Deck 10: Performance Management

Question 1

 When Dharmesh Shah, the chief technology officer (CTO) of HubSpot.com, traded jobs with Paul English, the CTO of Kayak.com, he was

A) implementing the internal business perspective of the balanced scorecard.
B) using job swap as a means of benchmarking.
C) using job swap as a means of budgeting.
D) using job swap as a means of implementing Six Sigma. 

Answer 1

B

Question 2

 The managers of Z-Cosmetics, after identifying key measurements, decided to set performance targets for their business. In order to fulfill the purpose, they adopted a process that required management to collect data from Color Cosmetics, a leading manufacturer in the industry. The managers of Z-Cosmetics believed that adopting the best practices across the industry would help them achieve their goals more effectively. Identify the process used by Z-Cosmetics to set performance targets.

A) Activity-based costing
B) Benchmarking
C) Total Quality Management
D) Budgeting

Answer 2

B

Question 3

 Because GE operates in many businesses, ranging from aircraft engines to healthcare imaging, GE would

A) not be able to use the balanced scorecard.
B) have to adopt a common strategy for all businesses to be able to use the balanced scorecard.
C) need to create a unique balanced scorecard for each of its business units.
D) have to choose one business unit with which it could use the balanced scorecard.

Answer 3

C

Question 4

 In business, only two things can be observed, measured, and monitored:

A) suppliers and customers.
B) behavior and outputs.
C) resources and growth.
D) employee satisfaction and loyalty.

Question 5

 The _____ was created to help businesses translate strategy into action by identifying the most critical measures to drive business success and linking long-term strategic goals with short-term operational actions.

A) ISO 9000 program
B) strategic review process
C) balanced  scorecard
D) value chain analysis

Question 6

 Which of the following refers to the quantitative and qualitative aspects of products or services that customers value most?

A) Financial economies
B) Core competencies
C) Value propositions
D) Internal business processes

Question 7

 Which of the following questions should the managers address as they design control systems?

A) What it is?
B) Who should design?
C) How to design?
D) Is it relevant?

Question 8

 _____ refers to a four-stage process that provides the mechanisms and systems that monitor the transformation process, ensuring that outputs are produced to the desired quality, quantity, and specification of an organization and its customers.

A) Control cycle
B) Trend analysis
C) Scenario building
D) SWOT analysis

Question 9

 Which of the following is the first step involved in benchmarking?

A) Harvesting and analyzing data
B) Finding the best companies for each process
C) Identifying the processes to benchmark
D) Creating plans for improvement

Question 10

 New Skin, a cosmetics company, is focused on innovation and new product introduction. New Skin will place heavy emphasis on which perspective of the balanced scorecard?

A) Financial perspective
B) Customer perspective
C) Business process perspective
D) Learning and growth perspective

Question 11

 The accounting system used to assess the specific cost components of producing a product or service is known as

A) economic value added.
B) return on equity.
C) activity-based costing.
D) economies of scale.

Question 12

 Which of the following balanced scorecard perspectives is used by managers to identify the company's most important customers and how well the company is doing in meeting customers' needs?

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

Question 13

 DePaul Company has been monitoring the performance of its processes against selected measures. What is DePaul's next step in the control cycle?

A) Identify measures that track the right information to assess performance.
B) Set targets for the selected measures.
C) Take corrective action.
D) Set up a balanced scorecard.

Question 14

 Rowling Company is monitoring the amount customers spend on its products relative to all other products. Rowling is focused on which of the various customer metrics?  

A) Market share
B) Customer retention
C) Customer profitability
D) Account share

Question 15

 Downing Company is studying the costs required to attract new customers compared to the lifetime profitability of certain types of customers before it decides which new customers to target. Downing is focused on which of the various customer metrics? 

A) Customer retention
B) New customer acquisition
C) Customer profitability
D) Market share

Question 16

 The _____ perspective identifies the infrastructure and skills needed to carry out business processes, interact with customers, and achieve long-term financial growth.

A) customer
B) learning and growth
C) financial
D) business process

Question 17

 Which of the following statements is true about the various customer metrics?

A) The new customer metric is measured by the total number of positive feedbacks received from new and existing customers.
B) Some companies find it valuable to monitor the amount customers spend on their products relative to all other products.
C) Retaining existing customers to maintain or increase market share is not an easy task.
D) Customer satisfaction is one of the metrics that is the most objective and quantitative.

Question 18

 Which of the following statements about the balanced scorecard is true?

A) It helps managers create a set of quantitative and qualitative measurements that are related and mutually reinforcing.
B) It does not enable managers to make any qualitative measurements.
C) A company with many business units needs only a single balanced scorecard.
D) Company mission plays an instrumental role in the balanced scorecard.

