MBA 620 3-1 Milestone One (Developing a
Balanced Scorecard) | 2026 Update with
complete solutions.
Practice Question Bank & Answer Rationale
THIS PACK CONTAINS
99 exam-style multiple-choice questions. Each question includes the correct answer and a complete rationale
for focused revision.
COVERAGE
This exam assesses mastery of the balanced scorecard framework as applied in the MBA 620 Milestone One
project. It covers the four BSC perspectives, strategy mapping, objective-measure-target-initiative alignment,
causal linkage validation, and integration with financial and nonfinancial performance systems.
STUDY GUIDE
Recommended duration: 3 hours. Passing target: 80%.
HIGHP - Page 1 of 34
,1. A company's balanced scorecard includes the objective 'reduce customer defection rate
by 15% over two years.' Which BSC perspective does this objective most directly belong
to?
[ ] A. Financial
[ ] B. Customer
[ ] C. Internal Process
[ ] D. Learning and Growth
CORRECT: B. Customer
Customer defection rate is a core customer perspective metric reflecting retention and loyalty. Financial
perspective focuses on shareholder value, internal process on operational efficiency, and learning and growth
on employee capabilities and information systems.
2. In a strategy map, which sequence correctly represents a typical cause-and-effect chain
from the bottom to the top?
[ ] A. Customer -> Financial -> Internal Process -> Learning & Growth
[ ] B. Learning & Growth -> Internal Process -> Customer -> Financial
[ ] C. Internal Process -> Learning & Growth -> Financial -> Customer
[ ] D. Financial -> Customer -> Internal Process -> Learning & Growth
CORRECT: B. Learning & Growth -> Internal Process -> Customer -> Financial
The classic BSC logic flows from employee learning and growth, which improves internal processes, which
enhances customer value, ultimately driving financial results. The other sequences invert or scramble this
causal hierarchy.
3. Which of the following is the most appropriate 'initiative' for the objective 'increase
customer satisfaction scores by 10 points'?
[ ] A. Customer satisfaction score target of 90%
[ ] B. Launch a customer relationship management training program for frontline staff
[ ] C. Net promoter score measured quarterly
[ ] D. Reduce operating expenses by 5%
CORRECT: B. Launch a customer relationship management training program for frontline staff
An initiative is a specific action or project undertaken to achieve the objective. A CRM training program is an
action, while the score target is a target, the net promoter score is a measure, and expense reduction is a
different financial objective.
4. When selecting measures for a BSC objective, which criterion is most critical to ensure
the scorecard drives desired behavior?
[ ] A. The measure must be easily manipulated by managers.
HIGHP - Page 2 of 34
, [ ] B. The measure must be directly linked to the objective and within the unit's control.
[ ] C. The measure should be purely financial to ensure objectivity.
[ ] D. The measure must be updated annually to reduce reporting burden.
CORRECT: B. The measure must be directly linked to the objective and within the unit's control.
Effective BSC measures are causally linked to the objective and actionable by the responsible unit.
Manipulability is undesirable, financial-only measures ignore other perspectives, and annual updates are too
infrequent for timely feedback.
5. A firm sets a target of '95% on-time delivery' but has no initiative to improve logistics.
Which BSC design flaw does this illustrate?
[ ] A. Missing causal link between objective and initiative
[ ] B. Overemphasis on financial metrics
[ ] C. Lack of customer input
[ ] D. Insufficient employee training
CORRECT: A. Missing causal link between objective and initiative
A target without an initiative leaves a gap in the BSC's action plan; the scorecard should specify how the
target will be achieved. The other options describe different potential issues not directly evidenced here.
6. Which of the following best describes the role of the 'learning and growth' perspective
in the BSC?
[ ] A. It measures immediate financial returns from training investments.
[ ] B. It provides the foundation for improving internal processes and customer outcomes.
[ ] C. It focuses exclusively on customer feedback mechanisms.
[ ] D. It replaces the need for internal process metrics.
CORRECT: B. It provides the foundation for improving internal processes and customer outcomes.
Learning and growth encompasses employee skills, information systems, and organizational climate, which
enable better internal processes and ultimately customer and financial results. It does not measure
immediate financial returns or replace other perspectives.
