ACF5100 Advanced Strategic Management Accounting

Questions for discussion in Week 5

2.1 Explain the role of a company’s performance measurement system.

Performance measurement systems play a key role in developing strategy, evaluating the achievement of organizational objectives and compensating managers.

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

Increasingly, in order to succeed, organizations are relying on competitive advantage created from their intangible assets, such as loyal customers, high-quality operating and innovation processes, employee skills and motivation, data bases and information systems, and organization culture. The growing importance of intangible assets complements the growing interest in the Balanced Scorecard because the Balanced Scorecard helps organizations measure, and therefore, manages the performance of their intangible, knowledge-based, assets. With the Balanced Scorecard measurement system, companies continue to track financial results but they also monitor, with nonfinancial measures, whether they are building or destroying their capabilities—with customers, processes, employees, and systems—and how the company is managing intangible assets to create future growth and profitability. The Balanced Scorecard provides a framework for describing how intangible and tangible assets (such as property, plant, equipment, and inventory) will be combined to create value for the organization.

2.7 What is a strategy map?

A strategy map identifies linkages among essential elements for the organization’s strategy. That is, a strategy map provides a comprehensive visual representation of the linkages among objectives in the four perspectives of the Balanced Scorecard. For example, employees’ process improvement skills (learning and growth