Question 19

 The factor that differentiates behavior and output is that

A) outputs include the decisions of individual employees.
B) behavior is controlled at the unit or department level.
C) outputs are more flexible and diverse.
D) behavior can be specified for an entire organization.

Question 20

 Cardinal Company is using cost of goods sold as a measurement of performance, which will be placed under which perspective of the balanced scorecard?

A) Financial perspective
B) Customer perspective
C) Business process perspective
D) Learning and growth perspective

Question 21

 What is a balanced scorecard? Briefly describe its perspectives.

Question 22

 Organizations that focus solely on performance without a focus on support tend to produce burnout contexts. 

Question 23

 Discuss TQM, Six Sigma, and ISO 9000.

Question 24

 Describe the two primary areas in which leaders take corrective action.

Question 25

 The following selected data come from Celebration Company's balance sheets over three recent years. Based on the data, what is Celebration's debt ratio for each of the three years, and do the ratios show deterioration or improvement in Celebration's leverage? Assume that the industry average is 0.30 or 30%. 

A) ?2.12; 2.17; 2.22; strong but deteriorating slightly
B) 0.39; 0.40; 0.41; weak but improving slightly
C) 2.56; 2.53; 2.46; strong and improving slightly
D) 0.47; 0.46; 0.45; weak and deteriorating slightly

Question 26

 _____ is defined as the process of evaluating behaviors and outputs to see whether standards have been met or objectives have been obtained.

A) Benchmarking
B) Measurement
C) De-escalation
D) Strategic control

Question 27

 Describe benchmarking.

Question 28

 The following selected data come from Celebration Company's income statements over three recent years. Based on the data, what is Celebration's profit margin for each of the three years, and do the ratios show deterioration or improvement in Celebration's profitability? Assume the industry average is 0.065 or 6.5%. 

A) ?0.039; 0.027; 0.023; weak but improving
B) 0.39; 0.40; 0.41; weak but improving slightly
C) 0.038; 0.026; 0.022; weak but improving
D) 0.35; 0.34; 0.32; weak and deteriorating slightly

Question 29

 _____ is an international control mechanism that pursues high-quality products by ensuring high-quality processes.

A) ISO 9000
B) Benchmarking
C) Six Sigma
D) Total Quality Management

Question 30

 _____ is a quantitative approach that uses a method known as DMAIC, which stands for define, measure, analyze, improve, and control.

A) Benchmarking
B) Six Sigma
C) Budgeting
D) Total Quality Management

Question 31

 One of the more important measurements of TQM is _____, defined as the amount of time required to develop and deliver products and services to the customer. 

A) total cycle time
B) benchmarking
C) Six Sigma
D) leverage

Question 32

 The following selected data come from Celebration Company's balance sheets over three recent years. Based on the data, what is Celebration's current ratio for each of the three years, and do the ratios show deterioration or improvement in Celebration's liquidity?

A) ?2.12; 2.17; 2.22; strong but deteriorating slightly
B) 0.39; 0.40; 0.41; weak but improving slightly
C) 2.56; 2.53; 2.46; strong and improving slightly
D) 0.47; 0.45; 0.43; weak and deteriorating slightly

Question 33

 ISO 9000 is a program that focuses on improving the firm's products but not the processes involved.

Question 34

 The balanced scorecard promotes competition and reveals best practices so that they can be analyzed, adopted, and implemented throughout an industry.

Question 35

 For the balanced scorecard to be valuable, measurements from the customer perspective must link directly to financial results or strategic goals.

Question 36

 Which of the following is the ultimate goal of Total Quality Management?

A) Producing sustainable revenue
B) Setting strategic priorities
C) Fulfilling customer needs
D) Improving employee performance

Question 37

 Organizations that emphasize performance metrics with a focus on support and trust will tend to produce _____ contexts.

A) country club
B) high performance
C) low performance
D) burnout

Question 38

 The following selected data come from Celebration Company's balance sheets and income statements over three recent years. Based on the data, what is Celebration's return on assets for each of the three years, and do the ratios show deterioration or improvement in Celebration's profitability? Assume that the industry average is 0.075 or 7.5%. 

A) ?0.039; 0.027; 0.023; weak but improving
B) 0.39; 0.40; 0.41; weak but improving slightly
C) 2.56; 2.53; 2.46; strong and improving slightly
D) 0.47; 0.46; 0.45; weak and deteriorating slightly

Question 39

 Explain the four key activities of the control cycle.

Question 40

 Budgeting involves allocating financial resources and measuring expected quantitative and qualitative outcomes of a firm.