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Chapter 6

Chapter 6. Business Performance Measures. Objectives. Business performance measures: Balanced scorecard Key performance indicators Customer loyalty. Balanced Scorecard. Separates organizational metrics into 4 perspectives:

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Chapter 6

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  1. Chapter 6 Business Performance Measures

  2. Objectives • Business performance measures: • Balanced scorecard • Key performance indicators • Customer loyalty

  3. Balanced Scorecard • Separates organizational metrics into 4 perspectives: • 1. Financial perspective: How well goals, objectives, and strategies are contributing to shareholder value and the bottom line. • 2. Customer Perspective: Measures how effective the organization is in creating value for its customers through its goals, objectives, strategies, and processes. • 3. Internal Business Processing Perspective: Organizational processes designed to create and deliver customer value. • 4. Learning and Growth Perspective: How capabilities and skills of organization are focused and channeled to create customer value.

  4. Key Performance Indicators (KPI) • Key Performance Indicators (KPI) in terms of the SMART acronym: • Specific – KPIs must be focused and process based. • Measurable – KPIs must be quantitative and easily determined. • Achievable: KPIs must be set with benchmark levels that are achievable. • Relevant – KPIs should be linked to goals, strategies, and objectives. • Time bounded – KPIs should reflect a specific time period.

  5. Customer Loyalty • Customer Loyalty: Customers who exhibit a high level of satisfaction, conduct repeat business, or provide referrals and testimonials. • Many organizations realize that it is far easier and less costly to retain customers than to attract new ones.

  6. Summary • Balanced scorecard separates organizational metrics into 4 perspectives: Financial perspective, Customer Perspective, Internal Business Processing Perspective, and Learning and Growth Perspective. • Key Performance Indicators (KPI) in terms of the SMART acronym: Specific, Measurable, Achievable, Relevant, Time bounded. • Customer Loyalty: Many organizations realize that it is far easier and less costly to retain customers than to attract new ones.

  7. Home Work • 1. What is the Financial Perspective of the Balanced Scorecard measure of Business performance? • 2. What is the Customer Perspective of the Balanced Scorecard measure of Business performance? • 3. What are the Key Performance Indicators (KPI) in terms of the SMART acronym? • 4. What is the definition of customer loyalty?

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