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All rights reserved. Ph. CIA Cynthia J... Ph. Booker. D. Inc. Ph. Caldwell. CMA Jon A. Rooney.B.D.. CPA McGraw-Hill/Irwin Copyright © 2014 by The McGraw-Hill Companies.Performance Measurement to Support Business Strategy Chapter 18 PowerPoint Authors: Susan Coomer Galbreath. CPA Charles W. CPA.D. .D..A.

while delivering the desired returns to stakeholders. 18-3 .LO 18-1 Strategy and Performance LO 18-1 Explain why management accountants should know the business strategy of their organization. Business Strategy A company’s specific approach for deploying the organizational assets and capabilities required to meet its customers’ needs competitively.

its purpose and goals. and identification of its major strategies.LO 18-1 Strategy and Performance Value Proposition How the organization will create value for all stakeholders. definition of its responsibilities to stakeholders. 18-4 . Mission Why an organization exists. Mission Statement Description of an organization’s values.

LO 18-1 The Foundation of a Successful Business Strategy Identify Core Resources and Capabilities Methods of Achieving Success Cost Leaders Product Differentiators Focused Competitors 18-5 .

• Often not useful in identifying the cause of operational problems • Commonly reported only on a monthly. Financial performance measures are useful for motivating employees to improve the company’s profits. or annual basis • Many people in the organization do not see how their work translates into financial results 18-6 . quarterly.LO 18-2 Beyond the Accounting Numbers LO 18-2 Explain why companies use nonfinancial performance measures. but they do have several flaws.

18-7 . Business Model Description of how different levels and employees in the organization must perform for the organization to achieve its goals.LO 18-3 Responsibilities According to Level of Organization LO 18-3 Understand the reasons why performance measures differ across levels of the organization.

Balanced Scorecard Set of performance targets and results that show how well an organization has performed in meeting its objectives relating to its stakeholders 18-8 .LO 18-4 Balanced Scorecard LO 18-4 Understand how the balanced scorecard helps organizations recognize and deal with their opposing responsibilities.

LO 18-3 Multiple Measures or a Single Measure of Performance? Single Measure Profit Multiple Measures Employee satisfaction Customer satisfaction Employee learning Regulatory violations Branch costs Branch profitability 18-9 .

LO 18-5 Continuous Improvement and Benchmarking LO 18-5 Understand how to apply the methods involved in an effective performance measurement system. services. and activities against competitors’ performance 18-11 . Continuous Improvement Continuous reevaluation and improvement of the efficiency of the organization’s activities Benchmarking Continuous process of measuring a company’s own products.

Customer Satisfaction Measures Quality Control Delivery Performance Bookings and Purchase Orders Market Share 18-12 .LO 18-6 Nonfinancial Measures LO 18-6 Identify examples of nonfinancial performance measures and discuss the potential for improved performance resulting from improved activity management.

18-13 . • Partial productivity measures express the relation between output and only one input.LO 18-6 Nonfinancial Measures • Productivity focuses on the efficient conversion of inputs into outputs.

their commitment to the organization and its objectives increases. • Many managers believe that when workers take on real decision-making authority.LO 18-7 Employee Involvement LO 18-7 Explain why employee involvement is important in an effective performance measurement system. 18-14 .

• Giving decision-making responsibility to workers uses their skills and knowledge and motivates them to further develop those skills and knowledge in an effort to improve the organization’s performance. 18-15 .LO 18-7 Employee Involvement • When decision-making responsibility lies with workers closer to the customer. workers are more responsive to customer concerns and can make informed decisions.

End of Chapter 18 18-16 .