Chapter 2, Problem 4DQ

(a)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of on-time delivery to customers would belong.

Concept Introduction: Balanced scorecard is a very popular management tool used by many organizations globally. It helps in clarifying and communicating an organization’s strategic priorities and objectives under four main areas known as perspectives. These perspectives focus on financial as well as non-financial goals the business intend in reaching. Financial perspective, customer perspective, internal process perspective and learning and growth perspectives are the four areas aforesaid.

Explanation of Solution

On time deliveries to customers comes under the customer perspective of the balanced scorecard. The emphasis of this perspective is on performance objectives that focus on the market and the customers of the business. Aspects such as customer service and satisfaction, market share and brand awareness is being focused upon within the customer perspective. It is important that businesses understand that reaching non-financial goals such as this is instrumental in reaching their financial goals. There is a higher tendency within the current business context where the customer expectations are looked into much depth, in providing exactly what the customers expect.

(b)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of developing the next generation of products would belong.

Concept Introduction:

Balanced scorecard could be considered as one of the most popular management tools used within the day. The tool under four main focus areas, clarifies and communicates the strategic priorities and objectives of a firm. These areas are commonly known as the perspectives and are formulated under financial and non-financial measurement guidelines. Financial, customer, internal process and learning and growth are the said perspectives.

Explanation of Solution

Developing the company’s next generation of products would fall under the perspective of learning and growth. In reaching predetermined goals, organizations must ensure that they keep up with the current trends of the market. In doing so, learning and growth plays a much prominent role. Through learning, the growth of the organization is made easier. It is important that companies update their portfolio of products in order to suit the needs and wants of the current customer. Via learning and growth, organizations may come up with innovations that might take them way ahead of competition.

(c)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of manufacturing yield would belong.

Concept Introduction:

Among the popular management tools widely used by organizations of the day, balanced scorecard is a key tool. It focuses on clarifying and communication the strategic priorities and objectives of the firm under four main quadrants namely the perspectives. These perspectives emphasise on reaching the organization’s financial and non-financial goals. Together with the financial perspective, customer perspective, internal process perspective and learning and growth perspective make up the four quadrants.

Explanation of Solution

Manufacturing yield would fall under the perspective of internal processes. It simply means the productivity of the manufacturing operation within a firm. The processes needed to deliver a superior product to the customer that in turn shall earn a profit for the organization is focused upon in this perspective. In other words, the operational aspects that need to be in place to drive organizational performance is being emphasised here. Aspects such as process improvements, quality optimization and capacity utilisation would ideally be included under the perspective of internal processes.

(d)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of engineering efficiency would belong.

Concept Introduction:

There are a number of management tools widely used by organizations worldwide, out of which, balanced scorecard is much popular. It is being used in clarifying and communicating the strategic priorities and objectives of the firm. This is being done with focus on four main areas known as the perspectives. These perspectives represent financial and non-financial goal of the firm. Financial, customer, internal processes and learning and development are the four perspectives mentioned above.

Explanation of Solution

Engineering efficiency would fall under the perspective of internal processes. Engineering efficiency simply refers to the ratio between the energy needed to power up a process and the energy created by the said process. The higher the engineering efficiency, the higher the productivity of the process. As the internal processes perspective focuses on aspects such as process improvements, quality optimization and capacity utilization, engineering efficiency would be of greater relevance. Engineering efficiency could be the result of a process improvement which would in turn create optimization of quality as well as sound utilization of capacity.

(e)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of quarterly sales growth would belong.

Concept Introduction:

Among the popular management tools used by many organizations worldwide, balanced scorecard holds a prominent place. This popularity is due to the tool focusing on financial as well as non-financial aspects that are important to a firm in reaching its goals. These aspects are commonly known as perspectives within the tools and they are instrumental in clarifying and communicating the strategic priorities and objectives of the firm. Financial goals are being addressed under the financial perspective while the non-financial goals are being dealt with by the perspectives of customer, internal processes and learning and growth.

Explanation of Solution

The growth in quarterly sales would ideally fall under the financial perspective. Profit maximization is one of the key objectives of any firm and sales is the main source where income is being generated. Any objective related to the organization’s financial performance and

health would come under this perspective. Aspects such as cost savings and efficiencies, profit margins and revenue sources are directly related to the financial goals of a firm and hence shall belong here.

