Describe the perspectives of the balanced scorecard

Question #1

Assume the CFO of your organization approaches you to ask your advice about implementing the Balanced Scorecard at your organization.

a) List and describe the four perspectives of the Balanced Scorecard.

b) What steps would you encourage him or her to take in order to successfully implement and use the Scorecard?

Question #2

The ABC Company manufactures widgets. It competes and plans to grow by selling high-quality widgets at low prices and by delivering them to customers quickly. There are many other companies in the industry producing similar widgets. ABC believes it needs to continuously improve its manufacturing and delivery processes and that having satisfied employees are both critical to its long-term success.

a) Based on this information, what type of strategy do you believe ABC is pursuing? Be sure to back up your claim with specific evidence.

b) List and justify eight metrics (2 in each of the Balanced Scorecard perspectives) that you believe ABC should include in its Balanced Scorecard.

c) ABC calculates the following figures:

2011 operating income

$1,850,000

2012 operating income

$2,013,000

Growth component

$85,000

Price-recovery component

($72,000)

Productivity component

$150,000

In addition, the market for widgets did not grow in 2012, input process did not change in 2012, and ABC reduced its selling price in 2012.

Based on this information, do you believe ABC’s increase in operating income in 2012 is consistent with the strategy you identified in part a? Be sure to justify your answer with specific information.

Question #3

Consider the following quality cost report:

 

Year 1

Year 2

Year 3

Prevention

$950

$1,065

$995

Appraisal

$1,250

$1,100

$900

Internal failure

$875

$925

$975

External failure

$1,400

$1,500

$1,625

Total quality costs

$4,475

$4,590

$4,495

Total revenues

$25,000

$26,500

$27,775

Do you believe this firm’s quality initiatives have been successful? Be sure to justify your opinion with specific information from the quality report.

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