teall_cost_3_ch13

7/25/2019 teall_cost_3_ch13

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Copyright 2003 Pearson Education Canada Inc. Slide 13-1

Chapter 13

Strategy, Balanced Scorecard, andStrategic Profitability Analysis


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Strategic Profitability Analysis

Strategy describes how an organization matches itsown capabilities with opportunities in themarketplace in order to achiee its ob!ecties

"ndustry analysis focuses on# competitors potential entrants into the market e$uialent products bargaining power of customers

bargaining power of suppliers

Pages 42 - 43


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Strategic Profitability Analysis %Continued&

Product differentiation refers to the organization'sability to make its products or serices uni$ue

Cost leadership occurs when the organization is ableto reduce costs, relatie to competitors, through

productiity and efficiency improements

Pages 42 - 43


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Balanced Scorecard

(he Balanced Scorecard translates an organization'smission and strategy into a comprehensie set ofmeasures

)easurements proide feedback on how well the

organization is implementing its strategy reduced emphasis on short*term financial goals

+our lements of the Balanced Scorecard

1- +inancial measures.- Customer measures

3- "nternal business process measures

/- 0earning and growth

Pages 43 - 4!


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Copyright 2003 Pearson Education Canada Inc. Slide 13-"

ample of Balanced Scorecard

(arget Actual2b!ectie )easures Performance Performance

+inancial ain in income 45,666,666 45,5.6,666Perspectie 7eenue growth 89 8-/:9

Customer ;ew customers 5 8Perspectie Customer satisfaction


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Copyright 2003 Pearson Education Canada Inc. Slide 13-#

+eatures of a ood Balanced Scorecard

(ells the story of the company's strategy byarticulating a se$uence of cause*effect relationships

elps communicate the strategy to all members ofthe organization by translating the strategy into acoherent and linked set of understandable targets

"n profit*seeking companies, places strong emphasison financial measures and ob!ecties

0imits the number of measures used by identifying

only the most critical ones

ighlights suboptimal tradeoffs that managers maymake when they tail to consider operational andfinancial measures together

Pages 4$ - 4


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Copyright 2003 Pearson Education Canada Inc. Slide 13-!

Pitfalls "mplementing a Balanced Scorecard

on't assume the cause*and*effect linkages to beprecise

on't seek improements across all measures allthe time

on't use only ob!ectie measures on thescorecard

on't fail to consider both costs and benefits of

initiaties on't ignore non*financial measures when

ealuating managers and employees

Page 4


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Copyright 2003 Pearson Education Canada Inc. Slide 13-$

ngineered and iscretionary Costs

ngineered costs result specifically from a clear cause*effect

relationship between output and resources used materials

iscretionary costs costs which arise from a periodic appropriation

decision lack a clear cause*effect relationship between output

and resources used adertising, eecutie training, 7?, public relations

Page "0$


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Copyright 2003 Pearson Education Canada Inc. Slide 13-

ngineered iscretionaryCosts Costs

Process or etailed and nowledge of theActiity physically process is sketchy

obserable or unaailable

7epetitie ;on*repetitie

0eel of )oderate 0argeDncertainty or small

ownsizing %or rightsizing& is process of matchingresources with current and future needs

ifficult for discretionary costs as ideal amount isunknown

ownsizing and Capacity )anagement

Pages "0! - "11


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Productiity measures the relationship between actualinputs used and actual outputs achieed

Partial ProductiityE Fuantity of output produced G Fuantity of input used

E 1,156,666 units G .,

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