations cycle of the value chain include:

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

Question 56

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

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

Question 57

Which of the following statements is true?
I) Traditionally, internal operations were monitored to improve financial performance
II) In the balanced scorecard approach, monitoring for improvement is not valued
III) Managers believe that monitoring performance measures related to an organizations' learning and growth should lead to improvements in financial performance

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

Question 58

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

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

Question 59

Adoptions Inc.Org. (AIO)is a not-for-profit organization that facilitates adoptions of both domestic and international children. Since it opened, it has facilitated many adoptions of both Canadian born and International born children. "Percent of funding received from clients" would most likely be a measure in which perspective of AIO's balanced scorecard?

A)Innovation perspective
B)Financial perspective
C)Internal business process perspective
D)Employee development perspective

Question 60

Adoptions Inc.Org. (AIO)is a not-for-profit organization that facilitates adoptions of both domestic and international children. Since it opened, it has facilitated many adoptions of both Canadian born and International born children. Which of the following statements is true?

A)Because AIO is a not-for-profit organization, it cannot use the balanced scorecard effectively
B)AIO's balanced scorecard may include more than four perspectives
C)AIO's balanced scorecard should include only financial, customer, internal business, and learning and growth perspectives
D)Financial measures are irrelevant in AIO's balanced scorecard because it is a not-for-profit organization

Question 61

Strengths of the balanced scorecard related to communication and linkages include:
I) Encouraging clarification of vision and strategies
II) Improving organizational consensus
III) Selecting measures that reflect the only strengths of the organization

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

Question 62

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

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

Question 63

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

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

Question 64

The following information is based on a fictitious Canadian Bank (CB)and none of the numbers provided herein are real. CB assets total $46.1 billion, it has 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 Canada and abroad. CB's mission is to create an exceptional customer experience 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 perspective?

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

Question 65

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

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

Question 66

The following information is based on a fictitious Canadian Bank (CB)and none of the numbers provided herein are real. CB assets total $46.1 billion, it has 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 Canada and abroad. CB's mission is to create an exceptional customer experience 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 CB's balanced scorecard?

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

Question 67

Each perspective of the balanced scorecard normally contains:

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

Question 68

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

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

Question 69

One of the strengths of the balanced scorecard is its ability to provide guidance for improvements. Those improvements can be related to:
I) Cost reductions
II) Employee morale
III) Decision-making

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

Question 70

The following information is based on a fictitious Canadian Bank (CB)and none of the numbers provided herein are real. CB assets total $46.1 billion, it has 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 Canada and abroad. CB's mission is to create an exceptional customer experience 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 CB's balanced scorecard would likely include:
I) Average wait time per customer
II) Training and development costs per internal employee
III) Cost per customer served

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

Question 71

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

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

Question 72

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

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

Question 73

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

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

Question 74

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

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

Question 75

The following information is based on a fictitious Canadian Bank (CB)and none of the numbers provided herein are real. CB assets total $46.1 billion, it has 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 Canada and abroad. CB's mission is to create an exceptional customer experience 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 CB. Which is the most subjective?

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

Question 76

The balanced scorecard implementation process begins with:

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

Question 77

Adoptions Inc.Org. (AIO)is a not-for-profit organization that facilitates adoptions of both domestic and international children. Since it opened, it has facilitated many adoptions of both Canadian born and International born children. Upon completion of an adoption process, AIO's clients complete a questionnaire regarding their experience. The results of that questionnaire would most likely be summarized and reported as a part of which of the following perspectives?

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

Question 78

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

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

Question 79

The following information is based on a fictitious Canadian Bank (CB)and none of the numbers provided herein are real. CB assets total $46.1 billion, it has 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 Canada and abroad. CB's mission is to create an exceptional customer experience by providing solutions through leading technologies, offering a wide selection of financial products and services, and leveraging experience to meet customers' needs. CB could develop a balanced scorecard for:
I) The organization as a whole
II) Individual branches
III) Domestic branches only
IV) International branches only

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

Question 80

The steps for implementing a balanced scorecard:

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