Question: Describe two broad approaches that companies can

> In 1995, Canadian native Maria Messina achieved one of the most sought-after career goals in the public accounting profession when she was promoted to partner with Deloitte & Touche, Chartered Accountants, the Canadian affiliate of the U.S.-based Deloitt

> Cyrus McCormick revolutionized American agriculture in the mid-nineteenth century when he invented a mechanical reaper. His horse-drawn harvester would become the primary product marketed by McCormick Harvesting Machine Company. Decades later, Cyrus McCo

> After graduating from West Virginia University in 1984 with a degree in accounting and finance, Gregory Podlucky decided to work with his father Gabriel, who had a small business empire in western Pennsylvania. 1 The senior Podlucky’s business interests

> Paul Polishan graduated with an accounting degree in 1969 and immediately accepted an entry-level position in the accounting department of The Leslie Fay Companies, a women’s apparel manufacturer based in New York City. Fred Pomerantz, Leslie Fay’s found

> Clifford Hotte had a problem. His company had come up short of its earnings target. For the fiscal year ended April 30, 1995, financial analysts had projected that Health Management, Inc. (HMI), a New York–based pharmaceuticals distributor, would post ea

> In 1971, 25-year-old Thomas Shine founded a small sporting goods company, Logo 7, that would eventually become known as Logo Athletic. Shine’s company manufactured and marketed a wide range of shirts, hats, jackets, and other apparel items that boldly di

> 8:15 a.m., Saturday, October 31 “So, Dani, seriously, what exactly am I going to be doing today?” 1 “I am serious, Tyler. I’m not sure what I’m supposed to be doing much less what I’m supposed to have you do. Like I said … Katelyn hasn’t told me anything

> In March 2000, the Securities and Exchange Commission (SEC) began requiring public companies to have their quarterly financial statements “reviewed” by their independent auditors. The broad purpose of this new requirement was to improve the quality and c

> In August 2004, an Internet-based investment advisory service included the common stock of LocatePlus Holdings Corporation in its “Stocks to Watch” 1 alert. The advisory service touted the New Age business model of LocatePlus, a company whose headquarte

> In 1999, a group of private investors founded Celebrity Sports Network, Inc., a company that retained professional athletes and former professional athletes to sponsor “fringe” sporting events such as professional wrestling, competitive dancing, and roll

> As David Robinson works his way through the large, festive crowd, he keeps bumping into people he knows. All the while, Robinson is hoping that he will avoid the one person he doesn’t want to meet face to face. 1 Belot Enterprises’ several hundred employ

> Prior to the Internet, the Bank Rate Monitor served as the primary source of information for U.S. consumers searching for the best available mortgage interest rates and interest rates on certificates of deposit. Over time, Bankrate, Inc., the company tha

> Thursday, October 24, 1929, easily ranks as the most dramatic day that Wall Street has ever seen. 1 That day witnessed the beginning of the Great Stock Market Crash that over the following few years would result in an almost 90 percent decline in the Dow

> During the 1980s, CBI Holding Company, Inc., a New York-based firm, served as the parent company for several wholly owned subsidiaries, principal among them Common Brothers, Inc. CBI’s subsidiaries marketed an extensive line of pharmaceutical products. T

> Over the past few decades, hedge funds have become among the most controversial and largest investment vehicles on Wall Street. Critics of hedge funds argue that their high-risk investment strategies contributed significantly to the economic crisis that

> The Great Depression dealt a devastating blow to Billy Durant. During the depths of the Depression in 1936, Durant, a high school dropout who was born a few months after the outbreak of the Civil War in 1861, was forced to declare bankruptcy. Like mil-li

> Grand Theft Auto ranks among the best-selling video games of all time as well as one of the most controversial. 1 By the time Grand Theft Auto V was released in 2013, over 125 million copies of the video game had been sold worldwide since the original v

> Jack Nicklaus electrified sports fans worldwide in 1986 when he won the prestigious Masters golf tournament at the ripe old age of 46. Over the previous several years, the “Golden Bear” had been struggling to remain competitive with the scores of talente

> Auditors commonly find themselves facing situations in which they must persuade client executives to do something they absolutely and resolutely do not want to do. When all else fails, auditors may be forced to use a tactic that clinical psychologists, m

> A desire to be their “own bosses” and a burning entrepreneurial spirit compelled John Orecchio and Paul Oliver to leave the ranks of well-paid, white-collar employees and strike out on their own. In February 2002, the two friends established a new invest

> Bernard Lawrence Madoff was born on April 29, 1938, in New York City. Madoff spent his childhood in a lower middle-class neighborhood in the borough of Queens. After graduating from high school, Madoff enrolled in the University of Alabama but transferre

> From 1962 to 1992, Ed McMahon served as the quintessential sidekick and straight man to Johnny Carson on the long-running and popular television program The Tonight Show. After leaving that program, McMahon stayed in the television spot-light for 12 year