7. In developing a balanced scorecard, which of the following is a leading indicator of
future financial performance?
[ ] A. Return on equity
[ ] B. Employee satisfaction index
[ ] C. Net profit margin
[ ] D. Cash flow from operations
HIGHP - Page 3 of 34
, CORRECT: B. Employee satisfaction index
Employee satisfaction is a leading indicator because it drives future process improvements and customer
satisfaction, which eventually affect financial outcomes. The other options are lagging financial metrics.
8. A BSC objective states: 'Reduce product development cycle time by 20%.' Which
perspective does this objective belong to?
[ ] A. Financial
[ ] B. Customer
[ ] C. Internal Process
[ ] D. Learning and Growth
CORRECT: C. Internal Process
Cycle time reduction is an operational efficiency metric, falling under the internal process perspective.
Financial perspective deals with monetary outcomes, customer with satisfaction and retention, and learning
and growth with employee and system capabilities.
9. Which of the following is a common pitfall when implementing a balanced scorecard?
[ ] A. Using too few measures across perspectives
[ ] B. Treating the scorecard as a one-time project rather than a continuous strategic management
system
[ ] C. Including both financial and nonfinancial metrics
[ ] D. Aligning initiatives with objectives
CORRECT: B. Treating the scorecard as a one-time project rather than a continuous strategic
management system
A frequent failure is to view the BSC as a static report instead of a dynamic tool for ongoing strategy
execution. Using too few measures, including both metric types, and aligning initiatives are actually
recommended practices.
10. When validating the causal chain in a BSC, which technique is most appropriate?
[ ] A. Regression analysis of historical data between perspectives
[ ] B. Randomly assigning measures to perspectives
[ ] C. Ignoring correlations to avoid complexity
[ ] D. Focusing solely on financial outcomes
CORRECT: A. Regression analysis of historical data between perspectives
Statistical analysis such as regression can test hypothesized cause-and-effect relationships among BSC
perspectives. Random assignment, ignoring correlations, or focusing only on financials undermine the BSC's
strategic logic.
HIGHP - Page 4 of 34
Balanced Scorecard) | 2026 Update with
complete solutions.
Practice Question Bank & Answer Rationale
THIS PACK CONTAINS
99 exam-style multiple-choice questions. Each question includes the correct answer and a complete rationale
for focused revision.
COVERAGE
This exam assesses mastery of the balanced scorecard framework as applied in the MBA 620 Milestone One
project. It covers the four BSC perspectives, strategy mapping, objective-measure-target-initiative alignment,
causal linkage validation, and integration with financial and nonfinancial performance systems.
STUDY GUIDE
Recommended duration: 3 hours. Passing target: 80%.
HIGHP - Page 1 of 34
,1. A company's balanced scorecard includes the objective 'reduce customer defection rate
by 15% over two years.' Which BSC perspective does this objective most directly belong
to?
[ ] A. Financial
[ ] B. Customer
[ ] C. Internal Process
[ ] D. Learning and Growth
CORRECT: B. Customer
Customer defection rate is a core customer perspective metric reflecting retention and loyalty. Financial
perspective focuses on shareholder value, internal process on operational efficiency, and learning and growth
on employee capabilities and information systems.
2. In a strategy map, which sequence correctly represents a typical cause-and-effect chain
from the bottom to the top?
[ ] A. Customer -> Financial -> Internal Process -> Learning & Growth
[ ] B. Learning & Growth -> Internal Process -> Customer -> Financial
[ ] C. Internal Process -> Learning & Growth -> Financial -> Customer
[ ] D. Financial -> Customer -> Internal Process -> Learning & Growth
CORRECT: B. Learning & Growth -> Internal Process -> Customer -> Financial
The classic BSC logic flows from employee learning and growth, which improves internal processes, which
enhances customer value, ultimately driving financial results. The other sequences invert or scramble this
causal hierarchy.
3. Which of the following is the most appropriate 'initiative' for the objective 'increase
customer satisfaction scores by 10 points'?
