Problem

Balanced Scorecard and Strategy: Food Ingredients Company The balanced scorecard for a sma...

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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