Module 2 - Strategy, Balanced Scorecard, Profitability

strategy specifies how an organization does what?

key point?

creates value for customers

while differentiating

core competence is the overlap between (3)

strengths, maximizing opportunity, countering threats

value leadership is aka?

product differentiation

value leadership:

products & services are? (2)

superior and unique

value leadership:

leads to? (2)

brand loyalty

willingness to pay high prices

cost leadership:

achieves?

lower costs

cost leadership:

achieves lower costs by (3)

productivity & efficiency improvements, elimination of waste, tight cost control

cost leadership:

leads to?

lower selling prices

economies of scale

spreading cost of capacity over large volumes from highly automated processes

economies of scope

producing different products together is more cost efficient than producing separately due to shared resources

balanced scorecard translates?

an org’s mission and strategy into a set of performance measures

why is it called the balanced scorecard?

balances use of financial and non-financial performance measures to evaluate performance

4 perspectives of balanced scorecard - in order of hierarchy top to bottom

financial

customer

internal business process

learning & growth

financial perspective evaluates? (2)

profitability of strategy

creation of shareholder value

customer perspective identifies?

targeted customer and market segments

internal business perspective focuses on?

internal operations that create value for customers

learning and growth perspective identifies?

capabilities the org must excel at to better internal processes

3 components in doing a strategic analysis of OI

growth

price-recovery

productivity

growth component measures the change in OI attributable to

change in quantity of output sold between cy and py

price-recovery component measures the change in OI attributable to

changes in prices of inputs and outputs between cy and py

productivity component measures the change in

costs attributable to changes in quantity of inputs between cy and py

units input required to produce output in cy using same relationship as py =

(units input in py / units output in py) x units output in cy