Problem:
Clotheshound is a local clothing store in New England. Clotheshound has been experiencing increased competition from the national clothing chains. In an effort to improve performance, management intends to create a Balanced Scorecard. In a meeting, several measures were suggested by various managers.
Management has identified a key problem. Customers are taking too long to pay their department store's charge card bills, and the company has an abnormal amount of bad debts. If this problem were solved, the company would have far more cash to invest in store improvements. Investigation has revealed that much of the problem with late payments and unpaid bills is apparently due to disputes about incorrect charges on the customer bills. Incorrect charges usually occur because sales clerks enter data incorrectly on the charge account slip.
1. Assume that the company adopts the Balanced Scorecard. After operating for a year, there are -improvements in some performance measures but not in others. What should management do next?
2. How does the Balanced Scorecard communicate strategy to the organization? How is strategy translated into performance measures?
3. Why does the Balanced Scorecard differ from company to company? Whose responsibility is the implementation?
4. Based on your understanding of the application of the Balanced Scorecard, discuss how an organization successfully create and use a BSC.