Q1.Assess how the Balanced Scorecard has
developed since its conception by Kaplan and Norton in the 1990’s and discuss
its’ key weaknesses as strategic performance management tool. Framework Answer (20 marks) Introduction (2 marks) ·
Explanation / definition
of a BSC·
Significant evolution -
from performance measurement tool to strategic management sy
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Q1.Assess how the Balanced Scorecard has
developed since its conception by Kaplan and Norton in the 1990’s and discuss
its’ key weaknesses as strategic performance management tool.
Framework Answer (20 marks)
Introduction (2 marks)
·
Explanation / definition
of a BSC
·
Significant evolution -
from performance measurement tool to strategic management system
First generation (4 marks)
·
Set of financial &
non-financial performance measures
·
Arranged by perspective
·
Vaguely linked to strategy
Second generation (4 marks)
·
Strategic objectives
included to help select measures
·
Strategy maps developed to
show relationships between objectives
·
Strategic themes used to
group similar objectives together on a strategy map
Third generation (4 marks)
·
Destinations statement
included
·
A description of org. in
the future (usually 3 – 5 years)
·
Builds consensus on
objectives & easier to agree targets
Key Weaknesses (6 marks)
·
Cause & effect
relationships are assumptions & require validation
·
Time lag between cause
& effect – lacks time dimension
·
Can encourage managerial
remoteness (‘management from the cockpit’)
·
Time, cost & commitment ti implement
·
Ignores some stakeholders
(employees, suppliers, partners, regulators) -
all key stakeholders need to be satisfied, not just the shareholders
Q2. “The budgeting process is broken and in
order to achieve organizational agility, flexibility and adaptability we need
to fundamentally change the way we manage businesses”.
Evaluate this statement, assessing how
advocates of Beyond Budgeting propose this change is made (20 marks)
Framework answer (20 marks)
Criticisms
of annual budgeting (6 marks) – 1 mark per point
·
Takes too long
·
Costs too much
·
Quickly out of date
·
Creates rigid plan (less
able to react)
·
Gaming behaviour
·
Creates a fixed
performance contract
·
Creates annual competition
for resource allocation
·
Alternative relevant
reasons accepted
Beyond
Budgeting approach (10 marks) – 1 mark per point
·
Modern environment need
agility & flexibility for fast response to opps.
& threats
·
Traditional mgmt. approach
(top down / command & control) outdated
·
Managers need authority act immediately
and decisively
·
Not constrained by a fixed and outdated
plan
·
Control
relinquished in decentralised structure to front-line teams, with advantage of local knowledge & close customer relationships
·
Continuous and inclusive planning
·
Ambitious medium-term goals, not
short-term fixed targets
·
Local management set own targets to beat
competition (not on internal negotiations)
·
Rewards based on performance relative to
competition & peers (not fixed annual targets(
·
Monitor performance using KPI ranges
·
Leaders using “a light touch” to manage
the business - only interfere if performance is outside pre-determined range
·
Controls based on fast, frequent feedback;
not budget variances
·
Teams
trusted to regulate their performance; not
micro-managed but help accountable
Evaluation
(4 marks)
·
Summary of key benefits of BB vs benefits
of budgeting
·
Reasonable conclusion
Q3.Assess the role of the Balanced
Scorecard as tool for communicating strategy.
·
BSC intro (2 marks)
·
Objectives, measures, targets and initiatives by perspective (2
marks)
·
4 perspectives (1 mark each, max. 2 marks)
·
C&E relationship between perspectives (2 marks)
·
C&E relationship between objectives – strategy map (2 marks)
·
Destination and objectives statements (2 marks)
·
Assessment (4 marks)
·
presentation & structure (4 marks)
Q4.Advocates of the “Beyond Budgeting”
philosophy claim that the twelve principles should be implemented as a whole,
holistic framework rather than on a piecemeal basis. Describe the key features
and characteristics of Beyond Budgeting and advise why this management system
might be suitable for organisations operating in fast changing environments (20
marks)
·
Introduction (2)
·
Key Features (2 marks per developed
point, max 10)
- Authority
devolved to front-line teams close to customers
- Teams
trusted but accountable for performance
- Targets
set by team relative to competition / peers (not negotiated targets)
- Staff
motivated by self-imposed, stretching targets & team ethos
- Teams
regulate & improve own performance (not micro-managed)
- Leaders
using “a light touch” to manage the business
- Control
achieved by monitoring KPIs within performance ranges
- Top
mgmt. only intervene if performance outside pre-determined range
- Rewards
based on beating competition & continual improvement
(not fixed annual
target)
- Culture
based on competitive success
- Performance
potential unlocked
·
Why fast moving (2 marks per developed
point, max 6)
- Planning
is a continuous process (not annual event)
- Continual
assessment of opps. & threats - react quickly
- Activities
continually coordinated (not once a year)
- Flexible
access to resources (not annual budget allocations)
- Use
rolling forecasts based on KPIs that drive value
·
Conclusion (2)
Q5 Competitor Analysis (20 marks)
The saying “ignore your competitors at your
peril” has led to an upsurge in the search for competitor intelligence. Outline
the purpose of competitor analysis, identify good sources of intelligence and
discuss what should be done with the data once it has been gathered (20
marks)
Purpose
(5 marks)
·
Competitive advantage is only achieved relative to other players
·
Competitor knowledge needed to create competitive advantage
·
A thorough & structured approach to identifying competitors,
assessing their strengths & weaknesses and the threats they pose
·
Significant amount of info. needed e.g. sales, market share, costs
structure, marketing strategy, new products, customer base & satisfaction,
supplier terms, strategic partnerships and so on
·
Like jigsaw puzzle – need each piece to get an overall picture
Sources
(9 marks) – 1 mark each, max 3 for each type;
Recorded Data
|
Observable Data
|
Opportunistic Data
|
Annual report
|
Price lists
|
Shared suppliers / customers
|
Press releases
|
Advertising campaigns
|
Shared distributors
|
Newspaper articles
|
Promotions
|
Seminars / conferences
|
Analysts reports
|
Patent applications
|
Recruitment of ex-employees
|
Company presentations
|
Tenders
|
Social contacts with competitors
|
Actions
(6 marks) 2 marks each point
·
Develop / revise strategy – change direction etc
·
Play to your competitive strengths
·
Attack competitor weaknesses:
·
Seek favourable competitive position
·
Etc
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