Chapter 28 - Homework

Which of the following terms defines and links strategic objectives to the performance metrics of a company? A) Performance paradox B) Strategic performance measurement system C) Strategic performance operational analysis D) None of the above

B) Strategic performance measurement system

Henry's Cafe is a local restaurant that is growing quickly. While the company does not yet have a balanced scorecard, Henry has mentioned that being efficient in producing meals is a high priority of his business and appears to be a significant driver of profits. Henry tells you he gathers the following data: sales, cost of labor, employee turnover, labor hours, cost of ingredients, overhead costs, average training hours per employee, number of erroneous meals prepared, the time when orders were made (e.g., at 12:43 pm), the time when orders were delivered, and number of customers per day. a. Under which performance perspective on the balanced scorecard should Henry's strategic objective to efficiently produce meals be placed?

Internal processes

__________ are often used as metrics for measuring a purchasing department's performance. a) Material price variances b) Return on investments c) Residual incomes d) None of the above

a) Material price variances

In the context of cognitive biases, __________ is the tendency for a person to see what they want to see in data. a) motivated reasoning b) surrogation c) common measures bias d) None of the above

a) motivated reasoning

A __________ defines the purpose of an action taken within a company. a) strategic objective b) strategic initiative c) strategy map d) performance metric

a) strategic objective

When corporate social responsibility (CSR) activities involve ensuring the ability to meet current needs without compromising the ability of future generations to meet their needs, the CSR activities are referred to as __________. a) sustainability efforts b) fleeting endeavors c) growth efforts d) utilitarian endeavors

a) sustainability efforts

Which of the following terms refers to a form of CSR information that helps managers evaluate the savings generated by using fewer natural resources in a company's operations? a) Eco-sustainability diffusion b) Eco-efficiency measure c) Eco-innovation diffusion d) Eco-development measure

b) Eco-efficiency measure

In the context of performance perspectives, performance in the __________ perspective focuses on operational efficiencies. a) financial b) customer c) learning and growth d) internal processes

d) internal processes

c. Identify whether the performance metrics you suggested in part (b) are leading or lagging indicators relative to a performance metric "total cost of production per meal." Performance MetricType of IndicatorMinutes from ordered to deliveredLeading Labor hours per mealLeading Number of erroneous meals prepared per hourLeading Cost of ingredients per mealLeading Number of meals produced per hour

leading leading leading leading leading

The balanced scorecard for a service company American Express Company is a major financial services company noted for its American Express® card. Some of the performance measures used by the company on its balanced scorecard are listed below. For each measure, identify whether the measure best fits the learning and growth, internal processes, customer, or financial performance perspective of the balanced scorecard. Performance MetricPerformance PerspectiveAverage card member spending Number of Internet features Cards in force Number of merchant signings Earnings growth Number of new card launches Hours of credit consultant training Return on equity Investment in information technology Revenue growth Number of card choices

CUSTOMER INTERNAL PROCESSES INTERNAL PROCESSES CUSTOMER FINANCIAL LEANRING AND GROWTH LEARNING AND GROWTH FINANCIAL LEARNING AND GROWTH FINANCIAL LEARNING AND GROWTH

Possible Balanced Scorecard MeasuresPerformance PerspectiveAverage meal priceFinancial Number of meals purchasedCustomer Online customer review ratingsCustomer Number of customer complaintsCustomer Average employee wageInternal processes Average training hours per new employeeLearning and growth Quality ratings of ingredients suppliersInternal processes Gross profitFinancial Profit marginFinancial Number of unique meals on the menuLearning and growth

