93. The perspective that defines the capabilities needed by the organization to create long-term improvement is
the
94. Which of the following would NOT be a core outcome measure for employee capabilities?
95. Which of the following would be considered a lead measure for employee capabilities?
96. The learning and growth perspective has three major objectives. Which of the following is an objective of
the learning and growth process?
97. Double-loop feedback occurs under what conditions?
98. Which of the following would not be an outcome measure?
99. The critical performance measures of the Balanced Scorecard have some special properties. Which of the
following is NOT one of those properties?
100. Failure of a strategy might be due to
101. A testable strategy is defined as
102. A testable strategy can be constructed
103. A strategy map
104. Double-loop feedback can be defined as
105. If only the return on investment were used to measure performance, it would be considered
106. A balanced scorecard is designed to bring about organizational change. Which of the following is a means
of alignment?
107. The balanced scorecard becomes a means of communicating the strategy of the organization to its
employees and managers. What might be a downside of communicating this information?
108. Which of the following is NOT a condition that must be present for a strategy to become attainable?
109. Performance expectations are communicated by setting
110. For purposes of strategic alignment, incentive compensation should be based upon
111. Compare and contrast activity-based measures and strategic-based measures.
112. Activity-based responsibility and strategic-based responsibility incorporate some of the same elements.
However, strategic-based responsibility adds some new elements to the common dimensions. What are the
elements in common and what new elements are included?
113. Activity-based evaluation and strategic-based evaluation incorporate some of the same elements. However,
strategic-based responsibility adds some new elements to the common dimensions. What are the elements in
common and what new elements are included?
114. Strategic-based performance measures are balanced measures. Give examples of four types of balanced
measures.
115. The following measures belong to one of four perspectives on the balanced scorecard:
1 Return on investment
2 Time to market
3 Number of new customers
4 Percentage of revenues from new sources
5 Quality costs
6 Employee productivity
Required:
a. Identify the perspective appropriate for each measure listed above.
b. Suggest a possible strategic objective that might be associated with each measure.
116. Mendocino Company would like to increase its operational efficiency. For the first quarter of operations
during the current year, the following data were reported:
Days
Inspection time
0.4
Process time
3.9
Move time
1.1
Wait time
4.9
Required:
a.
Compute the manufacturing cycle efficiency (MCE) for the quarter.
b.
If by use of JIT all wait time during production is eliminated, what will be the new MCE?
(round to two decimal places if necessary)
117. The following measures belong to one of four perspectives on the balanced scorecard:
1 Satisfaction of customer
2 Satisfaction of employees
3 Cycle time
4 Product cost per unit
Required:
a. Identify the perspective appropriate for each measure listed above.
b. Suggest a possible strategic objective that might be associated with each measure.
118. Montepulciano Industries is planning to change its manufacturing plant by automating and installing a
flexible manufacturing system. The company is also changing its performance measures as well as its operating
procedures. In an effort to evaluate performance and determine where improvements can be made, management
has gathered the following data relating to activities over the last four months:
Month
1
3
4
Quality Control Measures:
Number of defects
191
122
93
Number of warranty claims
56
33
29
Number of customer complaints
107
71
57
Material Control Measures:
Purchase order lead time
9 days
6 days
4 days
Scrap as a percentage of total cost
1%
3%
4%
Machine Performance Measures:
Percentage of machine downtime
2%
4%
7%
Use as a percentage of availability
96%
89%
87%
Setup time (hours)
6
10
13
Delivery Performance Measures:
Throughput time (days)
6.0
9.0
10.0
Delivery cycle time (days)
15.0
21.0
24.0
Manufacturing cycle efficiency
35.0%
21.1%
18.0%
Percentage on-time deliveries
97%
92%
84%
Total units
4,221
3,818
3,705
Many of these measures are new and the president has asked you to interpret the results. Throughput is the time it takes to turn materials into a
completed product. Delivery cycle time is the time between receiving an order and shipping the goods.
Required:
Using the performance measures given, do the following:
a.
Identify the areas where the company seems to be improving.
b.
Identify the areas where the company seems to be deteriorating.
a.
Areas where the company is improving:
b.
Areas of deterioration:
119. How does the Balanced Scorecard communicate strategy to the organization? How is strategy translated
into performance measures?
120. Why does the Balanced Scorecard differ from company to company? Whose responsibility is the
implementation?
121. Lionheart Manufacturing has a theoretical capability to produce 20,250 printers per quarter but currently
produces 10,125 printers. The conversion cost per quarter is $4,860,000. There are 6,750 production hours
available within the plant per quarter. In addition to the processing minutes per unit used, the production of
printers uses 12 minutes of move time, 8 minutes of wait time, and 10 minutes of rework time. (All work is
done by cell workers.)
