Concept explainers
Balanced Scorecards and Strategy Maps
Following several years of tight budgets, administrators at the University of California, Davis, looked for ways “to do more with less.” Janet Hamilton, vice chancellor of administration, researched books and articles, met with consultants, and talked to her counterparts at universities across the United States to find new management methods that could change the university from a bureaucratic organization to one that is customer-oriented. She learned about reengineering, total quality, and a variety of other management techniques. None of the management techniques appealed to her, until she came across articles about the balanced scorecard. She believed that the balanced scorecard was the right tool for the Davis campus, and she set about implementing it.
At first, Hamilton did not call her approach a “balanced scorecard,” because she feared that employees would think of this as just another management fad to endure until the administration went on to something new. Instead, she pilot-tested the balanced scorecard ideas in one service department, environmental health and safety (EHS), until it worked. With the success of EHS behind her, she moved to implement the balanced scorecard in other service departments, such as police, fire, and printing services.
Each department developed its own particular performance measures to achieve the following objectives (we have shortened the list to save space):
Required
- a. Was the vice chancellor overly cautious in not calling her approach a “balanced scorecard”?
- b. Comment on the wisdom of beginning a balanced scorecard with a pilot project. Would it be possible to extrapolate the experience of a service department, such as environmental health and safety, to an academic unit, such as a college of business?
- c. What opportunities and difficulties do you see in applying a balanced scorecard to a university setting?
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Fundamentals Of Cost Accounting (6th Edition)
- Carson Wellington, president of Mallory Plastics, was considering a report sent to him by Emily Sorensen, vice president of operations. The report was a summary of the progress made by an activity-based management system that was implemented three years ago. Significant progress had indeed been realized. At the conclusion of the report, Emily urged Carson to consider the adoption of the Balanced Scorecard as a logical next step in the companys efforts to establish itself as a leader in its industry. Emily clearly was impressed by the Balanced Scorecard and intrigued by the possibility that the change would enhance the overall competitiveness of Mallory. She requested a meeting of the executive committee to explain the similarities and differences between the two approaches. Carson agreed to schedule the meeting but asked Emily to prepare a memo in advance, listing the most important similarities and differences between the two approaches to responsibility accounting. Required: Prepare the memo requested by Carson.arrow_forwardCoral Creations has strategic plans that call for rapid growth, a limited number of units for each design to enhance exclusivity, designs for the perfect fit, on-time delivery to customers, retention of highly trained employees with innovative skills, and excellent inventory control. A. Suggest one performance measure for each dimension of the balanced scorecard for Coral Creations. B. Take one of your measures and discuss the linkage it has to multiple strategies in Corals plan.arrow_forwardThe fundamental concept behind strategic performance measurement systems is that an organizations strategy can be represented by a set of performance measures. This basic concept of representing a complex idea (like strategy) with something more tangible (like a measure) goes back hundreds, even thousands of years. Platos Allegory of the Cave provides perhaps the first evidence of this concept. In the allegory, Plato describes a hypothetical scenario in which a group of prisoners is chained to a wall inside a cave, locked in a position facing away from the cave opening. Plato explains that the prisoners have been in this condition their entire lives so their knowledge of the outside world is limited to what they are able to perceive in their current state staring only at the cave wall. Plato then describes how sunlight from the outside casts shadows of anything that passes by the cave opening into the cave. These shadows appear on the wall that the prisoners are facing, and sounds from the outside echo off the shadowed wall. Plato explains that, to the prisoners, reality is not outside the cave but the shadows are reality. To them, sounds dont come from the outside but rather from the shadows on the wall before them. Plato then goes on to discuss the status of a prisoner freed from this bondage and his initial reaction to exposure to a different reality. Plato says, Will he not fancy that the shadows which he formerly saw are truer than the objects which are now shown to him? This allegory illustrates that reality can really only be indirectly perceived via imperfect representations of reality. That is what accounting is all about. Accounting measures are imperfect representations of economic ideas that cannot be seen directlyjust like Platos shadows in the cave. Accounting measures are merely reflections of more interesting and important concepts. Consider financial statements and answer the following: Why do people care about what is on a firms balance sheet or income statement? Are they really interested in the financial statements in and of themselves, or do they use the financial statements to learn something about the issues they really care about? What are some of those issues?arrow_forward
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