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SOLUTION(30 min.) Balanced scorecard.
1. The market for color laser printers is competitive. Vic’s strategy is to produce and sell
high-quality laser printers at a low cost. The key to achieving higher quality is reducing defects
The scorecard correctly measures and evaluates Vic’s broad strategy of growth through
It appears from the scorecard that Vic was not successful in implementing its strategy in
2. Vic’s scorecard does not provide any explanation of why the target market share was not
Vic may want to include some measures in the customer perspective (and internal business
process perspective) that get at these issues. These measures would then serve as leading
3. Vic should include a measure of employee satisfaction to the learning and growth
perspective and a measure of new product development to the internal business process
perspective. The focus of its current scorecard measures is on processes and not on people and
products.
Vic considers training and empowering workers as important for implementing its
high-quality, low-cost strategy. Therefore employee training and employee satisfaction should
Adding new product development measures to internal business processes is also
important. As Vic reduces defects, Vic’s costs will not automatically decrease because many of
Vic’s costs are fixed. Instead, Vic will have more capacity available to it. The key question is
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4. Improving quality and significantly downsizing to eliminate unused capacity is difficult.
Recall that the key to improving quality at Vic Corporation is training and empowering workers.
As quality improvements occur, capacity will be freed up, but because costs are fixed, quality
If it had to downsize, the preferred approach for Vic to follow is to first downsize by
laying off employees, assure the remaining employees that there will be no more layoffs, and
then seek to improve quality.
12-40 Balanced scorecard, environmental, and social performance. Gardini Chocolates
makes custom-labeled, high-quality, specialty candy bars for special events and advertising
purposes. The company employs several chocolatiers who were trained in Germany. The
company offers many varieties of chocolate, including milk, semi-sweet, white, and dark
chocolate. It also offers a variety of ingredients, such as coffee, berries, and fresh mint. The real
appeal for the company’s product, however, is its custom labeling. Customers can order labels
for special occasions (for example, wedding invitation labels) or business purposes (for example,
business card labels). The company’s balanced scorecard for 2017 follows. For brevity, the
initiatives taken under each objective are omitted.
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Required:
1. Was Gardini successful in implementing its strategy in 2017? Explain your answer.
2. Would you have included some measure of customer satisfaction in the customer
perspective? Are these objectives critical to Gardini for implementing its strategy? Why
or why not? Explain briefly.
3. Explain why Gardini did not achieve its target market share in the candy bar market but still
exceeded its financial targets. Is “market share of overall candy bar market” a good measure
of market share for Gardini? Explain briefly.
4. Do you agree with Gardini’s decision not to include measures of changes in operating
income from productivity improvements under the financial perspective of the balanced
scorecard? Explain briefly.
5. Why did Gardini include balanced scorecard standards relating to environmental and social
performance? Is the company meeting its performance objectives in these areas?
SOLUTION(25 min.) Balanced scorecard, environmental and social performance.
1. Gardini’s strategy is to focus on “service-oriented customers” who are willing to pay a
Does the scorecard represent Gardini’s strategy? By and large it does. The focus of the
scorecard is on measures of process improvement, quality, market share, and financial success
Based on the scorecard being reasonably well designed, how has Gardini performed
relative to its strategy in 2017? It appears from the scorecard that Gardini was successful in
implementing its strategy in 2017. It achieved all targets in the financial, internal business, and
2. Yes, Gardini should include some measure of customer satisfaction in the customer
perspective. Gardini’s differentiation strategy and ability to charge a premium price is based on
meeting and/or exceeding customer expectations, especially in the custom design of the labels.
3. To evaluate if it has been successful in implementing its strategy, Gardini needs to
measure its market share in its targeted market segment, not its market share in the overall
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4. Gardini is correct in not measuring changes in operating income from productivity
improvements on its scorecard under the financial perspective. Gardini’s strategy is to grow by
5. Gardini included social and environmental performance measures in its balanced
scorecard because it believes strong environmental and social performance gives it a competitive
Following the concept of shared value, Gardini includes social and environmental
measures (together with business goals and measures) in its balanced scorecard to evaluate how
Not all companies believe in implementing sustainability goals, but those that do find the
balanced scorecard to be a useful tool to simultaneously implement both financial and
sustainability goals.
12-41 Balanced scorecard, social performance. Comtex Company provides cable and Internet
services in the greater Boston area. There are many competitors that provide similar services.