Required:
a. Compute the theoretical and actual velocities per hour and the theoretical and actual cycle times
(minutes per unit produced).
b. Compute the ideal and actual amounts of conversion cost assigned to each printer.
c. Calculate the current MCE.
d. If poor employee training is the root cause of wait time and move time, develop an improvement
strategy as a series of if-then statements that will reduce the conversion cost per printer.
122. Tavarek Industries has the theoretical capability to produce 127,500 units per month but currently produces
102,000 units. The conversion cost for the month is $3,750,000. There are 8,500 production hours available
within the plant per month. In addition to processing time, to produce a unit takes 15 minutes of move time and
10 minutes of wait time.
Required:
1.
Compute the theoretical and actual velocities per hour
2.
Compute the theoretical and actual cycle times (minutes per unit produced)
3.
Compute the current MCE
127,500 / 8,500 = 15 units per hour
available
102,000 / 8,500 = 12 units per hour
60 / 15 = 4.00 minutes per copier
Actual cycle time = 60 minutes/ Actual velocity
60 / 12 = 5 minutes per copier
5.00 / (5.00 + 15 + 10) = .167
123. Barney’s Town is a local clothing store in New York. Barney’s Town has been experiencing increased
competition from the national clothing chains. In an effort to improve performance, management intends to
create a Balanced Scorecard. In a meeting, several measures were suggested by various managers.
Management has identified a key problem. Customers are taking too long to pay their department store’s charge
card bills, and the company has an abnormal amount of bad debts. If this problem were solved, the company
would have far more cash to invest in store improvements. Investigation has revealed that much of the problem
with late payments and unpaid bills is apparently due to disputes about incorrect charges on the customer bills.
Incorrect charges usually occur because sales clerks enter data incorrectly on the charge account slip.
The performance measures suggested by the managers are given below:
•
Total sales revenue
•
Sales per square foot of floor space
•
Sales to inventory ratio
•
Sales per employee
•
Sales to total assets
•
Customer satisfaction with accuracy of charge account bills from monthly customer survey
•
Customer wait time for service
•
Travel expenses for buyers’ trips
•
Average age of accounts receivable
•
Courtesy shown by junior staff members based on surveys of senior staff
•
Unsold inventory at the end of the season as a percentage of total cost of sales
•
Percentage of suppliers making just-in-time deliveries
•
Quality of food in the staff cafeteria based on staff surveys
•
Written-off accounts receivable as a percentage of sales
•
Percentage of charge account bills containing errors
•
Percentage of employees who have attended the city’s cultural diversity workshop
•
Total profit
•
Profit per employee
•
Percentage of salesclerks trained to correctly enter data on charge account slips
Required:
a.
Build an integrated Balanced Scorecard using only performance measures suggested by the managers. You do not have to use all the
measures, but build a Balanced Scorecard that reveals a strategy for dealing with the problems with accounts receivable and unsold
merchandise.
b.
Construct a testable strategy by showing the causal links (with arrows) between measures in the different perspectives, and show whether
the performance measure should show an increase or decrease.
c.
Assume that the company adopts the Balanced Scorecard. After operating for a year, there are improvements in some performance
measures but not in others. What should management do next?
Total profit
Average age of accounts receivable
Customer satisfaction with accuracy of charge account bills
Internal Processes:
Percentage of sales clerks trained to correctly enter data on charge
124. The Sand and Sun scuba resort recently changed owners. The new owners planned to upgrade the resort
into to a destination vacation resort by improving the lodging and the restaurant. Currently, the restaurant has a
limited menu of sandwiches and little competition because of its location. The current staff has been retained
and the new management held a meeting with the employees to develop a balanced scorecard that would guide
operations. All were enthusiastic about creating the scorecard and the new management’s plans for the resort.
The following measures were developed for an initiative that would improve the restaurant:
a. Resort sales
b Resort return on investment
c. Number of menu items
d. Dining area cleanliness
e. Customer satisfaction with menu choices through satisfaction surveys
f. Customer satisfaction with service through satisfaction surveys
g. Average time to take an order
h. Average time to prepare an order
i Percentage of the cooking staff completing a basic cooking course at the
community college
j. Percentage of restaurant staff completing a hospitality course at the
community college
Required:
1. For each measure, create a balanced scorecard (show the perspective, measure and measure)
indicate whether the performance measure should increase ( +) or
decrease (-).
2. Create a strategy map that links the performance measures.
3. What are the hypotheses built into the scorecard? Through if/then statements show how performance
will be improved.
4. How will management know if one of the hypotheses is false?
125. How can management communicate strategy? What are three methods for achieving strategic alignment?
What management failure can keep strategy from being actionable?