Question

Compare and contrast measures based on activity and measures based on strategy

Answer 1

ACTIVITY BASED MEASURES:

Overview: Activity-based measures refer to the accounting system that assigns responsibility to various processes carried out in an entity by using both Financial as well as non-financial measures of performance. These measures are usually employed in an industry that is dynamic and wherein a business requires continuous improvement to thrive.

- The various activity measures used in an organisation include:

• Financial Efficiency
• Studying deviation between actual and standard
• Promotions
• Profit Sharing
• Controlling Costs
• Bonus

STRATEGY BASED MEASURES:

Overview: Strategy-based measures refer to the accounting system that assigns responsibility to various processes carried out in an entity by translating mission as well as strategy of an organisation into a set of objectives and measures the following four areas:

• Financial area
• Area related to customer
• Area related to business process
• Area related to infrastructure

- The various strategy measures used in an organisation include:

• Financial Measures
• Process measures
• Customer measures
• Infrastructure measures
• Bonus
• Salary
• Profit sharing