Author Question: Balanced scorecard and strategy. Scott Company manufactures a DVD player called the Maxus. The ... (Read 34 times)

abern · **on:** Jul 6, 2018

Balanced scorecard and strategy.

Scott Company manufactures a DVD player called the Maxus. The company sells the player to discount stores throughout the country. This player is significantly less expensive than similar products sold by Scott's competitors, but the Maxus offers just DVD playback, compared with DVD and Blu-ray playback offered by competitor Nomad Manufacturing. Furthermore, the Maxus has experienced production problems that have resulted in significant rework costs. Nomad's model has an excellent reputation for quality.

Required:
1. Draw a simple customer preference map for Scott and Nomad using the attributes of price, quality, and playback features. Use the format of Exhibit 12- 1.
2. Is Scott's current strategy that of product differentiation or cost leadership?
3. Scott would like to improve quality and decrease costs by improving processes and training workers to reduce rework. Scott's managers believe the increased quality will increase sales. Draw a strategy map as in Exhibit 12- 2 describing the cause-and-effect relationships among the strategic objectives you would expect to see in Scott's balanced scorecard.
4. For each strategic objective, suggest a measure you would recommend in Scott's balanced scorecard.

Question 2

List the main categories of accounts (as provided in a typical chart of accounts) and provide their specific normal balance.

Anna · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

1. Solution Exhibit 12- 30A shows the customer preference map for DVD players for Scott Company and Nomad Manufacturing on price, playback features, and quality.

EXHIBIT 12- 30A
Customer Preference Map for DVD Players

2. Scott currently follows a cost leadership strategy, which is reflected in its lower price compared to Nomad Manufacturing. The Maxus DVD player is similar to products offered by competitors.

3. Solution Exhibit 12- 30B presents Scott's strategy map explaining cause-and-effect relation-ships in its balanced scorecard.

EXHIBIT 12- 30B
Strategy Map for Scott Company

In the learning and growth perspective, Scott measures the percentage of employees trained in quality management and the percentage of manufacturing processes with real-time feedback. These objectives improve manufacturing processes and quality in the internal-business process perspective. Improvements in these measures increase customer satisfaction and market shares, which in turn increase revenues and operating income. To see if the increases in operating income are coming from productivity improvements, Scott measures the changes in operating income specifically attributable to productivity and quality improvements.

4. To achieve its goals, Scott could include the following measures under each perspective of the balanced scorecard related to its strategy map:

Financial Perspective Operating income from productivity and quality improvement
Operating income from growth
Revenue growth

Customer Perspective Market share
Number of additional customers
Customer-satisfaction ratings

Internal-Business-Process Perspective Percentage of defective products sold
Number of major improvements in manufacturing process

Learning-and-Growth Perspective Employee-satisfaction ratings
Percentage of employees trained in quality management
Percentage of line workers empowered to manage processes
Percentage of manufacturing processes with real-time feedback

Answer to Question 2

Assets (DR), Liabilities (CR), EquityCapital (CR), EquityDrawing (DR), Revenue (CR), and Expenses (DR).