Chapter 13 The Balanced Scorecard and Business Value of Information Technology
1.
The balanced scorecard only o nly includes quantitative measures. True
2.
False
The balanced scorecard framework describes performance from four different perspectives based on the firm's strategy to achieve shareholder value. True
3.
False
In the business process perspective, the firm describes its objectives for improvements in tangible and intangible infrastructure. infrastructure. True
False
4. A strategy map depicts the cause and effect relationship between objectives across the balanced scorecard perspectives. True 5.
False
When the firm's value proposition meets or exceeds customers' requirements, requirements, customer satisfaction results in customer retention and new customer acquisition, which drives sales growth. True
False
13-1 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
6.
Besides presenting financial performance information to shareholders, the financial perspective provides information that can confirm the success of investments in learning and growth. True
7.
Network IT changes the way that work if performed and decisions are made. True
8.
False
Function IT can be used without affecting more than one skilled worker. True
9.
False
False
Supply chain management systems are an example of Network IT. True
False
10. The success of Enterprise IT investments often depends on whether the company makes complementary changes in business processes. True
False
11. The balanced scorecard management process starts with the Formulate step. True
False
12. Investments in business analytics systems support the balanced scorecard management process during the Link to Operations step. True
False
13. Research shows that standardized, integrated, and networked technology enhances decision making and performance management. True
False
13-2 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
14. The value of IT investments often depend on the level of complementary resources, which can change over time. True
False
15. The impact of an IT investment can depend on managers' decision-making abilities. True
False
16. Which of the following is the best description of the balanced scorecard?
A. A strategic planning and management system B. A performance measurement framework C. A formal, structured approach to link IT investment to business performance D. All are descriptions of the balanced scorecard 17. Which of the following is not a balanced scorecard perspective?
A. Stakeholder B. Financial C. Business process D. Customer
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18. Which of the following is not a general type of business process found on generic strategy maps?
A. Innovation processes B. Administrative processes C. Operations management processes D. Customer management processes p rocesses 19. Which of the following is not a value proposition characteristic expected to influence customer value?
A. Product attributes B. Image C. Innovation D. Relationship 20. Which of the following is not included in Information Capital as described in the balanced scorecard learning and growth perspective?
A. IT Infrastructu I nfrastructure re B. Employees' abilities to use technology C. Intangible assets D. Applications 21. Which of the following is not an example of Enterprise IT?
A. Spreadsheet financial applications B. Business intelligence systems C. CRM systems D. ERP systems
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22. Which of the following is not an organizational capability directly supported by Enterprise IT?
A. Process definition B. Process integration C. Customer service D. Transaction automation 23. Which of the following is the best reason that companies find it hard to assess the benefit of IT investments?
A. Difficult to assess costs B. Difficult to tie IT investments to company strategy C. IT investments become embedded in business processes D. None of the above 24. Which of the following is not a step in the balanced scorecard management management process?
A. Invest B. Translate C. Monitor D. Adapt 25. Which of the following is the best description of the Link to Operations step in the balanced scorecard management process?
A. The company establishes objectives, measures, targets, and initiatives. B. The company prepares operating budgets and prioritizes business process improvements. improvements. C. The company evaluates the effectiveness of its strategy. D. The company examines the competitive environment.
13-5 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
26. Review the following list of company objectives. ob jectives. Prepare a strategy map that places each objective in the correct balanced scorecard perspective.
