The relationship between economic value creation and competitive advantage is fundamental to strategic management. It provides the foundation on which to formulate a firm$$s competitive strategy for cost leadership or differentiation. A company has a competitive advantage when it creates more economic value than rival firms do$.$ The balanced scorecard approach attempts to provide a more integrative view of competitive advantage and how the company is performing. Its purpose is to assess multiple internal and external performance dimensions to balance financial and strategic goals.

This activity is important because as a manager, you need to understand how creating economic value for your business can lead to a competitive advantage over your rivals. It is also important to understand how to use metrics both internally and externally to balance both strategic and financial goals.

The goal of this exercise is for you to understand the multiple internal and external performance metrics that can be used to create value and balance strategic and financial goals.

Review the relevant content in Chapter $5$ and then answer the questions that follow.

What is one disadvantage of a balanced scorecard?

Multiple Choice

It gives limited information in planning and designing business processes.

It provides limited guidance about which metrics to choose.

It limits the ability to link the strategic vision to strategic business units.

It cannot be used for strategy implementation.

It provides more insight into how metrics that deviate from goals can be rectified.