(f)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of percentage of products that equal to seventy percent of sales would belong.

Concept Introduction:

Organizations within the day use a number of management tools in obtaining a comprehensive insight of their operations. Balanced scorecard is one such tool that is much popular. It focuses on the financial as well as non-financial performance indications of a firm under four main areas, which are known as perspectives. These perspective are instrumental in clarifying and communicating the strategic priorities and objective of the firm to its stakeholders. Financial, customer, internal processes and learning and growth are the four perspectives that make up a balanced scorecard.

Explanation of Solution

The percentage of products that equal to seventy percent of sales would fall under the financial perspective. From the product portfolio of the firm, the set of products that would be equal to seventy percent of sales would ideally be the highest selling and thus highest earning ones. The financial perspective under the balanced scorecard focuses on areas such as cost savings and efficiencies, profit margins and revenue sources. These aspects directly address the financial health as well as performance of a firm. The attainment of financial objectives could be considered the main focus of any firm operating within a much competitive environment.

(g)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of cash flow would belong.

Concept Introduction:

Out of the tools used by organizations in obtaining a better view of their operations, balanced scorecard is key, as it includes financial as well as non-financial focus areas. These areas are commonly known as the perspectives and are instrumental in clarifying and communicating the strategic priorities and objectives of the firm. Financial perspective, customer perspective, internal processes perspective and learning and growth perspective are the four quadrants mentioned above.

Explanation of Solution

Cash flow would ideally fall under the financial perspective of the balanced scorecard. Cash flow of a business could be considered the core of its financial elements. For most of the organizations, money comes before anything else. Be it a profit oriented business or otherwise, cash flow is essential to keep the business running. Any aspect that would directly impact upon the financial health and performance of a business would come under the financial perspective. Further, aspects such as cost savings and efficiencies, profit margins and revenue sources would be key financial indicators of a business.

(h)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of number of customer partnerships would belong.

Concept Introduction:

Balanced scorecard is a much popular management tool widely used by many organizations around the world, as it provides a comprehensive view of the organizational performance from many angles. These angles are typically known as perspectives and they provide a financial as well as non-financial view of the operations that are helpful in clarifying and communication the strategic priorities and objectives of the firm. The said perspectives include elements such as financials, customers, internal processes as well as learning and growth.

Explanation of Solution

The number of customer partnerships of a business would fall under the customer perspective of the balanced scorecard. A customer partnership is a situation where a relationship is formed between the customer and the business based on known facts and for the benefit of both the parties. Ideally, within a customer partnership, all departments of the business would have a connection with the said customer. The customer perspective of the balanced scorecard would focus on aspects such as customer service and satisfaction, market share and brand awareness.

(i)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of increase in market share would belong.

Concept Introduction:

The management tool of balanced scorecard focuses on organizational performance from four main angles commonly known as the perspectives of the tool. These perspectives emphasise on financial as well as non-financial aspects, which could be considered the reason for it being widely accepted by firms worldwide. The four perspectives of financial, customer, internal processes and learning and growth are helpful in clarifying and communicating the strategic priorities and objectives of the business to its key stakeholders.

Explanation of Solution

An increase in market share of a firm would ideally fall under the customer perspective of the balanced scorecard. This perspective focuses on market and customer related aspects that impacts upon organizational performance objectives. In other words, what businesses should be doing in serving customers and markets are being looked into. Aspects such as customer service and satisfaction, brand awareness and market share shall be included under this perspective.

(j)

Summary Introduction

Interpretation: The perspective of the balanced scorecard to which the measurement of unit cost of products would belong.

Concept Introduction:

Balanced scorecard is one of the most popular management tools used by many firms. Its focus on financial as well as non-financial aspects of an organization is the reason for its popularity. These aspects are being focused upon from four main perspectives namely financial, customer, internal processes and learning and growth. The said perspectives assist an organization to clarify and communicate its strategic priorities and objectives to its stakeholders.

Explanation of Solution

The unit cost of products would typically belong to the internal processes perspective. The internal processes perspective puts forward what processes businesses need to have in place to deliver a superior product to the customer, while ensuring organizational profit is maximized. Aspects such as process improvements, quality optimization and capacity utilization would come under this perspective. Via process improvements, the unit cost of products could be brought down, which would in turn lead to better quality as well as higher margins.