> As a small child, Brooklyn native David Brooks loved horses. 1 In 1969, when he was 14 years old, Brooks went to work at a local racetrack as a groom to help support his family. Brooks loved the tough job that involved arriving at the racetrack in the w

> John and Mary Andersen immigrated to the United States from their native Norway in 1881. The young couple made their way to the small farming community of Plano,Illinois, some 40 miles southwest of downtown Chicago. Over the previous few decades, hundred

> Andrea Kimball has recently acquired a franchise of a well-known fast-food restaurant chain. She is considering a special promotion for a week during which hamburger prices would be reduced $0.40 from the regular price of $1.09 to $0.69. Local advertisin

> Dr. Barbara Benson is the head of the pathology laboratory at Barrington Medical Center in Mobile, Alabama. Dr. Benson estimates the amount of work for her laboratory staff by classifying the pathology tests into three categories: simple routine, simple

> A Votre Santé (AVS) is a small, independent winery owned by Kay Aproveche. Kay has a relationship with a grower who grows two types of wine grapes, a Chardonnay and a generic white grape. AVS buys the grapes at the point at which they have r

> Aramis Aromatics Company produces and sells its product AA100 to well-known cosmetics companies for $940 per ton. The marketing manager is considering the possibility of refining AA100 further into finer perfumes before selling them to the cosmetics comp

> Nordstrom, Inc. (http://www.nordstrom.com) and Saks Fifth Avenue (http://www.saksfifthavenue.com) are upscale retailers. Using the following sources, answer the questions below. • Each company’s history reported on its web page (from “About Us” at the c

> Describe the low-total-cost value proposition and provide your own example of a company that has successfully implemented this value proposition.

> Why does attempting to improve customer measures such as customer satisfaction, customer retention, customer profitability, and market share not necessarily constitute a strategy?

> Define and explain the role of measures, objectives, and targets, in the Balanced Scorecard strategy map.

> Why is a clear strategy vital for an organization?

> What is return on investment?

> Explain why the growing importance of intangible assets complements growing interest in the Balanced Scorecard.

> Why are both financial and nonfinancial measures necessary to manage a company’s strategy?

> What are four common pitfalls in developing a Balanced Scorecard?

> What is the nature of the objective(s) that nonprofit and government organizations are likely to put at the top of their Balanced Scorecard and strategy maps?

> What are several desirable characteristics for a Balanced Scorecard measure?

> What are the three components of the learning and growth perspective in the Balanced Scorecard?

> How do the time frames for financial benefits for improvements in the different categories of processes typically vary?

> How might a company link its strategy or customer value proposition to a focus on particular categories of processes in the Balanced Scorecard?

> What are some critical dimensions along which to measure regulatory and social processes in the operating processes part of the Balanced Scorecard’s process perspective?

> What are the four bases for setting a transfer price?

> What are operations management processes within the Balanced Scorecard’s process perspective, and what are some typical objectives for operations management processes?

> All of a Balanced Scorecard’s measures for processes should be fully controllable by people who perform the work in the processes. Do you agree with this statement? Explain.

> Explain how a Balanced Scorecard approach is helpful in identifying critical processes and evaluating the processes.

> Describe the customer solutions value proposition and provide your own example of a company that has successfully implemented this value proposition.

> Describe the product leadership value proposition and provide your own example of a company that has successfully implemented this value proposition.

> What are the two basic approaches to improving a company’s financial performance?

> What are the four measurement perspectives in the Balanced Scorecard?

> What is a Balanced Scorecard?

> What two important sub processes does managing innovation include?

> What is a soft number in accounting?

> How are innovation processes in the process perspective linked to the Balanced Scorecard’s customer and financial perspectives?

> What are the three important objectives for a company’s customer management processes within the Balanced Scorecard’s process perspective?

> What four categories of processes are useful in developing the process perspective measures for a Balanced Scorecard?

> Describe two broad approaches that companies can use to improve productivity.

> Refer to the In Practice description of Teach for America on pages 44–45. How can Teach for America use its strategy map and scorecard to advance its mission and strategy?

> Refer to the In Practice description of Infosys on page 24. Required (a) Why would a company with Infosys’s history find the Balanced Scorecard important for managing its growth and monitoring its performance? (b) What customer measures would you recomm

> Why did Pioneer Petroleum, a company following a differentiation strategy, have so many process objectives and measures relating to cost reduction and productivity?

> How does economic value added differ from residual income?

> How is residual income computed?

> Why do organizations allocate costs to responsibility centers?

> A company’s chief executive officer (CEO) wanted his company to develop a Balanced Scorecard. After giving considerable thought to who should lead the development, he selected the head of the information technology group because the Balanced Scorecard wo

> Why do organizations allocate revenues to responsibility centers?

> What is a transfer price?

> What is the difference between internal financial control and external financial control?

