dalanced scorecard. (R. Kaplan, adapted) Petrocal, Inc., refines gasoline and sells it through its own Petrocal gas stations. On the basis of market research, Petrocal determines that 60% of the overall gaso- line market consists of "service-oriented customers," medium- to high-income individuals who are willing to pay a higher price for gas if the gas stations can provide excellent customer service, such as a clean facility, a convenience store, friendly employees, a quick turnaround, the ability to pay by credit card, and high-octane premium gasoline. The remaining 40% of the overall market are "price shoppers" who look to buy the cheap- est gasoline available. Petrocal's strategy is to focus on the 60% of service-oriented customers. Petrocal's balanced scorecard for 2017 follows. For brevity, the initiatives taken under each objective are omitted. Actual Target Performance Performance Objectives Measures Financial Perspective Increase shareholder value Operating-income changes from príce recovery $80,000,000 $85,000,000 Operating-income changes from growth $60,000,000 $62,000,000 Customer Perspective Increase market share Market share of overall gasoline market 4% 3.8% Internal-Business-Process Perspective Quality index Refinery-reliability index (%) 92 points 93 points Improve gasoline quality Improve refinery performance 91% 91% Ensure gasoline availability Learning-and-Growth Perspective Increase refinery process capability Product-availability index (%) 99% 99.5% Percentage of refinery processes with advanced controls 94% 95%

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Q.Do you agree with Petrocal’s decision not to include measures of changes in operating income from productivity improvements under the financial perspective of the balanced scorecard? Explain briefly.

dalanced scorecard. (R. Kaplan, adapted) Petrocal, Inc., refines gasoline and sells it through its
own Petrocal gas stations. On the basis of market research, Petrocal determines that 60% of the overall gaso-
line market consists of "service-oriented customers," medium- to high-income individuals who are willing to
pay a higher price for gas if the gas stations can provide excellent customer service, such as a clean facility,
a convenience store, friendly employees, a quick turnaround, the ability to pay by credit card, and high-octane
premium gasoline. The remaining 40% of the overall market are "price shoppers" who look to buy the cheap-
est gasoline available. Petrocal's strategy is to focus on the 60% of service-oriented customers. Petrocal's
balanced scorecard for 2017 follows. For brevity, the initiatives taken under each objective are omitted.
Actual
Target
Performance Performance
Objectives
Measures
Financial Perspective
Increase shareholder value
Operating-income changes from
príce recovery
$80,000,000 $85,000,000
Operating-income changes from
growth
$60,000,000 $62,000,000
Customer Perspective
Increase market share
Market share of overall gasoline
market
4%
3.8%
Internal-Business-Process Perspective
Quality index
Refinery-reliability index (%)
92 points
93 points
Improve gasoline quality
Improve refinery performance
91%
91%
Ensure gasoline availability
Learning-and-Growth Perspective
Increase refinery process capability
Product-availability index (%)
99%
99.5%
Percentage of refinery processes
with advanced controls
94%
95%
Transcribed Image Text:dalanced scorecard. (R. Kaplan, adapted) Petrocal, Inc., refines gasoline and sells it through its own Petrocal gas stations. On the basis of market research, Petrocal determines that 60% of the overall gaso- line market consists of "service-oriented customers," medium- to high-income individuals who are willing to pay a higher price for gas if the gas stations can provide excellent customer service, such as a clean facility, a convenience store, friendly employees, a quick turnaround, the ability to pay by credit card, and high-octane premium gasoline. The remaining 40% of the overall market are "price shoppers" who look to buy the cheap- est gasoline available. Petrocal's strategy is to focus on the 60% of service-oriented customers. Petrocal's balanced scorecard for 2017 follows. For brevity, the initiatives taken under each objective are omitted. Actual Target Performance Performance Objectives Measures Financial Perspective Increase shareholder value Operating-income changes from príce recovery $80,000,000 $85,000,000 Operating-income changes from growth $60,000,000 $62,000,000 Customer Perspective Increase market share Market share of overall gasoline market 4% 3.8% Internal-Business-Process Perspective Quality index Refinery-reliability index (%) 92 points 93 points Improve gasoline quality Improve refinery performance 91% 91% Ensure gasoline availability Learning-and-Growth Perspective Increase refinery process capability Product-availability index (%) 99% 99.5% Percentage of refinery processes with advanced controls 94% 95%
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