Coors: Balanced Scorecard Essay

2002 Words Apr 27th, 2011 9 Pages
Coors is a family owned business in the beer industry offering 16 different kinds of beers in the US market. Coors has 3 production plants in the US with its Colorado plant being the largest brewery in the world and serving 70% of the US market. Coors has implemented a supply chain management (SCM) software solution from the Computer Integrated Logistics (CIL) project to solve urgent problems in the logistical area such as meeting seasonal demand, surges from promotion and introducing new brands each year. Other issues addressed by the CIL project were filling routine customer orders, filling rush orders and shipping beer to distributors before it was spoiled. The project’s objective was to increase the company’s profitability by reducing …show more content…
The advantage of a BSC is that strong improvements in non-financial measures signal the prospect of creating economic value in the future. A more detailed set of objectives, performance measures and initiatives are suggested in Table 1 in the Appendix. The BSC will be reviewed and assessed quarterly to make sure that BSC targets are met. Moreover, any new reasonable performance measures will be subsequently incorporated in the BSC. Additionally, performance measures that do not drive correct behavior will be excluded. Coors is assessing the potential of the economic value added (EVA) as a BSC financial performance measure. EVA reflects the economic profit of the organization.
In order to calculate EVA, the accounting financials needs to be adjusted to derive Net Operating Profit After Taxes (NOPAT). The following adjustments (Appendix: Table 2) are added to derive the economic profit and capital: 1) Advertising Costs - three-year life 2) LIFO reserve 3) Deferred income tax liability 4) Capitalization of operating leases 5) Net interest expense
EVA is calculated as:
EVA = NOPAT – WACC * (Total Assets – Current Liabilities), in which
WACC = Weighted Average Cost of Capital.
Current liabilities are deducted from the total assets to reflect that no return on capital is requested. Detailed calculations can be found in the Table 3 in Appendix.
EVA measures the value created in

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