Question #1
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.
b) List, describe, and justify eight metrics 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.