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ACCA Strategic Professional · Advanced Performance Management · Performance hierarchy

Alvar Software's mission is to 'help small firms manage their finances simply'. Management is assessing a draft set of objectives: (1) increase recurring revenue by 15% in the next year; (2) raise customer satisfaction to 85% by December; (3) cut app crash rate from 4% to 1% within six months; (4) cut development spending by 25% this year. Management believes the product must remain simple and reliable. Which objective is most likely to conflict with the mission and with objective (3)?

Objective (4) is most likely to conflict. Cutting development spending by a quarter could stop the firm making its product simple and reliable, undermining the mission and the aim of reducing the crash rate. The other objectives are measurable and broadly consistent with the mission.

  1. AObjective (4), because a deep cut to development spending may undermine product simplicity and reliabilityCorrect
  2. BObjective (1), because revenue growth always conflicts with a mission
  3. CObjective (2), because customer satisfaction is not measurable
  4. DObjective (3), because reducing crashes is only a financial aim

Explanation

A 25% cut to development spending is likely to hinder improvements in reliability and ease of use, which support the mission and objective (3). Revenue growth, a satisfaction survey score and crash rates can all be measured and are consistent with the mission. Identifying conflicts among objectives is part of testing the hierarchy for coherence.

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