Building a balanced scorecard Hit-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican street food, Ethiopian cuisine, and Lebanese-Italian fusion. The company was founded three years ago by Juanita O'Brien when she opened a single food truck with a unique menu. As her business has grown, she has become concerned about her ability to manage and control the business. O’Brien describes how the company was built, its key success factors, and its recent growth. I built the company from the ground up. In the beginning it was just me. I drove the truck, set the menu, bought the ingredients. prepared the meals, served the meals, cleaned the kitchen, and maintained the equipment. I made unique meals from quality ingredients, and didn't serve anything that wasn't perfect. I changed my location daily and notified customers of my location via Twitter. As my customer base grew. I hired employees to help me in the truck Then one day I realized that I had a formula that could be expanded to multiple trucks. Before I knew it I had 10 trucks and was hiring people to do everything that I used to do by myself. Now, I work with my team to build the menu, set daily locations for the trucks, and manage the operations of the business My business model is based on providing the highest quality street food and charging more for it than other trucks. You won't get the cheapest meal at one of my trucks, but you will get the best The superior quality allows me to price my meals a little bit higher than the other trucks My employees are critical to my success. I pay them a better wage than they could make on other food trucks, and I expect more from them. I rely on them to maintain the quality that I established when I opened my first truck. Things are going great, but I'm feeling overwhelmed So far, the growth sales has led to a growth in profitability—but I’m getting nervous. If quality starts to fall off, my brand value erodes, and that could affect the prices that I charge for my meals and the success of my business. Create balanced scorecard measures for Hit-n-Run Inc. Identify whether these measures best fit the innovation, customer, internal process, or financial dimension of the balanced scorecard.

Crawfords Books and Things has a traditional bookstore housed downtown Charlotte. The store has been there forty years, and many customers love the fact that they can hold the books in their hands and browse the offerings. Crawfords just started an online book division for people who like to order books online. EVA for the Charlotte store is about $13 million, while EVA for the online division shows a value of -$2.2 million. A. Explain why it might be better to evaluate the online division using a balanced scorecard. B. Suggest two measures for the customer dimension that would be appropriate for the online division and two measures for the internal processes dimension of the balanced scorecard that would be appropriate for the online division.

Eat-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican street food, Ethiopian cuisine, and Lebanese-Italian fusion. The company was founded three years ago by Juanita OBrien when she opened a single food truck with a unique menu. As her business has grown, she has become concerned about her ability to manage and control the business. OBrien describes how the company was built, its key success factors, and its recent growth: I built the company from the ground up. In the beginning, it was just me. I drove the truck, set the menu, bought the ingredients, prepared the meals, served the meals, cleaned the kitchen, and maintained the equipment. I made unique meals from quality ingredients and didnt serve anything that wasnt perfect. I changed my location daily and notified customers of my location via Twitter. As my customer base grew, I hired employees to help me in the truck. Then one day I realized that I had a formula that could be expanded to multiple trucks. Before I knew it, I had 10 trucks and was hiring people to do everything that I used to do by myself. Now, I work with my team to build the menu, set daily locations for the trucks, and manage the operations of the business. My business model is based on providing the highest-quality street food and charging more for it than other trucks. You wont get the cheapest meal at one of my trucks, but you will get the best. The superior quality allows me to price my meals a little bit higher than the other trucks. My employees are critical to my success. I pay them a better wage than they could make on other food trucks, and I expect more from them. I rely on them to maintain the quality that I established when I opened my first truck. Things are going great, but Im feeling overwhelmed. So far, the growth in sales has led to a growth in profitabilitybut Im getting nervous. If quality starts to fall off, my brand value erodes, and that could affect the prices that I charge for my meals and the success of my business. Create balanced scorecard metrics for Eat-n-Run Inc. Identify whether these measures best fit the learning and growth, internal processes, customer, or financial performance perspective of the balanced scorecard.

Duncan’s Pizzas is a chain of pizza stores. Pizzas are made fresh in-store, and then delivered to customers by a fleet of drivers. The senior management team has identified the strategic priorities for the business as on-time delivery and product quality. Required: a) For each of the strategic priorities, suggest three performance measures. (6 marks) b) If the company is successful in achieving challenging targets for these performance measures, will it also necessarily achieve high profitability? Explain your answer. (4 marks, maximum 400 words)

Taylor Construction builds custom homes in Dallas, Texas. Brandon Taylor knows that his future depends on the quality of the homes he builds and the service he provides to customers. Most new-customer sales arise from word-of-mouth advertising by former customers.Identify the balanced scorecard perspective for each measure in the exercise. Perspective a. Number of customer complaints Internal business processesCustomerLearning & growthFinancial b. Employee turnover Learning & growthFinancialInternal business processesCustomer c. Net profit per house constructed Learning & growthFinancialInternal business processesCustomer d. Turnaround time on customer design changes Learning & growthInternal business processesCustomerFinancial e. Hours of training per employee Learning & growthFinancialInternal business processesCustomer f. Average labor cost per house CustomerLearning &…

Many fast-food restaurants compete on lean business practices. Match each of the following activities at a fast-food restaurant with one of the three lean business practices a, b, or c that it strives to achieve. Some activities might relate to more than one lean business practice. 1. Courteous employees a. Just-in-time (JIT) 2. Food produced to order b. Continuous improvement (CI) 3. Clean tables and floors c. Total quality management (TQM) 4. Orders filled within three minutes 5. Standardized food-making processes 6. New product development

