Which of the following responsibility accounting systems translates the strategy of an organization into operational objectives and measure?

CHAPTER 13

THE BALANCED SCORECARD:

STRATEGIC-BASED CONTROL

DISCUSSION QUESTIONS

1.A strategic-based responsibility accounting

system converts an organization’s mission

and strategy into operational objectives and

measures for four perspectives: the financial

perspective, the customer perspective, the

process perspective, and the learning and

growth perspective. It differs from activity-

based responsibility accounting because of

the formal linkage to strategy and because it

adds two perspectives to the responsibility

dimension: the customer perspective and

the learning and growth perspective.

2.A Balanced Scorecard is a strategic-based

performance management system that

translates an organization’s vision and strat-

egy into operational objectives and mea-

sures for four perspectives: financial, cus-

tomer, process, and learning and growth.

3.Balanced measures mean that the strategic

measures used are made up of a proper mix

of integrated financial and nonfinancial mea-

sures that are both predictive and historical

and which may be subjective or objective in

nature.

4.Lag measures reflect what has happened.

Lead measures are factors that drive future

performance.

5.Objective measures are quantifiable and

verifiable. (Verifiable means that the values

are the same from one person to the next.)

Subjective measures are less quantifiable

and more judgmental in nature (indicating

that their values can vary from one person

to the next).

6.Stretch targets are targets that are set at

levels that, if achieved, will transform the or-

ganization within three to five years. Their

strategic purpose is to bring the organization

to the level envisioned by the strategy.

7. A strategic-based reward system is designed

to encourage and support the implementation

of the organization’s strategy. Rewards are

offered for both financial and nonfinancial

performance. (Traditional rewards are mostly

tied to financial performance.)

8. The three strategic themes of the financial

perspective are revenue growth, cost reduc-

tion, and asset utilization.

9.The five core objectives of the customer

perspective are market share, customer

retention, customer acquisition, customer

satisfaction, and customer profitability.

10.The long-wave of value creation means antic-

ipating the emerging and potential needs of

customers and creating new products and

processes to satisfy those needs. The short-

wave of value creation is producing and

delivering existing products to customers.

11.The three processes of the process value

chain are the innovation process, the

operations process, and the post-sales

service process. The innovation process

anticipates the emerging and potential

needs of customers and creates new

products and services to satisfy those

needs. The operations process produces

and delivers existing products and services

to customers. The post-sales service

process provides critical and responsive

services to customers after the product or

service has been delivered.

12.Three objectives of the learning and growth

perspective are to increase employee capa-

bilities; to increase motivation, empower-

ment, and alignment; and to increase infor-

mation systems capabilities.

13.A testable strategy is a set of linked objec-

tives aimed at an overall goal that can be re-

stated into a sequence of cause-and-effect

hypotheses.

14.Double-loop feedback is information that

deals with both the effectiveness of strategy

13-1

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Which of the following responsibility accounting systems translates the strategy of an organization into operational?

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