test 2

Homework #3 ʹ Balanced Scorecard Name: _____________________________________ ID number: ___________________ Section: ____ Summary of types of measures used in a Balanced Scorecard from the assigned reading on this page.

Financial Perspective (Non-­‐traditional financial measures) Price Premium Volume increases Value of customer referrals Value of cross sales Long-­‐term value of customer These all lead to: o Revenue and profit growth o Shareholder value o Various financial ratios (ROI, ROS, profit margin, etc.)

Operational Perspective Right first time (% hits) Right on time (% hits) Responsiveness (% on time) Transaction time (clock time, days) Throughput time (manufacture or service process time) Reduction in waste Process quality (evaluated by other than customers)

Customer Perspective Service perceptions (received) Service expectations (expected) Perceived value Behavioral intentions: o % Loyalty o % Intent to Switch o # Customer Referrals o # Cross Sales o # of Defections

Innovation and Learning Perspective Number of new products Return on innovation (success of additions/changes) Employee skills Time to market (new products and change to processes) Time spent talking to customers (includes marketing research in general) Time spent talking to employees (for new ideas)

hƐĞ ƚŚŝƐ ĂƐ ƚŚĞ ĞdžĂŵƉůĞ͗ >ŽĞǁ͛Ɛ sĞŶƚĂŶĂ ,ŽƚĞů ;Žƌ ĂŶLJ ůƵdžƵƌLJ ŚŽƚĞůͬƌĞƐŽƌƚͿ provides these services: Guest rooms and suites Food ʹ restaurants, bars Convention and meeting facilities Auxiliary services ʹ golf, tennis, spa, retail shops

The above perspectives and measures are in the reading. Match the possible hotel metrics below with the appropriate category above. You will find examples of the general terms above in the hotel-­‐ specific examples below. Put the letters identifying the correct perspective in the answer column.

(Points = 40 @ .25 = 10) Available Data to Use as Measures:

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

Examples of metrics (measures) ĨŽƌ Ă ƌĞƐŽƌƚ ŚŽƚĞů ƐƵĐŚ ĂƐ >ŽĞǁ͛Ɛ sĞŶƚĂŶĂ Resort in Tucson Rental income per room ʹ revenue/room nights rented Average length of stay for guests Food and other non-­‐room charges on bill Convention repairs requested Travel agency bookings (number and value)

Transaction time at check-­‐in Repeat guest customers and their expenditures (number and value)

Repeat convention bookings and their expenditures (by company/organization) Conventions that moved to other Tucson/Arizona hotels

Survey comparing perceived service vs. expected service Room rates from Westin La Paloma and Hilton El Conquistador Occupancy rates -­‐ % of rooms rented Check-­‐out survey question ʹ ǁŽƵůĚ LJŽƵ ƐƚĂLJ Ăƚ >ŽĞǁ͛Ɛ ŝĨ ƌĞǀŝƐŝƚŝŶŐ dƵĐƐŽŶ͍ Service complaints received (number) Room repair orders ʹ number and time to repair Transaction time at check-­‐out Billing accuracy ʹ bill adjustments Convention bill adjustments Survey comparing service quality with price

Number of restaurant reservations

Check-­‐out survey question ʹ ǁŽƵůĚ LJŽƵ ƌĞĐŽŵŵĞŶĚ >ŽĞǁ͛Ɛ ƚŽ Ă ĨƌŝĞŶĚ͍ Supervisor ratings of employee performance Exit interview with convention managers Reservation wait times

Collecting employee feedback (especially front-­‐line) Restaurant order preparation time (in/out)

Timely analysis and use of customer data collected

Room service orders and delivery times Health inspection scores for food service Convention room set up on time

New services offered

Average value (expenditures) per convention guest Environmental scanning of competitors Changes (improvements) in procedures due to customer input Employee training programs Reservation mistakes Utility bills after installation of Energy Star televisions and air conditioning units Tips as percentage of restaurant bill (= customer satisfaction feedback) Tips as percentage of restaurant bill (= measure of service process accuracy) Room cleaning time (average per room by employee)

Answer (F,O,C,I)

Multiple Choice Questions based on the reading and slides. (Points = 10 @ 2 = 20)

Write your answer immediately to the left of the question number.

