Question 1

Which of the following is a value driver associated with improving long-term growth as opposed to return on invested capital (ROIC)?&#10;A)Asset health.&#10;B)Commercial health.&#10;C)Capital productivity.&#10;D)Cost structure health.

Accepted Answer

Commercial health is a value driver associated with improving long-term growth, as it focuses on factors such as product innovation, customer satisfaction, and market share. Asset health and cost structure health are both more closely related to efficiency and ROIC, while capital productivity can impact both growth and returns.

Question 2

In assessing a company's long-term strategic health,it can be hard to identify specific metrics.Thus,these situations require more qualitative milestones.

Accepted Answer

Identifying long-term strategic health of a company may not always have specific numerical metrics, but may require subjective or qualitative evaluations.

Question 3

In performance management,because of potential conflicts of interest,operating managers should not be involved in the setting of targets and in reading the measures in pursuing targets.

Accepted Answer

Operating managers should be involved in the setting of targets and reading the measures in pursuing targets, as they have the best understanding of the day-to-day operations and can provide valuable insight and input into the process. However, it is important to establish checks and balances to ensure that there is no bias or conflict of interest in the performance management process. This can be achieved by involving multiple stakeholders in the target-setting process and by having an independent third-party review the performance measures.

Question 4

Which of the following are properties of internal benchmarks that businesses use to gauge their productivity and health?
I.They do not provide learning opportunities.
II.The data are likely to be more readily available.
III.They are more challenging because of their specificity.
IV.Unearthing the causes of differences in performance is much easier.

A)I,II,and III only.
B)II and IV only.
C)III and IV only.
D)I,II,III,and IV.

Accepted Answer

Internal benchmarks are those that businesses set for themselves, typically based on their past performance or the performance of other similar businesses in the industry. Internal benchmarks are specific to the company and are more readily available, making it easier to analyze and compare data. They are more challenging because of their specificity but lead to easier identification of the causes of differences in performance as they provide more detailed data to work with. Internal benchmarks also provide learning opportunities as companies can learn from past successes and failures to improve future performance. Therefore, option I is incorrect and option IV is correct. As option III is marked correctly as an accurate description, option B meets the best answer criteria.

Question 5

Assessing the ability to exploit new growth areas and potential new threats is the focus of short-term value drivers as opposed to long-term value drivers.

Accepted Answer

Short-term value drivers typically focus on immediate financial performance and operational efficiencies, while long-term value drivers assess the ability to exploit new growth areas and potential new threats, aiming for sustainable growth and adaptability over time.

Question 6

Which of the following value drivers is a short-term driver as opposed to a medium-term driver?&#10;A)Asset health.&#10;B)Commercial health.&#10;C)Capital productivity.&#10;D)Cost structure health.

Accepted Answer

The answer of Which of the following value drivers is...

Question 7

Which of the following are aspects of the firm that diagnostics of organizational health typically measure?
I.Its culture and values.
II.The depth of management talent.
III.The skills and capabilities of the company.
IV.Its ability to retain employees and keep them satisfied.

A)I,II,and III only.
B)I,III,and IV only.
C)II,III,and IV only.
D)I,II,III,and IV.

Accepted Answer

Diagnostics of organizational health typically measure all aspects listed: the firm's culture and values, the depth of management talent, the skills and capabilities of the company, and its ability to retain employees and keep them satisfied. These are all critical components of organizational health.

Question 8

List and describe the three categories of short-term value drivers.

Accepted Answer

The answer of List and describe the three categories of...

Question 9

With respect to stock-based compensation for managers,which of the following is most accurate?&#10;A)It is never a useful means for incentivizing managers to create value.&#10;B)It has proven to be a useful tool to incentivize managers to create value in most cases.&#10;C)There is not enough evidence to reach conclusions concerning its effectiveness.&#10;D)It may be useful,but when it is used,macroeconomic and industry effects should be removed in formulating the compensation.

Accepted Answer

While stock-based compensation can be useful in incentivizing managers to create value, its effectiveness can be influenced by macroeconomic and industry factors. Therefore, when using stock-based compensation, it is important to control for these effects in formulating the compensation. There is not enough evidence to fully support or refute the effectiveness of stock-based compensation as a tool for incentivizing managers.

Question 10

Managers must regularly revisit the targets they set for each value driver.As their business environment changes,so will the limits of what they can achieve.

Accepted Answer

Managers need to regularly review and adjust targets for each value driver as their business environment changes and the limits of what they can achieve shift.

Question 11

Which set of metrics is best used to describe whether the company can sustain or improve its current revenue growth?&#10;A)Asset health.&#10;B)Commercial health.&#10;C)Strategic health.&#10;D)Core health.

Accepted Answer

The answer of Which set of metrics is best used...

Deck 26: Performance Management