> What does financial control mean?

> What are three reasons financial control alone may provide an ineffective control scorecard?

> Describe specific examples of how firms are using economic value added to evaluate their investments in product lines or divisions, or to evaluate operating strategies.

> As a result of a residual income analysis, the owner of a company that makes and installs swimming pools has decided to shut down the manufacturing operations that show a negative residual income for the current year. Is this necessarily the proper respo

> The owner of a chain of fast-food restaurants has decided to use economic value added to evaluate the performance of the managers of each of the restaurants. What do you think of this idea?

> A bank is thinking of using economic value added to identify services that require improvement or elimination. What problems may the bank have in computing the economic value added of any of the services that it offers to its customers?

> The Newburg Flyers operate a major sports franchise from a building in downtown Newburg. The building was built in 1940 at a cost of $5,000,000 and is fully depreciated so that it is shown on the company’s balance sheet at a nominal value of $1. The land

> A company attempted to build a Balanced Scorecard by fitting the company’s objectives and financial and nonfinancial performance measures into the four Balanced Scorecard perspectives. Explain why this approach may not lead to a well-developed Balanced S

> Michelle Gutierrez, manager of the Components Division of FX Corporation, is considering a new investment for her division. The division has an investment base of $4,000,000 and operating income of $600,000. The new investment of $500,000 supports corpor

> Deseronto Electronics manufactures motherboards for computers. The company is divided into two divisions: manufacturing and programming. The manufacturing division makes the board, and the programming division makes the adjustments required to meet the c

> You are a government controller. A division manager being audited objects to the transfer price he is being charged by the audit group for the audit services. The manager observes, “If I have to pay for these services, I should be allowed to buy them fro

> Perform an Internet search on “close underperforming stores” or similar phrase to locate an example of a company that has closed unprofitable stores or other segments. Explain what issues the company considered in dropping the unprofitable segments and i

> Following is the information on Paragon Company’s three product lines: Required (a) Construct a segment margin statement for Paragon Company. (b) Explain why the segment margins reported for an organization unit must be interpreted car

> One of the most widely accepted and longest held beliefs is the controllability principle, which says that organization units and people should be held accountable only for things that they can control. Required (a) For any job you choose, give one exam

> You have decided to divide a factory into cost centers. How would you allocate depreciation expense on the factory building to its individual cost centers?

> For each of the following units, identify whether the most appropriate responsibility center form is a cost center, a profit center, or an investment center and why you have made that choice. a. A laboratory in a hospital b. A restaurant in a department

> You are the controller of a chain of dry-cleaning establishments. You are computing the return on investment for each outlet. Outlet A, located in a city core, reported a net profit of $130,000. The land on which Outlet Ais located was essentially rural

> Plevna Manufacturing makes and distributes small prefabricated homes in kits. The kits contain all pieces needed to assemble the home. All that is required is that the builder erect the home on a foundation. Plevna Manufacturing is organized into two div

> Organizations in the public and nonprofit sector, such as government agencies and charitable social service entities, have financial systems that budget expenses and monitor and control actual spending. Choose a government agency or nonprofit organizatio

> What does segment margin mean?

> Some people and organizations believe that the discussion of controllable and uncontrollable events is distracting in the sense that it encourages finger-pointing and an excessive preoccupation with assigning blame. These observers argue that it is more

> Bennington Home Products sells home products. It buys products for resale from suppliers all over the world. The products are organized into groups. A few examples of these groups are floor care products, kitchen products, tool products, and paper produc

> For many years, automobile companies were highly decentralized in terms of functions. The most obvious effect of this heavy decentralization of function was apparent when all the groups needed to work together to accomplish a goal. The highest order of i

> Think of an example of an organization in which it is important that the various functional areas be closely coordinated to promote the organization’s overall success. Show how performance measures that focus solely on the performance of an individual un

> Researchers have defined two extreme forms of organizations. Organic organizations are highly decentralized with few rules. Most people agree that software development companies are very organic. Mechanistic organizations are highly centralized and use m

> Many people believe that the focus of control in a successful organization reflects the strategic initiatives in the organization. For each of the following organizations, identify what you think are the three most important items assessed by the organiz

> Strathcona Paper rewards its managers on the basis of the after-tax return on investment of the assets that they manage—the higher the reported return on investment, the higher the reward. The company uses net book value to value the assets employed in t

> Give an example of a responsibility center in a university.

> What control problem does decentralization create in organizations?

> A business whose investors require a return on investment of 8% reports an income of $1 million on an investment of $20 million. What is the residual income for this business?

> Develop a Balanced Scorecard that the dean or director of your school could use to evaluate the school’s operations. Be specific and indicate the purpose of each Balanced Scorecard measure.

> A store is divided into four departments: automotive products, home products, paint, and lumber. How would you assign the building costs, such as depreciation, to each of these departments?