Financial customer customer customer internal processes learning and growth internal processes financial financial Leraning and growth

b). Identify the common metrics for both the departments in the new unique scorecards. a. Employee training hours and employee performance b. Number of back orders and discrepancies in physical and record counts c. CSR ratings for Forbes and number of new customers d. None of the above

a. Employee training hours and employee performance

Cognitive biases Two departments within Cougar Gear Inc. are Production and Sales. Each department has a unique scorecard, as follows: The Production Department scorecard focuses on the learning and growth and internal processes perspectives. The Sales Department scorecard focuses on the learning and growth and customer perspectives. Both scorecards have the learning and growth performance metrics of median training hours per employee and average employee tenure. The Production scorecard has the unique metrics of production time per unit and number of production shutdowns. The Sales scorecard has the unique metrics of percentage of customers who shop again and online customer satisfaction rating. The performance targets for each metric are shown in the tan boxes just under the performance metrics. The actual achieved metrics are shown in the red boxes just below the tan boxes. When evaluating both departments, Cougar Gear's management looks at the median training hours per employee and average employee tenure metrics and subsequently decides to give the Sales Department a large bonus while giving the Production Department a minimal bonus. a. Identify the cognitive bias in the given situation. a. The common measure for both the department employees b. The unique measure restricted to the departments c. Importance given to the unique metrics than the common metrics d. None of the above

a. The common measure for both the department employees

b. From the given balanced scorecard, identify the overall strategic objective of the company. a. To increase the profitability of the business b. To be a company with more social responsibilities c. To improve the welfare of the company d. To start up new units of the company

a. To increase the profitability of the business

Strategy maps Grand Grocery developed a balanced scorecard with six strategic objectives under the standard four performance perspectives, as follows: a. Using the given balanced scorecard, identify the strategic map or relationship among the performance perspective. a. Train employees - improve employee satisfaction - improved inventory management - reduce receiving errors - improved customer service - increase profits. b. Improve employee satisfaction - increase profits. c. Improve inventory management - train employees - increase profits. d. Improve customer service - improve employee satisfaction.

a. Train employees - improve employee satisfaction - improved inventory management - reduce receiving errors - improved customer service - increase profits.

Which of the following are examples of a capital investment in a CSR objective? a) A mining company invests in new drills and mining equipment. b) A paper mill invests in wastewater recycling to avoid the potential legal liability for river contamination. c) A software company contributes to an educational fund for opportunity youth. d) A shipping company donates a portion of the annual profits to the building of safe and affordable homes for those disadvantaged by natural disasters.

b) A paper mill invests in wastewater recycling to avoid the potential legal liability for river contamination.

The __________ is the best-known strategic performance measurement system. a) action-profit linkage (APL) b) balanced scorecard (BSC) c) performance prism d) Cambridge performance measurement process

b) balanced scorecard (BSC)

For a company's strategic objective to increase profits, management measures (tracks) market share and operating profit. Therefore, market share and operating profit are the company's __________. a) measure maps b) performance metrics c) performance perspectives d) strategy maps

b) performance metrics

In the context of cognitive biases, __________ is the tendency to behave like the performance metrics are the strategic objectives a) the common measures bias b) surrogation c) motivated reasoning d) None of the above

b) surrogation

Which of the following statements is true about corporate social responsibility (CSR)? a) CSR activities have always been thought of as a concern for companies and their management. b) The popularity of CSR efforts has decreased in the recent years. c) CSR activities exclude far-reaching issues such as reducing global poverty and protecting the environment. d) Recruiters often use CSR activities to hire top talent interested in making a difference beyond the traditional financial results.

d) Recruiters often use CSR activities to hire top talent interested in making a difference beyond the traditional financial results.

eBook Print Item Unique balanced scorecards Coulson and Company is a large retail business that has a firm-wide balanced scorecard. Recently, management has discussed the need for the balanced scorecard to be more relevant to each individual department of the company. Specifically, management wants to come up with unique scorecards for its Public Relations and Inventory Management departments. For both departments, management recognizes that properly and efficiently training employees is important. For these purposes, management gathers data on the median training hours per employee and new employee performance review ratings. For the Inventory Management Department, management is focused on reducing stockouts (running out of certain inventory items) and keeping accurate inventory counts. For these purposes, the company tracks the number of back orders and discrepancies between the physical and record counts of inventory, respectively. For the Public Relations Department, management is focused on improving the public's CSR image of the company and attracting new customers. Management measures these objectives using Forbes CSR Rating of Coulson and Company and the number of new customers, respectively. a). Identify a name that suits the scorecard of the public relation and inventory management departments. a. Unique scorecard b. Cascading scorecard c. Performance scorecard d. Improvement scorecard

