Response to the following problem:
Strategy, balanced scorecard, Service Company Snyder Corporation is a small information systems consulting firm that specializes in helping companies implement sales-management software. The market for Snyder's products is very competitive. To compete, Snyder must deliver quality service at a low cost. Snyder bills clients in terms of units of work performed, which depends on the size and complexity of the sales-management system. Snyder presents the following data for 2008 and 2009.
|
|
2008
|
2009
|
|
Units of work performed
|
60
|
70
|
|
Selling price
|
$50,000
|
$48,000
|
|
Software-implementation labor hours
|
30,000
|
32,000
|
|
Cost per software- implementation labor hours
|
$60
|
$63
|
|
Software- implementation support capacity(in units of work)
|
90
|
90
|
|
Total cost of software- implementation support
|
$360,000
|
$369,000
|
|
Software- implementation support capacity cost per unit of work
|
$4000
|
$4,100
|
|
Number of employees doing Software development
|
3
|
3
|
|
Total Software development costs
|
$375,000
|
$390,000
|
|
Software development cost per employee
|
$125,000
|
$130,000
|
Software-implementation labor-hour costs are variable costs. Software-implementation support costs for each year depend on the software-implementation support capacity (defined in terms of units of work) that Snyder chooses to maintain each year. It does not vary with the actual units of work performed that year. At the start of each year, management uses its discretion to determine the number of software-development employees. The software-development staff and costs have no direct relationship with the number of units of work performed.
1. Is Snyder Corporation's strategy one of product differentiation or cost leadership? Explain briefly.
2. Describe key elements you would include in Snyder's balanced scorecard and your reasons for doingso.