13-6 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
27. Your company has elected to implement a balanced scorecard management process following the steps outlined by Kaplan and Norton. After examining the process closely, your company's senior management team (CEO, CFO, CIO, etc.) decides to modify the process to make the steps more specific. First of all, they identified three different organizational organizational levels involved in the process: senior management, middle management, management, and the rest of the workforce. After a brainstorming session, they decide to break the five steps into pieces as follows: the formulate step would include a) assessing the company's value proposition relative to the competition, and b) determining the appropriate elements of the value proposition to emphasize in order to achieve competitive advantage. The translate step would include a) setting long-term strategic objectives for customer and shareholder value, and b) set p riorities for long-term capital improvements necessary necessary to achieve the long-term strategic objectives. The Link step would then include a) establishing necessary IT initiatives, b) setting departmental budgets, c) implementing new IT systems, and d) operating business processes. The monitor step would include a) produce reports to track performance, and b) review reports to evaluate performance. Then, they decided to insert a new step, titled Adjust. This step would include making adjustments necessary to improve business processes, basically revisiting revisiting the Link to Operations step but making minor changes. If the adjustments failed to achieve objectives, then they would continue to the Adapt step to a) reconsider their assumptions about the competitive environment, and b) reconsider alternatives for those parts of the value proposition to emphasize to achieve competitive success. : Draw a BPMN activity diagram that outlines your company's approach to the balanced scorecard management process. Then, describe in writing whether you agree with your senior management team's breakdown of the steps and the approach they propose. What would you do do differently? Why?
13-7 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Chapter 13 The Balanced Scorecard and Business Value of Information Technology Answer Key
1.
The balanced scorecard only includes quantitative measures.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Remembe Difficulty: 1 Eas Learning Objective: 13-01 Describe the balanced scorecard framework. Source: Origina Topic: Business Value
2.
The balanced scorecard framework describes performance from four different perspectives based on the firm's strategy to achieve shareholder value.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Remembe Difficulty: 1 Eas Learning Objective: 13-01 Describe the balanced scorecard framework. Source: Origina Topic: Business Value
3.
In the business process perspective, the firm describes its objectives for improvements in tangible and intangible infrastructure.
AACSB: Analytic
13-8 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-01 Describe the balanced scorecard framework. Source: Origina Topic: Business Value
4.
A strategy map depicts the cause and effect relationship between objectives across the balanced scorecard perspectives.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
5.
When the firm's value proposition meets or exceeds customers' requirements, requirements, customer satisfaction results in customer retention and new customer acquisition, which drives sales growth.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
13-9 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
6.
Besides presenting financial performance information to shareholders, the financial perspective provides information that can confirm the success of investments in learning and growth.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
7.
Network IT changes the way that work if performed and decisions are made.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Remembe Difficulty: 1 Eas Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
8.
Function IT can be used without affecting more than one skilled worker.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
13-10 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
9.
Supply chain management systems systems are an example of Network IT.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
10.
The success of Enterprise IT investments often depends on whether the company makes complementary changes in business processes.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
11.
The balanced scorecard management process starts with the Formulate step.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Remembe Difficulty: 1 Eas Learning Objective: 13-04 Define the balanced scorecard management process. Source: Origina Topic: Business Value
13-11 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
12.
Investments in business analytics systems support the balanced scorecard management process during the Link to Operations step.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-04 Define the balanced scorecard management process. Source: Origina Topic: Business Value
13.
Research shows that standardized, integrated, and networked technology enhances decision making and performance management.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-05 Describe how an AIS system contributes to a balanced scorecard management process. Source: Origina Topic: Business Value
14.
The value of IT I T investments often depend on the level of complementary resources, which can change over time.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-05 Describe how an AIS system contributes to a balanced scorecar d management process. Source: Origina Topic: Business Value
13-12 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
15.
The impact of an IT investment can depend on managers' decision-making abilities.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-05 Describe how an AIS system contributes to a balanced scorecard management process. Source: Origina Topic: Business Value
16.
Which of the following is the best description of the balanced scorecard?
A. A strategic planning and and management management system system B. A performance measurement framework C. A formal, structured structured approach to link IT investment investment to business performance All are descriptions of the balanced scorecard AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-01 Describe the balanced scorecard framework. Source: Origina Topic: Business Value
13-13 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
17.
Which of the following is not a balanced scorecard perspective?
Stakeholder B. Financial B. C. Business process D. Customer D. AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Remembe Difficulty: 1 Eas Learning Objective: 13-01 Describe the balanced scorecard framework. Source: Origina Topic: Business Value
18.
Which of the following is not a general type of business process found on generic strategy maps?
