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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Building a balanced scorecard

 Hit-n-Kun 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 do. 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 do. 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 in sales has led to a growth in profitability— but tm 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 Food Trucks. Identify whether these measures best fit the innovation, customer, internal process, or financial dimension of the balanced scorecard.

To determine

Balanced scorecard: The balanced scorecard is a framework used by managers, to focus on non-financial factors related to internal financial processes which improve the external financial performance.

Balanced scorecard perspectives:

  • Customer service
  • Innovation and learning
  • Internal processes
  • Financial performance

To prepare: Performance measures for the balanced scorecard perspectives

Explanation

The following are the performance measures for the balanced scorecard perspectives:

  • Customer service:
    • Number of repeat customers
    • Number of new customers
    • Customer satisfaction survey
    • Customer interaction
  • Innovation and learning:
    • Number of employee training hours
    • Employee turnover
    • Quality survey for new meals
    • Number of new locations in a particular period
  • Internal processes:
    • Number of on-time deliveries
    • Delivery tim...

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