Strategy 1
Fill in the missing dimension: Learning & Growth -> __________ -> Customer -> Financial
What is Internal Business Processes?
A cause-and-effect link shows how improving employee training impacts customer satisfaction. These two dimensions are being connected.
What are the Learning & Growth and Customer dimensions?
The original, historical cost of a piece of equipment is this.
What is a sunk cost?
It costs $8 in variable costs and $2 in fixed costs for capacity that won't be changed to make a part in-house. Buying it costs $9. The decision to make or buy would be this.
What is make? (Relevant cost $8 make vs. $9 buy; Fixed is irrelevant because it's unavoidable - have either way)
True/False: Optimization addresses changing conditions.
What is False? (Resource constraints)
Financial performance measures are this type of indicator.
What are lagging indicators?
Strategy maps are often structured to show this dimension at the top.
What is the financial dimension?
Innovations that majorly change operations are these.
What are disruptive technologies?
It costs $12 in variable costs and $5 in fixed costs to make a part in-house. Fixed costs are unavoidable. Buying it costs $14. The decision to make or buy would be this.
What is make? (Relevant cost $12 make vs. $14 buy; Fixed is irrelevant because it's unavoidable - have either way)
Evaluating the amounts, risk, and timing of predicted cash flows is part of this prescriptive analysis technique.
What is capital budgeting?
A balanced scorecard can be transformed into a visualization via this tool.
What is a strategy map?
On-time delivery is typically linked to this dimension.
What is Internal Business Processes?
This tool could be used to find the sales volume needed to break-even.
What is goal seek analysis?
It costs $15 in variable costs and $5 in fixed costs to make a part in-house. 40% of fixed costs can be avoided. Buying it costs $18. The decision to make or buy would be this.
What is make? (Relevant cost $17 make vs. $18 buy; 60% of fixed costs are unavoidable [irrelevant] but 40% are avoidable [i.e., make costs only], so add 40% x $15 or $2 to make side)
This type of optimization helps determine a company's focus, perhaps on advertising.
What is product mix optimization?
This answers the question, "What image do we want to convey to the world?"
What is the mission statement?
A statement that describes the company's future and what the organization strives to become.
What is a vision statement?
The marketing director wants to examine outcomes if sales are 10% less than expected, 5% more than expected, or 10% more than expected. This tool can be used.
What is scenario analysis?
It costs $20 in variable costs and $6 in fixed costs to make a part in-house. All fixed costs are avoidable. Buying it costs $24. The decision to make or buy would be this.
What is buy? (Relevant cost $26 make vs. $24 buy; Fixed IS relevant because it's avoidable - have only under make side)
Estimating cost savings and revenue losses would address changing conditions under this prescriptive analysis technique.
What is add/drop? (Product line or customer)
True/False: Balanced scorecards are used only in for-profit companies.
What is false?
Strategy maps help organizations connect initiatives to these measurable outcomes.
What are key performance indicators (KPIs)?
The CFO wants to see how profit changes if raw material costs increase 10%. This tool can be used.
What is sensitivity analysis?
It costs $22 in variable costs and $8 in fixed costs to make a part in-house. 50% of fixed costs are avoidable. Machine time could be used to earn $5 in unit contribution margin elsewhere. Buying it costs $25. The decision to make or buy would be this.
What is buy? (Relevant cost $31 make vs. $25 buy; Half of fixed [$4] is relevant; $5 CMu = opportunity cost under make [margin lost if choose make]; So $22 + $4 + $5 = $31 make)
True/False: a make or buy decision should be made on quantitative factors only.
What is False? (Qualitative factors could ultimately change the decision outcome.)