1. Not part of the definition of strategy

• Goal and objective achievement ❌

• Competitive advantage ❌

• Measures ✅

• Industry, market, and situational opportunities ❌

Explanation: Strategy includes goals, opportunities, and how the firm will achieve competitive advantage. Measures are how we track performance, not part of the definition of strategy.

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2. Cost leadership differentiates product?

• ❌ True

• False ✅

Explanation: Cost leadership is about offering the lowest cost, not differentiating. Differentiation strategy is the one focused on uniqueness.

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3. Performance measurement issue (economic downturn affects sales manager compensation)

• Controllability ✅

• Alignment ❌

• Interdependence ❌

Explanation: The manager is affected by factors she cannot control (the economy). That is a controllability problem.

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4. Return on sales (ROS) — which statements are true? (Check all)

• Easy to understand ✅

• Simple calculation ✅

• Determined by investment amount ❌

• Lacks informativeness ✅

Explanation: ROS = Profit ÷ Sales. Simple and easy but lacks depth (ignores investment and capital structure).

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5. Profit is more informative than other financial measures

• True ❌

• False ✅

Explanation: Profit alone is less informative than ratios like ROI, ROE, ROS because it ignores scale and investment.

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6. Courage Inc.: ROS & ROI

Sales = 1,200,000
Profit = 100,000
Assets = 1,000,000

• ROS = 100,000 ÷ 1,200,000 = 8.33%

• ROI = 100,000 ÷ 1,000,000 = 10%

Correct choice:

• ❌ 83.3%; 10.0%

• 8.3%; 10.0% ✅

• ❌ 8.3%; 83.3%

• ❌ 10.0%; 8.3%

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7. Disadvantages of financial performance measures (Check all)

• Forward-looking ❌

• Context-specific ✅

• Overly subjective ❌ (financial metrics are objective)

• Incomplete ✅

Explanation: Financial metrics are not forward-looking, are incomplete, and vary by context.

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8. Disadvantages of non-financial performance measures

(Check all)

• Forward-looking ❌ (this is an advantage!)

• Explanatory ❌ (also advantage)

• Subjective ✅

• Context-specific ✅

Explanation: Non-financial measures are good predictors but often subjective and tied to specific contexts (not easily comparable).

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9. Purpose of strategic performance measurement systems (Check all)

• Make strategy more forward-looking ✅

• Evaluate strategy ✅

• Communicate strategy ✅

• Inform the evolution of strategy ✅

Explanation: Strategic PMS helps articulate, assess, communicate, and evolve strategy.

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10. Balanced Scorecard perspectives

• Financial

• Customer

• Internal

Correct answer:

• All of the above ✅

• None of the above ❌

Explanation: Traditional BSC has four perspectives: Financial, Customer, Internal Process, Learning & Growth.

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🧾 Summary Table

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