ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy
A manufacturer defines its strategic objective as being the lowest-cost producer in its sector. Which of the following is the best example of a critical success factor (CSF) and key performance indicator (KPI) pairing consistent with that objective?
The correct pairing is efficient use of production capacity as the critical success factor, measured by machine utilisation rate. This links directly to a low-cost strategy, whereas the other pairs either do not support low cost or use indicators that do not actually measure the stated success factor.
- ACSF: efficient use of production capacity; KPI: machine utilisation rateCorrect
- BCSF: high staff morale; KPI: number of company social events held
- CCSF: brand reputation; KPI: number of advertisements placed
- DCSF: increased dividends; KPI: share price
Explanation
A CSF is something that must be achieved to deliver the strategy, and a KPI measures progress on it. For a low-cost strategy, efficient capacity use is a CSF and machine utilisation rate measures it directly. The other pairs either do not link to low cost or use KPIs that do not measure the CSF.
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