The ABC Company manufactures widgets. It competes and plans to grow by selling high-quality widgets at low prices and by delivering them to customers quickly. There are many other companies in the industry producing similar widgets. ABC believes it needs to continuously improve its manufacturing and delivery processes and that having satisfied employees are both critical to its long-term success.

a) Based on this information, what type of strategy do you believe ABC is pursuing?
Be sure to back-up your claim with specific evidence.

List, describe, and justify eight metrics (2 in each of the Balanced Scorecard perspectives) that you believe ABC should include in its Balanced Scorecard.

c) ABC calculates the following figures:

2013 operating income $1,850,000
2014 operating income $2,013,000
Growth component $85,000
Price-recovery component ($72,000)
Productivity component $150,000

In addition, the market for widgets did not grow in 2014, input process did not change in 2014, and ABC reduced its selling price in 2014.

Based on this information, do you believe ABC’s increase in operating income in 2014 is consistent with the strategy you identified in part a?
Be sure to justify your answer with specific information.

Question #2

Consider the following quality cost report:

Year 1 Year 2 Year 3
Prevention $1,850 $1750 $1,625
Appraisal $2,250 $2,300 $2,300
Internal failure $2,300 $2,500 $2,700
External failure $2,500 $2,700 $3,000
Total quality costs $8,900 $9,250 $9,625
Total revenues $135,000 $145,000 $152,000

Do you believe this firm’s quality initiatives have been successful?
Be sure to justify your opinion with specific information from the quality report.