Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 23

Nonfinancial (Operational) Control Measures: Environmental Performance Assume that the company for which you are working is interested in implementing a comprehensive monitoring and control system regarding environmental performance. The company is convinced that improved performance in this area will lead to reduced costs, an improved corporate image, greater market share, and ultimately to greater financial returns. To supplement a number of financial-performance indicators in the area of environmental quality, the company is interested in developing a set of nonfinancial performance indicators, which (it is hoped) will motivate better environmental quality. In this regard, the company has embraced five strategic objectives: minimize hazardous materials; minimize raw/virgin materials usage; minimize energy requirements; minimize release of residues into the environment; and maximize opportunities to recycle. For each of these five strategic objectives, provide at least two relevant nonfinancial performance indicators that could lead to improved environmental performance.

Step 1 of 2

When there is a company producing goods and services, then it is very important for the company to control the quality of products produced. High level of variation in product quality will make batch unacceptable, so it is necessary to control quality and that too with cost-effectiveness.