Strategy, balanced scorecard, service company.
Snyder & Partners is a small information systems consulting firm that specialises 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 invoices clients in terms of units of work performed, which depends on the size and com- plexity of the sales management system. Snyder presents the following data for the years 2007 and 2008.
| |
|
2007 |
2008 |
|
1
|
Units of work performed
|
60
|
70
|
|
2
|
Selling price
|
£50 000
|
£48 000
|
|
3
|
Software implementation labour-hours
|
30 000
|
32 000
|
|
4
|
Cost per software implementation labour-hour
|
£60
|
£63
|
|
5
|
Software implementation support
|
|
|
|
|
capacity (in units of work)
|
90
|
90
|
|
6
|
Total cost of software implementation support
|
£360 000
|
£369 000
|
|
7
|
Software implementation support capacity cost per unit of work
|
£4 000
|
£4 100
|
|
8
|
Number of employees doing software development
|
3
|
3
|
|
9
|
Total software development costs
|
£375 000
|
£390 000
|
|
10
|
Software development costs per employee
|
£125 000
|
£130 000
|
Software implementation labour-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.
Required
1. Is Snyder's strategy one of product differentiation or cost leadership? Explain briefly.
2. Describe briefly key elements that you would include in Snyder's balanced scorecard and your reasons for doing so.