Taeget Costing

Tempest Inc.

Question: 1

How does The Balanced Scorecard Approach Differs from More Traditional Discounted Cash Flows method of evaluating capital proposals?

* Traditional Discounted cash flows method is differs from Balanced scorecard as it provides a measure that is not actionable they describe consequences- not causes. They are too aggregated and do not tell the operational managers as what needs fixing.

* Traditional discounted cash flow approach differs from balanced scorecard as it emphasize only on one perspective as they only focus on costs. While, Balanced Scorecard provides performance measurement system that assesses how well they perform across the full range of strategically important areas, such as quality and delivery performance, as well as cost.

* Traditional discounted cash flow method in contrast to Balanced Scorecard provides limited guidance for future actions, emphasizing only immediate financial outcomes of actions and decisions.

* Discounted cash flows in contrast to balanced scorecard encouraged actions which limit future competiveness. This is particularly the case when there is excessive pressure to achieve short-term financial results.

Which Approach is better suited to Tempest Situation? “Balanced Scorecard”.

Why? Because it reports performance in all key strategic areas of business and in a form that is useful for the various levels of management. It saves time for the Management of Tempest Inc in decision making by 50% to 75%. Also it enhance in achieving the short term goals , whereby chairman giving Bill Jennings the time until November to redesign the process in terms of cutting the capital budget by $65m.

* For Example Board of Managers & told Bill Jennings to maximize the profit through cost reduction on investment projects is like telling Fiji Rugby team to go out and beat all Blacks without indicating how they can do it. Some more detailed guidance will be helpful. What strategies and tactics should team...