$1, 500,000 Operating income for 2016 Add growth component Deduct price-recovery component Add productivity component Operating income for 2017 91,000 (82,000) 145,000 $1, 654,000 The industry market size for electric motors did not grow in 2017, input prices did not change, and Pineway reduced the prices of its motors. 1. Was Pineway's gain in operating income in 2017 consistent with the strategy you identified in require- ment 1 of Exercise 12-19? 2. Explain the productivity component. In general, does it represent savings in only variable costs, only fixed costs, or both variable and fixed costs? Required 1. Is Pineway's 2017 strategy one of product differentiation or cost leadership? Explain briefly. 2. Ramsey Corporation, a competitor of Pineway, manufactures electric motors with more sizes and features than Pineway at a higher price. Ramsey's motors are of high quality but require more time to produce and so have longer delivery times. Draw a simple customer preference map as in Ex- hibit 12-1 for Pineway and Ramsey using the attributes of price, delivery time, quality, and design features. Required Draw a strategy map as in Exhibit 12-2 with at least two strategic objectives you would expect to see under each balanced scorecard perspective. Identify what you believe are any (a) strong ties, (b) focal points, (c) trigger points, and (d) distinctive objectives. Comment on the structural analysis of your strategy map. For each strategic objective indicate a measure you would expect to see in Pineway's balanced score- card for 2017. 3. 4.

Question

Analysis of growth, price-recovery, and productivity components (continuation of 12-19). An analysis of Pineway’s operating-income changes between 2016 and 2017 shows the following:

Reference:

Balanced scorecard. Pineway Electric manufactures electric motors. It competes and plans to grow by selling high-quality motors at a low price and by delivering them to customers in a reasonable time after receiving customers’ orders. There are many other manufacturers who produce similar motors. Pineway believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2017.

$1, 500,000
Operating income for 2016
Add growth component
Deduct price-recovery component
Add productivity component
Operating income for 2017
91,000
(82,000)
145,000
$1, 654,000
The industry market size for electric motors did not grow in 2017, input prices did not change, and Pineway
reduced the prices of its motors.
1. Was Pineway's gain in operating income in 2017 consistent with the strategy you identified in require-
ment 1 of Exercise 12-19?
2. Explain the productivity component. In general, does it represent savings in only variable costs, only
fixed costs, or both variable and fixed costs?
Required

Image Transcription

$1, 500,000 Operating income for 2016 Add growth component Deduct price-recovery component Add productivity component Operating income for 2017 91,000 (82,000) 145,000 $1, 654,000 The industry market size for electric motors did not grow in 2017, input prices did not change, and Pineway reduced the prices of its motors. 1. Was Pineway's gain in operating income in 2017 consistent with the strategy you identified in require- ment 1 of Exercise 12-19? 2. Explain the productivity component. In general, does it represent savings in only variable costs, only fixed costs, or both variable and fixed costs? Required

1. Is Pineway's 2017 strategy one of product differentiation or cost leadership? Explain briefly.
2. Ramsey Corporation, a competitor of Pineway, manufactures electric motors with more sizes and
features than Pineway at a higher price. Ramsey's motors are of high quality but require more time
to produce and so have longer delivery times. Draw a simple customer preference map as in Ex-
hibit 12-1 for Pineway and Ramsey using the attributes of price, delivery time, quality, and design
features.
Required
Draw a strategy map as in Exhibit 12-2 with at least two strategic objectives you would expect to see under
each balanced scorecard perspective. Identify what you believe are any (a) strong ties, (b) focal points,
(c) trigger points, and (d) distinctive objectives. Comment on the structural analysis of your strategy map.
For each strategic objective indicate a measure you would expect to see in Pineway's balanced score-
card for 2017.
3.
4.

Image Transcription

1. Is Pineway's 2017 strategy one of product differentiation or cost leadership? Explain briefly. 2. Ramsey Corporation, a competitor of Pineway, manufactures electric motors with more sizes and features than Pineway at a higher price. Ramsey's motors are of high quality but require more time to produce and so have longer delivery times. Draw a simple customer preference map as in Ex- hibit 12-1 for Pineway and Ramsey using the attributes of price, delivery time, quality, and design features. Required Draw a strategy map as in Exhibit 12-2 with at least two strategic objectives you would expect to see under each balanced scorecard perspective. Identify what you believe are any (a) strong ties, (b) focal points, (c) trigger points, and (d) distinctive objectives. Comment on the structural analysis of your strategy map. For each strategic objective indicate a measure you would expect to see in Pineway's balanced score- card for 2017. 3. 4.

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