Creating Balanced Scorecard? that Support Different Strategies The Midwest Consulting Group (MCG) helps companies build balanced scorecards. As part of its marketing efforts. MCG conducts an annual balanced scorecard workshop for prospective clients. As MCG’s newest employee, your boss has asked you to participate in this year’s workshop by explaining to attendees how a company’s strategy determines the measures that are appropriate for its balanced scorecard. Your boss has provided you with the excerpts below from the annual reports of two current MCG clients. She has asked you to use these excerpts in your portion of the workshop. Excerpt from Applied Pharmaceuticals’ annual report: The keys to our business are consistent and timely new product introductions and manufacturing process integrity. The new product introduction side of the equation is a function of research and development (R&D) yield (e.g., the number of marketable drug compounds created relative to the total number…

Exercise Analytic Hierarchy process You have been presented with 4 projects to increse profit in 100 fast food restaurants. Please use the AHP process to choose the best option. Projects 1. Adapt self served cashiers 2. Develop an online sales department 3.increse size of kitchen in all restaurant 4. Hire 50% more associates?

Refer to Exercise 10.7 for data. At the end of Year 2, the manager of the Houseware Division is concerned about the divisions performance. As a result, he is considering the opportunity to invest in two independent projects. The first is called the Espresso-Pro; it is an in-home espresso maker that can brew regular coffee as well as make espresso and latte drinks. While the market for espresso drinkers is small initially, he believes this market can grow, especially around gift-giving occasions. The second is the Mini-Prep appliance that can be used to do small chopping and dicing chores that do not require a full-sized food processor. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows: Jarriots corporate headquarters has made available up to 500,000 of capital for this division. Any funds not invested by the division will be retained by headquarters and invested to earn the companys minimum required rate of return, 9 percent. Required: 1. Compute the ROI for each investment. 2. Compute the divisional ROI (rounded to four significant digits) for each of the following four alternatives: a. The Espresso-Pro is added. b. The Mini-Prep is added. c. Both investments are added. d. Neither investment is made; the status quo is maintained. Assuming that divisional managers are evaluated and rewarded on the basis of ROI performance, which alternative do you think the divisional manager will choose?

Young Manufacturing Company is a startup manufacturing firm looking to build and develop its balanced scorecard. Gunner Young, the company owner, has told you the following: Our company was built on the shoulders of our hard-working, diligent employees. I believe that the heart and soul of any company is its employees. If our company is going to succeed, we need to continue to hire and train hard-working, passionate, and ethical employees. I also believe in being efficient. Ive noticed that the companies that always find ways to cut production costs and produce their goods faster are the ones that win in this industry. Gunner has also told you that he is mainly focused on maintaining the customers he has rather than seeking out a lot of new ones. At the end of the day, he admits that his companys ultimate objective is increasing the bottom line. a. Working together in a team, list one strategic objective for each performance perspective of the balanced scorecard based on the information Gunner provided. b. For each strategic objective you came up with in part (a), list at least one performance metric. c. Describe the relationships that would be illustrated by a strategy map of Youngs balanced scorecard. d. Describe the relationships that would be illustrated by a measure map of Youngs balanced scorecard.

The Midwest Consulting Group (MCG) helps companies build balanced scorecards. As part of itsmarketing efforts, MCG conducts an annual balanced scorecard workshop for prospective clients. AsMCG’s newest employee, your boss has asked you to participate in this year’s workshop by explainingto attendees how a company’s strategy determines the measures that are appropriate for its balancedscorecard. Your boss has provided you with the excerpts below from the annual reports of two currentMCG clients. She has asked you to use these excerpts in your portion of the workshop.Excerpt from Applied Pharmaceuticals’ annual report:The keys to our business are consistent and timely new product introductions and manufacturingprocess integrity. The new product introduction side of the equation is a function of research andd evelopment (R&D) yield (e.g., the number of marketable drug compounds created relative to thetotal number of potential compounds pursued). We seek to optimize our R&D yield…

The Grand Inn is a restaurant in Flagstaff, Arizona. It specializes in southwestern style meals in a moderate price range. Paul Weld, the manager of Grand, has determined that during the last 2 years the sales mix and contribution margin ratio of its offerings are as follows. Percent ofTotal Sales ContributionMargin Ratio Appetizers 15 % 50 % Main entrees 50 % 25 % Desserts 10 % 50 % Beverages 25 % 80 % Paul is considering a variety of options to try to improve the profitability of the restaurant. His goal is to generate a target net income of $117,000. The company has fixed costs of $1,053,000 per year. (a) Calculate the total restaurant sales and the sales of each product line that would be necessary to achieve the desired target net income. (Round intermediate calculations to 3 decimal places e.g. 0.251 and final answers to 0 decimal places, e.g. 2,510.) Total restaurant sales $ Sales from Each Product…

Performance metrics Buffalo BBQ Restaurant is trying to become more efficient in training its chefs. It is experimenting with two training programs aimed at this objective. Both programs have basic and advanced training modules. The restaurant has provided the following data regarding the two programs after two weeks of implementation: Training Program A Training Program B New chef # 1 2 3 4 5 6 7 8 9 10 Hours of basic training 24 26 30 21 24 23 26 31 30 24 Hours of advanced training 9 5 8 12 10 6 3 0 1 2 Number of chef mistakes 10 12 14 15 15 5 5 8 3 a. Compute the following performance metrics for each program: (1) Average hours of employee training per chef, rounded to one decimal place. Program A: _____ hrs. per chef Program B: _____ hrs. per chef (2) Average number of mistakes per chef, rounded to one decimal place. Program A: _____ mistakes per chef Program B: _____ mistakes per chef b. Which program should the restaurant implement moving…

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Chapter 23 Solutions