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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Arohi Motors is rolling out a new electric-scooter strategy. Its CEO measures progress using four lenses: financial results, customer satisfaction, internal process efficiency, and employee learning and growth, with measures and targets set for each. Later she finds that improving a lagging financial indicator took two years because the cause lay in poor employee training. Which statement about this tool is most accurate?

It is a Balanced Scorecard. Its four perspectives are financial, customer, internal process, and learning and growth. Learning and growth measures like employee training are leading indicators that eventually improve process, customer and financial outcomes, whereas financial results are lagging indicators. The other options are unrelated frameworks.

  1. AIt is a Balanced Scorecard, and training metrics are lead indicators for financial outcomesCorrect
  2. BIt is a SWOT matrix, and training is an external threat
  3. CIt is a BCG matrix, and training is a cash cow measure
  4. DIt is a Value chain analysis, and financial results are primary activities

Explanation

The four perspectives (financial, customer, internal business process, learning and growth) define the Balanced Scorecard. Learning and growth measures such as training drive improvements in processes, customers and then finances, so they act as leading indicators while financial figures lag. The other options name unrelated tools.

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