IF THEN STATEMENTS, STRATEGY MAP
At the end of 2005, Activo Company implemented a low cost strategy to improve its competitive position. Its objective was to become the low cost producer in its industry. A Balanced Scorecard was developed to guide the company toward this objective. To lower costs, Activo undertook a number of improvement activities such as JIT production, total quality management, and activity based management. Now, after two years of operation, the president of Activo wants some assessment of the achievements. To help provide this assessment, the following information on one product has been gathered:
|
|
2005 |
2007 |
|
Theoretical annual capacity |
124,800 |
124,800 |
|
Actual production |
104,000 |
117,000 |
|
Market size (in units sold) |
650,000 |
650,000 |
|
Production hours available (20 workers) |
52,000 |
52,000 |
|
Very satisfied customers |
41,600 |
70,200 |
|
Actual cost per unit |
$162.50 |
$130 |
|
Days of inventory |
7.8 |
3.9 |
|
Number of defective units |
6,500 |
2,600 |
|
Total worker suggestions |
52 |
156 |
|
Hours of training |
130 |
520 |
|
Selling price per unit |
$195 |
$195 |
|
Number of new customers |
2,600 |
13,000 |
1. Express Activo’s strategy as a series of if then statements. What does this tell you about Balanced Scorecard measures?
2. Prepare a strategy map that illustrates the relationships among the likely strategic objectives.