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Critical success factor

Critical success factor is one of a small number of performance areas in which a firm must excel to achieve its strategy. Each factor is typically tracked by one or more key performance indicators to make progress measurable.

ByHoang TruongUpdated

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A food retailer pursuing a freshness strategy identifies two critical success factors: on-shelf availability and waste rate. Each is made measurable with a KPI — percentage of products in stock at 6 p.m. daily, and percentage of stock written off unsold each week — turning a strategic aspiration into a managed operational target.

Where it fits
SubjectManagerial AccountingAdvancedTopicStrategic Performance & the Balanced ScorecardAdvanced

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PracticeCORE

A budget airline identifies 'aircraft turnaround time below 25 minutes' and 'seat-load factor above 85%' as its two critical success factors. A new operations analyst argues that 14 additional KPIs — including fuel efficiency, catering cost, complaint volume, and staff absenteeism — should be given equal prominence. What is the main risk of treating all 16 measures as equally important?

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