Vertex’s Balanced Scorecard

1. Was Vertex successful in implementing its strategy in year N? Explain.

According to Vertex’s Balanced Scorecard the company wasn’t able to achieve objectives set to financial perspective and customer perspective.

The actual performance for operating profit changes from productivity was 400 000€ when the target was 1 000 000€ and 600 000€ for operating profit from growth when they planned to achieve 1 500 000€.

The company also failed to reach 5% of market share, catching up only 4,6%.

2. Is Vertex’s Balanced Scorecard useful in helping Vertex understand why it did not reach its target market share in year N? If it is, explain why. If it is not, explain what other measures you might want to add under the customer perspective and why.

Vertex planned to achieve higher quality and lower costs by improving yields and reducing defects in its manufacturing operations but the company’s Balanced Scorecard doesn’t reflect customer satisfaction, the company cost structure in terms of defect product reduction, and most important, reduction of costs since the market for laser printers is very competitive.

To fully understand why the company failed their target I would include some measures in the customer perspective (and internal business process perspective). These measures would then serve as leading indicators (based on cause-and-effect relationships) for lower market share. For example, Vertex should measure customer satisfaction with its printers on various dimensions of product features, quality, price, service, and availability. It should measure how well its printers match up against other color laser printers on the market. This is critical information for Vertex to successfully implement its strategy.

In order to improve company’s competitiveness, I would include under financial perspective defect product per employee since significant amount of Vertex’s capacity is used to produce products that are defective and cannot be sold. This measure indicates whether Vertex has been able to reduce costs in order to achieve operating profit increases through cost leadership.

3. Would you have included some measure of employee satisfaction in the learning and growth perspective and new product development in the internal business process perspective? That is, do you think employee satisfaction and development of new products are critical to Vertex for implementing its strategy? Why or why not? Explain.

Vertex’s target of % of employees trained in process and quality management was successfully achieved. The company succeed in terms of development of employees’ process skills but considering that profits are far from the target the company balanced scorecard is lacking a measure of employee satisfaction to the learning and growth perspective and a measure of new product development

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