For each perspective, select those strategic objectives from the list that best relate to it. For each strategic objective, select the most appropriate performance measure(s) from the list.   Balanced 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 gasoline 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 cheapest 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.   4. Is there a cause-and-effect linkage between improvements in the measures in the internal-business-process perspective and the measure in the customer perspective? That is, would you add other measures to the internal-business-process perspective or the customer perspective? Why or why not? Explain briefly.   5. 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.

Understanding Business
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Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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For each perspective, select those strategic objectives from the list that best relate to it. For each strategic objective, select the most appropriate performance measure(s) from the list.

 

Balanced 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 gasoline 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 cheapest 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.

 

4. Is there a cause-and-effect linkage between improvements in the measures in the internal-business-process perspective and the measure in the customer perspective? That is, would you add other measures to the internal-business-process perspective or the customer perspective? Why or why not? Explain briefly.

 

5. 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.

 

 

 

Target
Actual
Objectives
Financial Perspective
Measures
Performance Performance
Operating-income changes from
price recovery
Operating-income changes from
growth
Increase shareholder value
$80,000,000
$85,000,000
$60,000,000
$62,000,000
Customer Perspective
Increase market share
Market share of overall gasoline
market
4%
3.8%
Internal-Business-Process Perspective
Improve gasoline quality
Improve refinery performance
Ensure gasoline availability
Learning-and-Growth Perspective
Increase refinery process capability
Quality index
Refinery-reliability index (%)
Product-availability index (%)
93 points
92 points
91%
91%
99%
99.5%
Percentage of refinery processes
with advanced controls
94%
95%
Transcribed Image Text:Target Actual Objectives Financial Perspective Measures Performance Performance Operating-income changes from price recovery Operating-income changes from growth Increase shareholder value $80,000,000 $85,000,000 $60,000,000 $62,000,000 Customer Perspective Increase market share Market share of overall gasoline market 4% 3.8% Internal-Business-Process Perspective Improve gasoline quality Improve refinery performance Ensure gasoline availability Learning-and-Growth Perspective Increase refinery process capability Quality index Refinery-reliability index (%) Product-availability index (%) 93 points 92 points 91% 91% 99% 99.5% Percentage of refinery processes with advanced controls 94% 95%
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