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Chapter 2


the act of quantifying the performance criteria of organizational units, goods and services, processes, people, and other business activities , "scorecard" of performance

Types of performance measurements

financial, customer / market, quality, time, flexibility, innovation/learning, sustainability (triple bottom line)

Customer-satisfaction measurement

customer ratings of a specific good and service feature and indicates the relationship between those ratings and customer's willingness to buy in the future

5 dimensions to service quality

tangibles, reliability, responsiveness, assurance, empathy


=quantity of output of process/ quantity of input


quantitative modeling of cause & effect relationship between external and internal performance criteria

Value of a loyal customer

quantifies the total revenue or profit each target market customer generates over the buyer's lifetime (vlc=PCMRF*BLC)

Models of organizational performance

Baldridge, balanced scoreboard, value chain model, service-profit chain model

Malcolm Baldridge National Quality Award Framework

meant to improve quality, productivity and competitiveness based on 7 criteria (leadership, strategic planning, customer focus, measurement, workforce focus, operation focus, results)

Balanced Scoreboard

Kaplan and Norton , translate strategy into measures that uniquely communicate your vision to the organization 4 perspectives (financial, customer perspective, innovation and learning, internal perspective)

Value Chain

most dominant model of performance measuring, helps to reduce total flow time and inventories (time customer expresses needs to when they pay for the product/service), synchronized network of processes and resources

Service-Profit Chain (SPC)

service business, set of cause and effect linkages between internal and external performance and defines key performance measurements

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