1. All of the following examples are measures within the Operational Perspective of the Balanced Scorecard EXCEPT: a. process quality

d. reduction in waste b. throughput time

e. transaction time c. number of cross sales

2. All of the following examples are measures within the Customer Perspective of the Balanced Scorecard EXCEPT: a. number of defections

d. long-­‐term value of the customer b. percentage of loyal customers

e. perceived value c. service quality perceptions

3. All of the following examples are measures within the Learning Perspective of the Balanced Scorecard EXCEPT: a. employee skills

d. time spent researching customers b. return on innovation

e. service expectations c. number of new products

4. All of the following examples are measures within the Financial Perspective of the Balanced Scorecard EXCEPT: a. value of price premiums

d. long-­‐term value of customers b. perceived value

e. value of cross sales c. volume increases

5. Balanced Scorecards were developed to compensate for all of these business problems EXCEPT: a. the emphasis on short term results d. stockholder and brand equity are reported

together on the balance sheet b. historical facts are not the best source e. capital assets are the primary assets future projections

disclosed in financial statements c. financial records only show part of the picture

6. The following are all characteristics of Marketing Dashboards EXCEPT: a. contain summaries of important financial d. produced annually to support year end and nonfinancial metrics

financial statements b. usually presented in highly visual and e. metrics used will vary by industry (e.g., graphical format

retail sales per square foot, room occupancy c. primary users are upper management

7. Balanced Scorecards provide data not included in financial statements. If you were provided with the marketing data below about market growth and company sales growth, what would LJŽƵ ƉƌĞĚŝĐƚ ĂďŽƵƚ ƚŚĞ ĐŽŵƉĂŶLJ͛Ɛ ŵĂƌŬĞƚ ƐŚĂƌĞ͍ ;zŽƵ ĚŽ ŶŽƚ ŶĞĞĚ ƚŽ ĐĂůĐƵůĂƚĞ ĂŶLJƚŚŝŶŐ ƚŽ answer this question. You can see an example in the slides related to Commtech.)

Revenue growth percentages for each of four years: Market Growth: 10% 10%, 10%, 10% Company Growth: 10%, 10%, 10%, 10% a. Company market share is increasing

b. Company market share is decreasing

c. Company market share remains the same d. Company market share direction of change cannot be predicted from this data

8. An airline decided to include these measures in its Balanced Scorecard: lost baggage, on-­‐ time departures, and number of passengers bumped from overbooking. These measures are examples of which perspective in the Balanced Scorecard? a. financial perspective

d. learning perspective b. operational perspective

e. innovation perspective c. customer perspective

9. (Source: lecture slides on Commtech example.) The Commtech financial statements showed increases in Net Profit, Return on Sales, and Return on Assets. If an investor only looked at the accounting results, s/he might have a very positive opinion about the company. When market-­‐ based measures are investigated, another picture evolves. All of the following changes simultaneously occurred as the financial measures increased EXCEPT: a. decrease in market share

d. decrease in relative product quality b. decrease in relative service quality e. company sales growth greater than market c. decrease in customer retention

sales growth rate

10. All of you have taken accounting courses and some of you are accounting majors. In general, accounting firms are involved in auditing clients, preparing client financial statements, and completing tax returns. Some accounting firms also provide various business-­‐related consulting services. These are some items that could occur on a balanced scorecard for a typical accounting firm. Which one is an example of the a Customer Perspective measure? a. value of consulting sales to audit clients b. continuing professional education (CPEs) provided to the staff accountants c. billable hours per employee (time that can be directly billed to a client) d. mid-­‐audit client meeting to determine their satisfaction levels related to the audit process e. percentage of junior staff reports returned by the managing partner for corrections