CostAccountingSeventeenthEdition,GlobalEditionChapter13Strategy,BalancedScorecard,andStrategicProfitabilityAnalysisCopyright?2021PearsonEducationLtd.

LearningObjectives13.1Recognizewhichoftwogenericstrategiesacompanyisusing13.2Understandthefourperspectivesofthebalancedscorecard13.3Analyzechangesinoperatingincometoevaluatestrategy13.4Identifyunusedcapacityandhowtomanageit

StrategyStrategyspecifieshowanorganizationmatchesitsowncapabilitieswiththeopportunitiesinthemarketplacetoaccomplishitsobjectives.Strategydescribeshowanorganizationcancreatevalueforitscustomerswhiledifferentiatingitselffromitscompetitors.Athoroughunderstandingoftheindustryiscriticaltoformulatingandimplementingasuccessfulstrategy.Industryanalysisfocusesonfiveforces.

IndustryAnalysisFocusesonFiveForcesNumberandstrengthofcompetitorsPotentialentrantstothemarketAvailabilityofequivalentproductsBargainingpowerofcustomersBargainingpowerofinputsuppliers

TwoBasicBusinessStrategiesProductdifferentiationisanorganization’sabilitytoofferproductsorservicesperceivedbyitscustomerstobesuperioranduniquerelativetotheproductsorservicesofitscompetitors.Competitiveadvantage:Brandloyaltyandthewillingnessofcustomerstopayhigherprices.Costleadershipisanorganization’sabilitytoachievelowercostsrelativetocompetitorsthroughproductivityandefficiencyimprovements,eliminationofwaste,andtightcostcontrol.Competitiveadvantage:Lowersellingprices.

StrategyImplementationandtheBalancedScorecard(1of2)Manycompanieshaveintroducedabalancedscorecardtotrackprogressandmanagetheimplementationoftheirstrategies.Thebalancedscorecardtranslatesanorganization’smissionandstrategyintoasetofperformancemeasuresthatservesastheframeworkforimplementingtheorganization’sstrategy.Thescorecardmeasuresfromfourperspec