Strategic Management Assignment

Strategic management assignment

Q1.  

        The Balanced Scorecard is actually a strategy evaluation and control technique. The Balanced Scorecard enables organizations to connect the gap between strategy and actions, it can reflect the most important aspects of the business, and respond quickly to the progress, feedback and changing business conditions. To be detail, it is a process that is for a firm to evaluate strategies from four different perspectives: (1.) financial performance, it can measure the return on investment, shareholder value of the company (2.) customer knowledge, to check the customer satisfaction (3.) internal business process, what processes should the company excel to succeed (4.) learning and growth, think about how the employees sustain the ability to change and improve If make it easy to understand, a Balanced scorecard for a company I simply a listing of all key objectives to work toward, and with a time limitation of when each objective is to be finished.

         To explain it with an example, I will use the 3M Corporation as a sample. According to their information, the company contains a financial objective, that is to achieve annual growth in earning per share of 10 percent or better, also as a strategic objective to have at least 30 percent of sales come from products introduced in the past four years. The overall aim of their Balanced Scorecard is to balance shareholder objectives with customer and operational objectives. We can see how the Balanced Scorecard provides organizations an easy way to clarify vision and strategy and translate them into real.

        Another example can be a Balanced Scorecard of a University, let’s take the Balanced Scorecard of the University of California, San Diego as an example. For the financial perspectives, they set the question ‘how do we look to resource providers’, they concern about the profitability, the efficiency, and the leverage. For the customer perspective, they set the question ‘How does customer see us’, and they want measure that do the customers own a feel that the employees are understanding needs, professional, variety, and courteous. For the part of internal process prospective, the want to measure are they productive and effective, so they are going to measure the personal expense as a percentage of net sales, etc. Last, the part of learning and growth perspectives, they want to know how the employees feel, just like do they feel that they are having influence in the community, can they manage their own workload, is there enough valuable training provided, etc. If I am going to give advice for this Balanced Scorecard, it is quite successful as an effective Balanced Scorecard should contain a carefully chosen combination of strategic and financial objectives suitable to the company.

       Economic Value Added is used for evaluating performance by comparing earnings to capital investment, it is a way of judging financial performance by measuring the amount by which the earnings of a project, an operation, or a corporation exceed or fall of the total amount of capital that was originally invested by its owners. EVA is conceptually simple: from net operating profit, deduct an appropriate charge for the opportunity cost of all capital invested in an enterprise.

        In this case, observe form the table and description of EVA adjustment, we can see some problem, the adjustment of financial costs, as the capital costs includes the cost of debt, therefore interest costs incurred should not be included when calculating net operating profit after tax by the accounting standard.

Q2.  

      Benchmarking is an analytical tool used to determine whether a firm’s value chain activities are competitive compared to competitive opponent and thus conductive to win in the marketplace. Benchmarking enables a firm to take action to improve its competitiveness by identifying value chain activities where the competitive opponent has comparative advantages in cost, service or operation.

        According to the key performance measure of Coors, the one of problem is the production cost. The case shows that Coors net operating profit before income taxes had increased from $75 million in 1996 to $105 in 1997. According to the CEO’s shareholder letter and a Value Line analysis, the major reason for this increase was the productivity improvement from the supply chain management project.

        The second problem could be production stability. We can see in the case Coors often could not meet its goal to load beer product directly off the production line into waiting railroad cars. The unstable factor disrupts the production plan and therefore increases the costs of time.

        The third problem is packaging. By the data searched, in the late 1990’s, Coors had introduced a baseball bat bottle and a football pigskin bottle.  Coors invests heavily in packaging. Therefore, Coors had invested a large capital in it and finally causes the variance in production costs.