Balanced Scorecard and Strategy: Food Ingredients Company The balanced scorecard for a small food-ingredients company is shown below. The information is based on an actual company, and detailed information about its operations and strategy is confidential. You may assume that the firm’s products and services are used by a diverse set of customers, including different types of food processors (Kraft, Heinz, Unilever, . . .), restaurant chains, bakeries, supermarkets, and the like. The company is located in a large city.
BALANCED SCORECARD FOR A FOOD INGREDIENTS COMPANY | |
Goals | Scorecard Measures |
Financial Perspective |
|
Capture an increasing share of industry growth | Company growth versus industry growth |
Secure the base business while remaining the preferred supplier to our customers | Volume trend by line of business; revenue trend by line |
of business; gross margin | |
Expand aggressively in global markets | Ratio of North American sales to international sales |
Commercialize a continuous stream of profitable new ingredients and services | Percentage of sales from products launched within the past five years; gross profit from new products |
Customer Perspective |
|
Become the lowest-cost supplier | Total cost of using our products and services relative to total cost of using competitive products and services |
Tailor products and services to meet local needs |
|
Expand those products and services that meet customers’ needs better than Competitors | Percent of products in R&D pipeline that are being test-marketed by our customers |
Customer satisfaction | Customer survey |
Internal Perspective |
|
Maintain lowest cost base in the industry | Our total costs relative to number one competitor; inventory turnover; plant utilization |
Maintain consistent, predictable production Processes | First-pass success rate |
Continue to improve distribution efficiency | Percentage of perfect orders |
Build capability to screen and identify profitable products and services | Change in customer profitability |
Integrate acquisitions and alliances efficiently | Revenues per sales dollar |
Learning and Growth Perspective |
|
Link the overall strategy to reward and recognition system | Net income per dollar of variable pay |
Foster a culture that supports innovation and growth | Annual preparedness assessment; quarterly report |
Source: Chee W. Chow, Kamal M. Haddad, and James W. Williamson, “Applying the Balanced Scorecard to Small Companies,” Management Accounting, August 1997, pp. 21−27.
Required Based on the information provided, determine what you think is the competitive strategy of the company. Does the balanced scorecard shown above reflect this strategy? Why or why not?
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