Actionability of Irwing's Current Measure - Case Study Example

Case Study Accounting Table of Contents Table of Contents 2 In your opinion, why is the scorecard tool a good device for the CR business? Are the linkages between strategy and key success factors strong? The expansion of the business has necessitated the need of developing a scorecard tool. In today’s competitive and growing markets it is not possible for the entrepreneurs to give personal attention to the stores located at different places. Any ignorance on this part can have serious implications on the business. For this purpose the scorecard tool is being adopted by the CR businesses for measuring the level of satisfaction that it is being able to offer to its customers. It helps the businesses in moving implementing their strategies for improving the performance (Rural Performance Management, “Bridging the gap between Strategy and action”).This is vital as the revenue of the business depends on the services offered to customer. The response of the customers helps in analyzing whether the business is able to cater to their needs. Any suggestions given by them can be considered and implemented after assessment. When the customers realize that their opinions are being incorporated by the business, it increases their faith and loyalty. Thus, scorecard helps in getting important feedbacks from the customers which when acted upon can boost profits. The strategies adopted by the business depend on certain success factors. If the business wants to increase its revenue base then it has to ensure that it delivers the best services for its customers as this will result in an increase in their number of visits thereby increasing their spending in the store. Once a business is able to satisfy the needs of its customers it will increase their loyalty towards the store. These loyal customers keep the revenues flowing even in difficult times, thus keeping the profits of the company stable. For reducing the controllable expense the business must maintain ideal inventory levels such as there is neither dead stock nor is there a stock-out situation. Both the situations are not desirable as the former increases the costs and the latter can result in lost sales. Looking at Exhibit 6, mark each goal as “actionable” or “measurable” and see if there are better choices for the dynamic scorecard measures than those the team chose. What recommendations would you make? Goal Increase store revenues Actionable Measurable Reduce store controllable operational expenses Actionable Measurable Increase store profitability Actionable Measurable Increase fuel volume sold Not Actionable Measurable Increase site profitability Actionable Measurable Increase market efficiency Actionable Not Measurable Increase number of store visits Actionable Measurable Increase size of spend per visit Actionable Measurable Increase enduring customer loyalty Actionable Not Measurable Increase customer satisfaction with store visits satisfaction Actionable Measurable Maximize fully functional equipment Actionable Measurable Maximize utilization of inventory assets Not Actionable Measurable Minimize lost sales due to product I stock-outs Actionable Not Measurable Maximize the sales of key category or products Actionable Measurable Reduce dead inventory Not Actionable Measurable Meet store operational standards Actionable Not Measurable Meet marketing standards Actionable Not Measurable Optimize utilization of people Actionable Measurable Recruit and effectively train new hires Actionable Not Measurable Increase employee satisfaction and engagement scores Actionable Not Measurable Retain desired staff members Actionable Measurable Employees consistently delight customers Actionable Not Measurable The team has chosen ideal measures for the scorecard that provide a direct link between the pre-set goals and their measurement. Irwing’s current measures- The strategy of the company is to provide customer satisfaction and motivate the work-force as these are the factors on which the revenues of the company depend. For this the company has designed the scorecard tool which helps in knowing how far the company has been able to achieve its goals. Measurability and actionability of Irwing’s current measure- The measures can be assessed in terms of increased customer visit, higher number of transactions per day, improved profit margins, improved turnover ratios, increased revenues etc. These can be influenced by offering quality services to the customers, improving the product quality etc. Recommendation For measuring customer satisfaction, they can be requested to fill an on the spot questionnaire, rating the service of the work-force and the ambience of the shopping store. How would you reconcile the need for actionable measurements with the availability of measures? An increase in the store revenues can be measured by comparing the figure with the actual store figures. Similarly, customer satisfaction can be measured by an increase in the number of their visits and their average spending. For increasing revenue the management should undertake extensive marketing campaigns. This will increase product awareness and push up the sales resulting in higher revenues. The achievement of higher profitability can be possible by exercising control over the costs. In this regard the store managers must concentrate on achieving better turnover ratios. They must try to avoid the possibility of low inventory turnover ratios as it will adversely impact the profitability. The intense competition in the market also makes it necessary to give prompt service to the customer. Any lapse on this part can result in the loss of a valuable customer. So while maintaining the inventory levels, care should be taken to prevent the possibility of stock-outs. Just as high inventory raises the cost of business, maintaining insufficient inventory levels can result is lost sales. It is important for the store managers to maintain an ideal stock position. For this they must maintain the desired inventory turnover ratios. It is vital for the business to meet the operational standards for the stores. Regarding this the management personnel must pay special attention towards providing improved working conditions for the staff. Care should be taken for ensuring the safety of the workers. Their efforts must be appreciated in the form of incentives, raised pays, promotion etc. This will improve the employee morale which in turn will show in their performance. They will place the interest of the organization over their own. This will improve their services towards the clients. At the end of the day, it really pays to make a customer happy as a satisfied customer will result in additional sales and push up the margins for the company. In your opinion, is the VOC data appropriate for a valid scorecard? The VOC data helps in knowing whether the business is able to keep its customers satisfied. This data is important for the scorecard as it helps the business in knowing their shortcomings so that they can work in that direction. It also enables the business to understand its areas of strength. Ways to make Voice of the customer effective For improving its efficiency the customers can be asked to fill a questionnaire in the store itself. As many customers forget to respond to these questionnaires once they leave the store. So they can be humbly requested by the store-staff to fill up their opinion. Besides this the announcement of gifts or a lucky draw, based on a number in the questionnaire will encourage them to co-operate in the process. Do you find that the CR scorecard effort is consistent with Irving’s value map (Exhibit 5)? Is Irving correct to use this as its strategy map? The scorecard efforts of Irwing focus on the response of the customer about their experience of shopping where they have to rate their experience in terms of satisfaction. Besides this they have to record a voice message about their feedback. This is inconsistence with the overall strategies of Irwing. In its strategy map the company focuses on the customer satisfaction as it helps in building loyalty and also increases the average transaction per day. This can increase the revenues for the company and fulfill the purpose of its activities. Sustainability of Irwing’s dynamic scorecard The scorecard of the company is mainly customer-centric assessing their satisfaction with the store services. This is a good measure and is sustainable as the continuity of a store depends upon how well it is able to cater to the needs of its customers. To survive in a competitive market, the demands of the customers must get utmost priority. So the scorecard rightfully captures the data needed for its survival. Reference Rural Performance Management. Bridging the gap between Strategy and action. Bridging and implementing a balanced scorecard at Mid-Valley hospital. December 5, 2009. < http://www.google.co.in/search?hl=en&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&hs=d4o&q=sustaiability+of+scorecard+tool+site%3Aedu&btnG=Search&meta=&aq=f&oq=>. Read More