There is a direct link between strategy and performance evaluation.

A key step in implementing a performance measurement system is the development of balance scorecard. Its a set of discrete yet linked measures of business performance that provides managers with comprehensive and timely information. The measure to be adopted in the balance scorecard depends on the firm strategy: 1. 2. Financial measure: Profitability, Operating profit, ROI, EPS, Market Share; Operational measure: Customer perspective: Quality and Customer satisfaction (Difficult to quantify), Cost; Internal business perspective: Activity based costing , Just In Time, TQM, reengineering and percentage of defects, Warranty costs. 3. Innovation: New products and new internal processes Since HP is more horizontal integrated and there is an informal control, it is more appropriate to use non financial measures and an informal balance scorecard approach. These conclusions are also supported by the fact that HPI is focused on finding new business to turn into stars and on cows that provide means for new investments (harvest and hold). Since TI is more vertically integrated and there is a formal control, it is more appropriate to use financial measure and a formal balance scorecard approach. These conclusions are also supported by the fact that TI is focused on low growth business with a dominant market share and by TI strategy (main focus on built).