b. Cascading scorecard

Identify the unique metrics of inventory management department. a. Employee training hours and employee performance b. Number of back orders and discrepancies in physical and record counts c. CSR ratings for Forbes and number of new customers d. None of the above

b. Number of back orders and discrepancies in physical and record counts

b. Identify the department that performs well. a. Production department b. Sales department c. Production and sales department d. Overall the company

b. Sales department

__________ are used by management to assess how well employees or units within a company meet the company's goals and objectives. a) Corporate social responsibility measures b) Eco-efficiency measures c) Performance measurement systems d) Reward and recognition systems

c) Performance measurement systems

When managers compare the performance of divisions within a company, they may ignore performance metrics that are unique to individual divisions. Instead managers may focus on prevalent performance metrics for all divisions. This bias is called the __________. a) surrogation b) motivated reasoning c) common measures bias d) None of the above

c) common measures bias

In the context of the objectives of performance perspectives, performance in the __________ perspective focuses on traditional accounting measures. a) customer b) internal processes c) financial d) learning and growth

c) financial

Identify the unique metrics for the public relations department. a. Employee training hours and employee performance b. Number of back orders and discrepancies in physical and record counts c. CSR ratings for Forbes and number of new customers d. None of the above

c. CSR ratings for Forbes and number of new customers

Identify the disadvantage of having a unique scorecard. a. There is no such advantage of having a unique scorecard. b. The number of employees and their level of training are common metrics which may affect the performance metric of the company. c. The performance of the different divisions cannot be compared with the other divisions. d. The company can accurately measure the performance of the departments.

c. The performance of the different divisions cannot be compared with the other divisions.

Which of the following statements is true? a) For a capital investment in a CSR proposal to be accepted, the value of the investment must be equal to the present value of the projected cash flows. b) If the projected cash outflow of the investment proposal equals the existing cost outflow, the CSR investment proposal can be accepted. c) A CSR proposal is accepted if the total annual cash flow is greater than the CSR investment. d) CSR investments that are legally mandated are justified by the requirements of the law rather than their immediate economic benefits.

d) CSR investments that are legally mandated are justified by the requirements of the law rather than their immediate economic benefits.

Athena Books Company is contemplating the installation of a wastewater recycling system. The amount to be invested in this system is $400,000. The system is expected to last 8 years and has no salvage value. Which of the following situations supports the installation of the recycling system? Assume the present value factor for an annuity of $1 at 10% for 8 periods is 5.3349 and the present value factor for $1 at 10% for 8 periods is 0.4665. a) The total cash flow savings expected from the recycling system is $700,000. b) The annual maintenance cost for the system is $40,000. c) The annual maintenance cost for the system is equal to the cost of the existing water system. d) The recycling system will yield a savings of $78,000 per year.

d) The recycling system will yield a savings of $78,000 per year.

Using the given balanced scorecard, identify the performance perspectives of the company. a. Learning and growth perspective b. Customer and internal processes c. Financial perspectives d. All the above

d. All the above

b. If the employees are provided with proper training, what are the possible outputs or changes in the strategic perspectives? a. Improved employee satisfaction b. Improved management of inventory and reduction in errors c. Improved customer services and increased profits d. All the above

d. All the above

a. Using the given balanced scorecard, identify the strategic initiatives of the company. a. Retaining the top employees b. Improving the talent acquisition process c. Retain the new customer d. Automated warehousing facility

d. Automated warehousing facility

c. Identify the advantage of having a unique scorecard. a. There is no such advantage of having a unique scorecard. b. The number of employees and their level of training are common metrics which may affect the performance metric of the company. c. The performance of the different divisions cannot be compared with another. d. The company can accurately measure the performance of the departments.

d. The company can accurately measure the performance of the departments.

b. Identify the performance metrics that the owner should concentrate on to measure the strategic objective of producing efficient meals. a. Minutes from ordered to delivered b. Labor hours per meal c. Number of erroneous meals prepared per hour d. Cost of ingredients per meal and the number of meals per hour e. All the above.

e. All the above.