Comtex believes that the key to financial success is to offer a quality service at the lowest cost.
Comtex currently spends a significant amount of hours on installation and post-installation
support. This is one area that the company has targeted for cost reduction. Comtex’s balanced
scorecard for 2017 follows.
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Required:
1. Was Comtex successful in implementing its strategy in 2017? Explain.
2. Do you agree with Comtex’s decision to include measures of developing innovative services
(research and development costs) in the internal-business-process perspective of the balanced
scorecard? Explain briefly.
3. Is there a cause-and-effect linkage between the measures in the internal-business-process
perspective and the customer perspective? That is, would you add other measures to the
internal-business-process perspective or the customer perspective? Why or why not? Explain
briefly.
4. Why do you think Comtex included balanced scorecard measures relating to employee safety
and community engagement? How well is the company doing on these measures?
SOLUTION
(25 min.) Balanced Scorecard, social performance.
1. The market for cable and Internet providers is competitive. Comtex’s strategy follows a
cost-leadership strategy—providing quality service at low cost by being efficient, and effective.
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The scorecard correctly measures and evaluates Comtex’s strategy of growth through
It appears from the scorecard that Comtex was not successful in implementing its strategy
in 2017. Although it achieved targeted performance in most of the learning and growth and
Comtex’s scorecard does not provide an explanation of why the target customer
2. Comtex should not include R&D costs in its internal business process perspective. It
should not focus on developing innovative services because it is not following a product
2. There is a cause-and-effect relationship between the installation time per customer and
customer satisfaction but not between money spent in R&D and customer satisfaction. As
discussed in requirement 2 above, I would drop the R&D measure. I would then add measures
In the customer perspective, I would add measures to track Comtex’s market share in the
Boston area. Do increases in customer satisfaction translate into higher market shares? Is Comtex
Although not required by the question, the instructor could ask the class what else
Comtex might want to include in the learning and growth perspective to support the customer
and internal business process perspectives. The learning and growth measures would then serve
3. Comtex included social and environmental performance measures in its balanced scorecard
because it believes strong environmental and social performance gives it a competitive advantage
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Following the concept of shared value, Comtex includes social and environmental
measures (together with business goals and measures) in its balanced scorecard to evaluate how
well it is doing toward achieving its social and environmental goals. The balanced scorecard
Not all companies believe in implementing sustainability goals, but those that do find the
12-42 Balanced scorecard, environmental, and social performance. WrightAir is a
no-frills airline that services the Midwest. Its mission is to be the only short-haul, low-fare,
high-frequency, point-to-point carrier in the Midwest. However, there are several large
commercial carriers offering air transportation, and WrightAir knows that it cannot compete with
them based on the services those carriers provide. WrightAir has chosen to reduce costs by not
offering many inflight services, such as food and entertainment options. Instead, the company is
dedicated to providing the highest quality transportation at the lowest fare. WrightAir’s balanced
scorecard measures (and actual results) for 2017 follow:
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Required:
1. What is WrightAir’s strategy? Was WrightAir successful in implementing its strategy in
2017? Explain your answer.
2. Draw a strategy map as in Exhibit 12-2 for WrightAir describing the cause-and-effect
relationships among the strategic objectives described in the balanced scorecard. Identify
what you believe are any (a) strong ties, (b) focal points, (c) trigger points, and (d) distinctive
objectives. Comment on your structural analysis of the strategy map.
3. Based on the strategy identified in requirement 1 above, what role does the price-recovery
component play in explaining the success of WrightAir?
4. Would you have included customer-service measures in the customer perspective? Why or
why not? Explain briefly.
5. Would you have included some measure of employee satisfaction and employee training in
the learning-and-growth perspective? Would you consider this objective critical to WrightAir
for implementing its strategy? Why or why not? Explain briefly.
6. Why do you think Wright Air has introduced environmental measures in its balanced
scorecard? Is the company meeting its performance objectives in this area?
SOLUTION
(25 min.) Balanced Scorecard.
1. WrightAir is following a cost-leadership strategy based on low-cost, no frills, and high
quality. WrightAir was successful in meeting its financial targets in 2017, but it did not achieve
target performance in the other three perspectives. It was therefore only partially successful in
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1. Solution Exhibit 12-42A presents the strategy map for WrightAir and identifying strong
ties, focal points, and distinctive objectives.
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