A. Innovation processes Administrative processes C. Operations management processes D. Customer management processes AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Remembe Difficulty: 1 Eas Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
13-14 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
19.
Which of the following is not a value proposition characteristic expected to influence customer value?
A. Product attributes B. Image B. Innovation D. Relationship D. AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
20.
Which of the following is not included in Information Capital as described in the balanced scorecard learning and growth perspective?
A. IT Infrastructure Infrastructure B. Employees' abilities to use use technology technology Intangible assets D. Applications D. AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
13-15 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
21.
Which of the following is not an example of Enterprise IT?
Spreadsheet financial applications B. Business intelligence systems C. CRM systems D. ERP systems AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
22.
Which of the following is not an organizational capability directly supported by Enterprise Enterprise IT?
Process definition B. Process integration C. Customer service D. Transaction automation AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
13-16 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
23.
Which of the following is the best reason that companies find it hard to assess the benefit of IT investments?
A. Difficult to assess assess costs B. Difficult to tie IT investments investments to company strategy IT investments become embedded in business processes D. None of the above AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-03 Describe different types of IT and why IT initiatives can be difficult to evaluate. Source: Origina Topic: Business Value
24.
Which of the following is not a step in the balanced scorecard management process? process?
Invest B. Translate B. C. Monitor C. D. Adapt D. AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-04 Define the balanced scorecard management process. Source: Origina Topic: Business Value
13-17 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
25.
Which of the following is the best description of the Link to Operations step in the balanced scorecard management process?
A. The company establishes establishes objectives, objectives, measures, targets, and initiatives. initiatives. The company prepares operating budgets and prioritizes business process improvements. C. The company evaluates the effectiveness of its strategy. strategy. D. The company examines the the competitive environment. AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Understan Difficulty: 2 Medium Learning Objective: 13-04 Define the balanced scorecard management process. Source: Origina Topic: Business Value
13-18 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
26.
Review the following list of company objectives. Prepare a strategy map that places each objective in the correct balanced scorecard perspective.
13-19 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Appl Difficulty: 3 Har Learning Objective: 13-02 Explain the purpose of strategy maps. Source: Origina Topic: Business Value
13-20 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
27.
Your company has elected to implement a balanced scorecard management process following the steps outlined by Kaplan and Norton. After examining the process closely, your company's senior management team (CEO, CFO, CIO, etc.) decides to modify the process to make the steps more specific. First of all, they identified three different organizational levels involved involved in the process: senior management, middle management, and the rest of the workforce. After a brainstorming session, they decide to break the five steps into pieces as follows: the formulate step would include a) assessing the company's value proposition relative to the competition, and b) determining the appropriate elements of the value proposition to emphasize in order to achieve competitive advantage. The translate step would include a) setting long-term strategic objectives for customer and shareholder value, and b) s et priorities for long-term capital improvements necessary to achieve the long -term strategic objectives. The Link step would then include a) establishing necessary IT initiatives, b) setting departmental budgets, c) implementing new IT systems, and d) operating business processes. The monitor step would include a) produce reports to track performance, and b) review reports to evaluate performance. Then, they decided to insert a new step, titled Adjust. This step would include making adjustments necessary to improve business processes, basically revisiting the Link to Operations step but making minor changes. If the adjustments failed to achieve objectives, then they would continue to the Adapt step to a) reconsider their assumptions about the competitive environment, and b) reconsider alternatives for those parts of the value p roposition to emphasize to achieve competitive success. : Draw a BPMN activity diagram that outlines your company's approach to the balanced scorecard management process. Then, describe in writing whether you agree with your senior management team's breakdown of the steps and the approach they propose. What would you do differently? Why?
(Open ended; the BPMN should not violate standards)
AACSB: Analytic AICPA BB: Leveraging Technolog AICPA FN: Leveraging Technolog Blooms: Evaluate Difficulty: 3 Har Learning Objective: 13-04 Define the balanced scorecard management process. 13-21 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Source: Origina Topic: Business Value
13-22 Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
