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CMA Final · Strategic Performance Management and Business Valuation · Introduction to Performance Management

Sundaram Auto Components Ltd has set a strategic objective of becoming the preferred supplier to OEMs. Its management wants every plant manager's targets to be derived from this objective, so that daily operational decisions support it. Which feature of performance management is being applied?

The company is aligning operational goals with corporate strategy by cascading objectives down to plant managers. This strategic alignment is a core scope element of performance management, ensuring daily decisions support the strategic aim. Variance analysis or transfer pricing only serve control or pricing purposes and do not provide this linkage.

  1. AAligning operational goals and measures with corporate strategy through cascading of objectivesCorrect
  2. BPreparing statutory financial statements under Ind AS
  3. CComputing variances only after the period ends for cost control
  4. DSetting transfer prices between divisions at market price

Explanation

Deriving plant-level targets from a corporate objective is cascading, which aligns operations with strategy. This is a core scope element of performance management. Variance reporting is a control tool and does not by itself link targets to strategy.

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