Ateneo 7 balanced scorecard

STRATEGY EVALUATION Session 7 Professor Hilda L. Teodoro Ateneo Graduate School of Business

LEARNING OBJECTIVES TO HELP THE STUDENTS: Understand the strategic evaluation framework and the characteristics of an effective evaluation system. Learn about performance measurement as an important component of strategy evaluation. Know some of the performance measurement systems such as the balanced scorecard.

AGENDA The Nature of Strategy Evaluation Characteristics of an Effective Evaluation System Balanced Scorecard Strategy Map

Strategy evaluation is vital to the organization’s well-being Alert management to potential or actual problems in a timely fashion Erroneous strategic decisions can have severe negative impact on organizations Complex and sensitive undertaking Overemphasis can be costly and counterproductive THE NATURE OF STRATEGY EVALUATION

3 Basic Activities – Examining the underlying bases of a firms’ strategy Comparing expected to actual results Corrective actions to ensure performance conforms to plans THE NATURE OF STRATEGY EVALUATION

Typical Kinds of Objectives profit revenues expenses net income ROI ROA ROCE cash flow

Typical Kinds of Objectives market share total sales number of loyal customers customer satisfaction / experience customer retention profitability

Typical Kinds of Objectives staff motivation, retention or attraction alignment to strategic goals innovation staff morale training knowledge sharing.

Typical Kinds of Objectives product development turnaround time manufacturing quality cycle or set-up time project management total quality management Six Sigma

FINANCIAL PERSPECTIVE Companies have two basic levers for their financial strategy: Revenue growth Build with revenue from new markets, new products, and new customers Increase value to existing customers by deepening relationships with them through expanded sales Productivity Improve company’s cost structure by reducing direct and indirect expenses Use assets more efficiently by reducing the working and fixed capital needed to support a given level of business

CUSTOMER VALUE PROPOSITION The core of any business strategy is the customer value proposition, which describes the unique mix of products and service attributes, customer relations, and corporate image that a company offers. It defines how the organization will differentiate itself from competitors to attract, retain, and deepen relationships with targeted customers.

CUSTOMER VALUE PROPOSITION Single most important step in developing a strategy. Typically the value proposition is chosen from among 3 differentiators: Operational excellence Customer intimacy Product leadership Companies strive to excel in one of the three areas while maintaining threshold standards in the other two.

INTERNAL PROCESS PERSPECTIVE Once a company has a clear picture of its financial and customer perspectives, it can then determine the means by which it will achieve the differentiated value proposition for customers and the productivity improvements to reach its financial objectives.

LEARNING AND GROWTH The foundation of any strategy map is the learning and growth perspective which defines the core competencies and skills, the technologies and corporate culture need to support the strategy.

MOBIL’S PAST STRATEGY In the past attempted to sell full range of products and services to all consumers, while still matching the low prices of discount stations. This unfocused strategy failed, led to poor financial performance. Through market research, Mobil discovered that price-sensitive consumers represent only 20% of gasoline purchasers, while 60% were willing to pay significant price premiums for gasoline if they could buy at stations that were fast, friendly and outfitted with excellent convenience stores.

‘ S STRATEGY MAP Using this map Mobil increased its operating cash flow by more than $1 billion per year and became the industry’s profit leader. Mobil’s strategic vision was to be the best integrated refiner-marketer in the US by efficiently delivering unprecedented value to customers. Major part of the strategy was to target customers who were willing to pay premiums for gasoline if they could buy at fast, friendly stations that were outfitted with excellent convenience stores.

FINANCIAL PERSPECTIVE The revenue growth strategy called for Mobil to expand sales outside of gasoline by offering convenience store products and services, ancillary automotive services (car washes, oil changes, and minor repairs), automotive products (oil, antifreeze, and wiper fluid), and common replacement parts (tires and wiper blades). Also, the company would sell more premium brands to customers, and it would increase sales faster than the industry average.

FINANCIAL PERSPECTIVE In terms of productivity, Mobil wanted to slash operating expenses per gallon sold to the lowest level in the industry and extract more from existing assets - for example, by reducing the downtime at its oil refineries and increasing their yields.

CUSTOMER PERSPECTIVE Customer Intimacy Proposition company targets premium customer segments by offering them speedy purchase; safe, well-lit stations, clean restrooms; convenience stores stocked with fresh, high-quality merchandise, and friendly employees

CUSTOMER PERSPECTIVE differentiator immediate access to gasoline pumps, each equipped with a self-payment mechanism;

INTERNAL PROCESSES PERSPECTIVE Building the franchise by developing new products and services. Training dealers to become better managers and help them generate profits from non gasoline products and services.

INTERNAL PROCESSES PERSPECTIVE Excel at understanding its consumer segments. Build best in class franchise teams.

INTERNAL PROCESSES PERSPECTIVE Focus on achieving operational excellence throughout its value chain of operations.

INTERNAL PROCESSES PERSPECTIVE Eliminate environmental and safety accidents.

LEARNING AND GROWTH Mobil identified that its employees needed to gain a broader understanding of the marketing and refining business from end to end

LEARNING AND GROWTH It had to nurture the leadership skills that were necessary for its managers to articulate the company’s vision and develop employees.

LEARNING AND GROWTH Mobil identified key technologies that it had to develop, including automated equipment for monitoring the refining processes and extensive databases and tools to analyze consumer’s buying experiences

Ateneo 7 balanced scorecard

More Related Content

What's hot

Similar to Ateneo 7 balanced scorecard

More from Prof.Edgardo V. Basa

Ateneo 7 balanced scorecard