MGMT 371 CHAPTER 10

Is it relevant?

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?

Value propositions

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

false

While a business is in the harvest stage, investment outweighs profitability. a. True b. False

true

The control cycle helps to make high level strategy more concrete by breaking it down into operational objectives. a. True b. False

true

The control cycle includes a mechanism to improve a business's response to the external environment, known as strategic control. a. True b. False

false

Benchmarking involves allocating and measuring expected quantitative and qualitative outcomes of a firm. a. True b. False

true

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

Customer profitability

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

true

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

true

Interactive control systems promote continuous communication between managers and subordinates throughout the entire organization. a. True b. False

true

Internal business processes are important because they represent the day-to-day operations that deliver products and services to customers. a. True b. False

they represent the day-to-day operations that deliver products and services to customers.

Internal business processes are important because: a. they are the quantitative and qualitative things that customers value most. b. they link key customer-based metrics such as market share to the financial performance of a firm. c. they focus mainly on choosing the financial measurements that are important for reaching strategic goals. d. they represent the day-to-day operations that deliver products and services to customers.

false

Market share of target customers may increase at the same time there is an increase in non-target markets, showing that the company is not meeting strategic objectives. a. True b. False

Learning and growth perspective

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

total cycle time

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

true

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

learning and growth

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

balanced scorecard

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

behavior is controlled at the unit or department level.

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.

behavior is controlled at the local level.

The factor that differentiates behavior and output is that: a. outputs include the decisions of individual employees. b. behavior is controlled at the local level. c. outputs are more flexible and diverse. d. behavior can be specified for an entire organization.

using job swap as a means of benchmarking.

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.

Six Sigma

____ 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

ISO 9000

_____ 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

balanced scorecard

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

Economic value added refers to a measure of the value a company provides to its shareholders.

Which of the following statements is true about the financial perspective of a balanced scorecard? a. Economic value added refers to a measure of the value a company provides to its shareholders. b. During the growth stage, profitability outweighs investment. c. When an organization introduces a new product, business is in the sustain phase. d. The harvest stage is the stage of business where the company is investing and extracting money.

Some companies find it valuable to monitor the amount customers spend on their products relative to all other products.

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.

Measurement

_____ 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

Strategic control

_____ is the process of recalibrating or confirming a firm's strategy in light of changes in the external environment. a. Strategic positioning b. Value chain analysis c. Strategic control d. Benchmarking

Control cycle

_____ 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

Take corrective action.

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.

false

Measuring drivers without outcomes leads to confusion and wasted resources. a. True b. False

Fulfilling customer needs

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

Learning and growth perspective

Which of the following perspectives refers to the framework that identifies the infrastructure and skills needed to carry out business processes, interact with customers, and achieve long-term financial growth? a. Internal business process perspective b. Customer perspective c. Learning and growth perspective d. Financial perspective

Balanced scorecard can be adapted to align with unique company goals.

Which of the following statements about the balanced scorecard is true? a. Balanced scorecard can be adapted to align with unique company goals. 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.

need to create a unique balanced scorecard for each of its business units.

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.

Financial perspective

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

growth stage

ColorZone, a cosmetics manufacturing company, introduced a new range of cosmetics targeting the younger population. The company spent a lot on advertisements in an attempt to reach more customers and increase sales. However, the money invested on promotion overweighed the sales profit in the initial months. From this scenario it can be inferred that the company is in the _____ of business. a. final phase b. growth stage c. strategic phase d. harvest stage

true

For the balanced scorecard to be valuable, measurements from the customer perspective must link directly to financial results. a. True b. False

false

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

behavior and outputs

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.

high performance

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

Account share

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

activity-based costing.

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.

false

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

0.039; 0.027; 0.023; weak but improving

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

2.56; 2.53; 2.46; strong and improving slightly

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

0.47; 0.46; 0.45; weak and deteriorating slightly

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

0.038; 0.026; 0.022; weak but improving

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

Benchmarking

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

Customer perspective

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

It helps to make high level strategy more concrete and tangible.

Which of the following is a main function of a control cycle? a. It improves the skills of employees needed to carry out business processes. b. It helps managers create a set of quantitative measurements that are unrelated. c. It helps to make high level strategy more concrete and tangible. d. It enables employees to identify gaps in capabilities or resources.

Six Sigma

Which of the following is one of the most important internal business process measures? a. On-base percentage b. Activity-based costing c. Six Sigma d. Return on equity

Identifying the processes to benchmark

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

Its facilitation of communication about strategy throughout an organization

Which of the following is the most valuable benefit of the balanced scorecard? a. Its usefulness in creating the vision, mission, and objectives of a firm b. Its creation of a strong culture which provides role clarity to employees c. Its facilitation of communication about strategy throughout an organization d. It flexibility toward employees allowing them to make their own decisions

It helps managers create a set of quantitative and qualitative measurements that are related and mutually reinforcing.

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.