Strategy & Performance Measurement

Suggested Answers
Topic wise Test 05

Answer: 1
Following are the three levels of products at Dine inn restaurant:
 Core product: the customer is buying a ‘luxury experience’ that will give them pleasure from the
experience and prestige of eating at a top restaurant like Dine Inn.
 The actual product would be the food, quality service and the environment including décor and layout
of the tables.
 Augmented product: this might include free membership of a patrons loyalty programme, a
complimentary taxi ride home in the event of rain and entry into a monthly prize draw.
Comments: It was a fairly easy question focusing on three levels of products for a restaurant. A similar
example is also discussed in this topic under the heading product strategy in chapter 15.

Answer: 2
Some advantages and disadvantages of different promotion strategies
Strategy Advantages Disadvantages
Advertising Easy and quick to reach a large target Can be expensive and also relies on
market. potential customers reacting proacvtively
to the advertising.
Sales promotion Customers like receiving ‘free’ goods e.g. Can be expensive if need to penetrate a
‘buy one get one free’. Relatively large target market.
persuasive in the short-term in
encouraging potential new customers to
try the product.
Direct selling Highly effective (and a growth area thanks Potential customers can feel pressured
to e-technology) as customers receive from excessive individual attention and
promotion that is tailored to their vendors knowing so much about their
individual needs and habits and is target customers’ profiles.
therefore much more relevant to them.
Sponsorship Good for brand awareness and very Potentially expensive. Can be
beneficial for those being sponsored. It counterproductive if associated with the
also shows involvement and giving back to wrong organisatiion or activity (e.g.
the community, leading to a positive consider the brand damage to the sponsors
corporate image. of professional sports organisations that
are subsequently found guilty of illegal
performance-enhancing drugs).
Public relations Can be highly persuasive and effective in Public relations mistakes can be harmful
managing awkward relationships. For and difficult to reverse. For example
example, maintaining relations with local significant brand damage occurred with
communities and eliciting sympathy Krispy Kreme launched the Krispy Kreme
following an environmental accident. Klub (which led to association with the
Ku Klux Klan) and also when
McDonald’s launched the ‘McAfrika’
burger in Norway (when over 12 million
people were starving at the time in
Africa).

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 Strategy & Performance Measurement
Suggested Answers
Topic wise Test 05
Answer: 3
(a) JIT techniques
Various techniques and methods are associated with JIT.
 Work flow and the layout of the factory floor. The layout of the factory floor should be designed in a
way that minimises waste of transportation and waste of motion. One way of doing this is to organise
the work around ‘dedicated work cells’. A work cell is a small group of employees with all the
equipment and skills necessary to produce a finished item.
 Reducing set-up time. ‘Set-up’ activities are the activities that have to be carried out to get ready for the
next job, for example tidying up the work place and cleaning machinery, and getting the materials for
the next job. Set-up activities do not add value. The aim should therefore be to reduce set-up times.
 Total productive maintenance (TPM). The aim of Total Productive Maintenance is to prevent
breakdowns in equipment that cause an unscheduled hold-up in production, by improving maintenance
systems.
 ‘Kanban’ systems and visibility in the work place. To improve production flow, and avoid production
of items that are not yet wanted, there should be clear signs in the workplace that indicate when more
production is required. In a JIT system, ‘kanban’ cards might be used as a signalling system. These are
signals – similar to flags – that send messages to other parts of the production system.
 For example, a card can be used by one stage in the production process to signal to the previous stage
in production that more output is now required. Details of the output required can be written on the
card. Kanban cards can therefore be used to authorise a movement of materials within the production
system. Without the authorisation, there should be no movement.
(b)
Bank
CSF: Profitability, Quality KPI: gross profit margin, net profit margin,
number of customer complaints
Restaurant:
CSF: Speed, Flexibility KPI: Average lead time (between receiving order
and delivering it), range of menu items
Apparel Manufacturer
CSF: Quality, Dependability KPI: Average time between machine breakdowns,
percentage orders satisfied from inventory
Retail shop dealing in mobile phones
CSF: Speed, Cost KPI: Transport time from vendor, throughput,
contribution margin

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 Strategy & Performance Measurement
Suggested Answers
Topic wise Test 05
Answer: 4
(a)

(b)

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 Strategy & Performance Measurement
Suggested Answers
Topic wise Test 05
Answer: 5
(a) CSF: Quality
a. KPI: Customer satisfaction index
b. KPI: Customer complaint rate
(b) CSF: Client Services:
a. KPI: Customer churn rate
b. KPI: Customer Satisfaction Index
(c) CSF: Timely Delivery
a. KPI: No of parcels lost in a year
b. No. of delays in delivery in a year
(d) CSF: Innovation
a. KPI: No. of new products launched in a year
b. KPI: Customer Loyalty index

(The End)

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