[ ] A. Customer satisfaction score target of 90%
[ ] B. Launch a customer relationship management training program for frontline staff
[ ] C. Net promoter score measured quarterly
[ ] D. Reduce operating expenses by 5%
CORRECT: B. Launch a customer relationship management training program for frontline staff
An initiative is a specific action or project undertaken to achieve the objective. A CRM training program is an
action, while the score target is a target, the net promoter score is a measure, and expense reduction is a
different financial objective.
4. When selecting measures for a BSC objective, which criterion is most critical to ensure
the scorecard drives desired behavior?
[ ] A. The measure must be easily manipulated by managers.
HIGHP - Page 2 of 34
, [ ] B. The measure must be directly linked to the objective and within the unit's control.
[ ] C. The measure should be purely financial to ensure objectivity.
[ ] D. The measure must be updated annually to reduce reporting burden.
CORRECT: B. The measure must be directly linked to the objective and within the unit's control.
Effective BSC measures are causally linked to the objective and actionable by the responsible unit.
Manipulability is undesirable, financial-only measures ignore other perspectives, and annual updates are too
infrequent for timely feedback.
5. A firm sets a target of '95% on-time delivery' but has no initiative to improve logistics.
Which BSC design flaw does this illustrate?
[ ] A. Missing causal link between objective and initiative
[ ] B. Overemphasis on financial metrics
[ ] C. Lack of customer input
[ ] D. Insufficient employee training
CORRECT: A. Missing causal link between objective and initiative
A target without an initiative leaves a gap in the BSC's action plan; the scorecard should specify how the
target will be achieved. The other options describe different potential issues not directly evidenced here.
6. Which of the following best describes the role of the 'learning and growth' perspective
in the BSC?
[ ] A. It measures immediate financial returns from training investments.
[ ] B. It provides the foundation for improving internal processes and customer outcomes.
[ ] C. It focuses exclusively on customer feedback mechanisms.
[ ] D. It replaces the need for internal process metrics.
CORRECT: B. It provides the foundation for improving internal processes and customer outcomes.
Learning and growth encompasses employee skills, information systems, and organizational climate, which
enable better internal processes and ultimately customer and financial results. It does not measure
immediate financial returns or replace other perspectives.
7. In developing a balanced scorecard, which of the following is a leading indicator of
future financial performance?
[ ] A. Return on equity
[ ] B. Employee satisfaction index
[ ] C. Net profit margin
[ ] D. Cash flow from operations
HIGHP - Page 3 of 34
, CORRECT: B. Employee satisfaction index
Employee satisfaction is a leading indicator because it drives future process improvements and customer
satisfaction, which eventually affect financial outcomes. The other options are lagging financial metrics.
8. A BSC objective states: 'Reduce product development cycle time by 20%.' Which
perspective does this objective belong to?
[ ] A. Financial
[ ] B. Customer
[ ] C. Internal Process
[ ] D. Learning and Growth
CORRECT: C. Internal Process
Cycle time reduction is an operational efficiency metric, falling under the internal process perspective.
Financial perspective deals with monetary outcomes, customer with satisfaction and retention, and learning
and growth with employee and system capabilities.
9. Which of the following is a common pitfall when implementing a balanced scorecard?
[ ] A. Using too few measures across perspectives
[ ] B. Treating the scorecard as a one-time project rather than a continuous strategic management
system
[ ] C. Including both financial and nonfinancial metrics
[ ] D. Aligning initiatives with objectives
CORRECT: B. Treating the scorecard as a one-time project rather than a continuous strategic
management system
A frequent failure is to view the BSC as a static report instead of a dynamic tool for ongoing strategy
execution. Using too few measures, including both metric types, and aligning initiatives are actually
recommended practices.
10. When validating the causal chain in a BSC, which technique is most appropriate?
[ ] A. Regression analysis of historical data between perspectives
[ ] B. Randomly assigning measures to perspectives
[ ] C. Ignoring correlations to avoid complexity
[ ] D. Focusing solely on financial outcomes
CORRECT: A. Regression analysis of historical data between perspectives
Statistical analysis such as regression can test hypothesized cause-and-effect relationships among BSC
perspectives. Random assignment, ignoring correlations, or focusing only on financials undermine the BSC's
strategic logic.
HIGHP - Page 4 of 34
