Translating the Mission into Long Term Goals p110 The Balanced Scorecard (BSC) is used for this purpose. When fully deployed, the BSC transforms strategic planning from a conceptual exercise into the nerve centre of an organisation. The 4 BSC perspectives measure the following: # Note 1 Financial perspective operating income, return on capital employed and economic value added – 2 Customer perspective number of new customers, customer retention, customer defection and customer – satisfaction 3 Internal business processes continuous improvement, throughput and quality e.g. number of mistakes – made during a certain process, and number of new processes incorporated in last year 4 Learning and growth competency of employees, innovative ideas generated by employees and managers, – and staff retention Kaplan and Norton (created a tool called maps’) argue that you can’t measure what you can’t describe, and ‘strategy that sustained value creation depends on managing 4 key internal processes: # Study Note 1 Operations 2 Customer relationships 3 Innovation 4 Regulatory and social processes Choosing a Strategy p111 When choosing a strategy, strategic planners decide on a core idea about how the organisation can best compete in the marketplace this core idea is called the strategy’. – ‘generic # Study Note 1 are 3 types of generic strategy: Low-cost leadership Differentiation Focus 2 The low-cost leadership strategy: Maximises by minimising costs per unit and hence prices Several things can be done to minimise costs: The curve’ or the curve’ ‘learning ‘experience Economy of scale as size increases so cost per unit decreases because the fixed costs are – shared with the larger number of products 3 The differentiation strategy: An organisation can charge higher prices for a product that customers perceive to be different Differentiation may be in terms of: Quality The production process Design
Translating the Mission into Long Term Goals p110 The Balanced Scorecard (BSC) is used for this purpose. When fully deployed, the BSC transforms strategic planning from a conceptual exercise into the nerve centre of an organisation. The 4 BSC perspectives measure the following: # Note 1 Financial perspective – operating income, return on capital employed and economic value added 2 Customer perspective – number of new customers, customer retention, customer defection and customer satisfaction 3 Internal business processes – continuous improvement, throughput and quality e.g. number of mistakes made during a certain process, and number of new processes incorporated in last year 4 Learning and growth – competency of employees, innovative ideas generated by employees and managers, and staff retention Kaplan and Norton (created a tool called ‘strategy maps’) argue that you can’t measure what you can’t describe, and that sustained value creation depends on managing 4 key internal processes: # Study Note 1 Operations 2 Customer relationships 3 Innovation 4 Regulatory and social processes Choosing a Strategy p111 When choosing a strategy, strategic planners decide on a core idea about how the organisation can best compete in the marketplace – this core idea is called the ‘generic strategy’. # Study Note 1 are 3 types of generic strategy: Low-cost leadership Differentiation Focus 2 The low-cost leadership strategy: Maximises by minimising costs per unit and hence prices Several things can be done to minimise costs: The ‘learning curve’ or the ‘experience curve’ Economy of scale – as size increases so cost per unit decreases because the fixed costs are shared with the larger number of products 3 The differentiation strategy: An organisation can charge higher prices for a product that customers perceive to be different Differentiation may be in terms of: Quality The production process Design
MNG2601-study_notes_2012_final.docx