Analog Devices Inc, Balanced Scorecard

I have no idea about Analog Devices Inc, but i do know what is balanced scorecard. I also remeber that in the final exam of BAO3312, it did have a question about BSC...anyway, 2 samples...

same case as last one, but different questions
SAMPLE 1


1. Very briefly explain a) the purpose of a balanced scorecard

b) the four perspectives of a balanced scorecard

c) advantages of using a balanced scorecard

d) limitations of using a balanced scorecard

a) The purpose of a balanced scorecard

The purpose of a balanced scorecard is to measure that the desired change or development defined by strategic objectives actually takes place. It is to translate strategy into measures that uniquely communicate senior management’s vision to the organization. And also that helps to encourage employees to act in the organization best interest.

b) The four perspectives of a balanced scorecard

Financial perspective, for example, profit managing, return on assets and cash flow.

Customer perspective, which identify targeted customer retention, new customer, customer profitability and market share.

Internal business process: perform the internal operations that create values for customers.

Learning and growth: specifies the capability of the firm and should achieve an outstanding internal process which creates a value for customers.

c) Advantages of using a balanced scorecard

To help to communicate the strategy to all members of the company by translating the strategy into a logical and linked set of understandable and measurable operational targets

Reduces the communication breakdowns

Balanced scorecard points out the goals clearly for employees, then staff will do in the best interest of the organization.

It helps planners to identify what should be measured.

d) Limitations of using a balanced scorecard

Identifying only the most serious ones.

Too few measures or too many measures.

Senior management not committed.

(The following questions are reproduced from a previous exam)

2. Based on the information available on Analog Devices Inc, construct a corporate scorecard at the organisational level suitable in 1996 to create, deploy and implement strategy and create change.

For each perspective used you should include two to three measures, a target for each measure.

Financial Perspective

MEASURES TARGETS

Return On Investments Increase 10%

New product sales $ 200 Million

Reduce Debt Debt to Equity < 20%

Customer Perspective

MEASURES TARGETS

Customer satisfaction rate Reduce the complain rate to 8%

Number of customers orders Increase order services line

Product cycle time 3 weeks

Internal Business Process


MEASURES TARGETS

Employee retention Increase 5%

Investing on net Research & Development $ 175 Million


Learning & Growth

MEASURES TARGETS

Employees attending the training sessions Train the employees on specialized areas

Health and Safety trading Once a year

Number of new employees and positions 1,500 new employees

3. Justify your choice of measures and targets for the scorecard.

According to ADI developed Vision 2000, there are three major objectives

1. Build leadership positions in seven critical areas of signal processing.

2. Increase the growth rate for sales and profits to greater than 20 percent.

3. Grow the organization and develop the skills and competencies of all employees.

So I chose these measures and targets for the scorecard.


SAMPLE 2

1. a) The purpose of a balanced scorecard


The purpose of a balanced scorecard system is measuring and managing all aspects of a company’s performance. Balance traditional financial measures of success with non financial measures.

b) The four perspectives of a balanced scorecard

Measures performance need from four different but linked perspectives.

1) Financial perspective for example, profit managing, return on assets and cash flow.

2) Customer perspective, which identify targeted customer retention, new customer, customer profitability and market share.

3) Internal perspective:

1． Critical processes which the organization must excel at to achieve its customer and financial objectives.

2． Improve operating processes, customer management processes, innovation processes, regulatory and social processes.

4) Innovation and learning perspective:

1． Identifies objectives for people, systems and organizational alignment

2． E.g. percentages of sales for new products, competencies of employees, information system and organization.

. c) Advantages of using a balanced scorecard

1) The short, medium and long period views can be managed in an ongoing and cohesive manner.

2) Balanced scorecard points out the goals clearly for employees, then staff will do in the best interest of the organization.

3) It helps planners to identify what should be measured.

d) Limitations of using a balanced scorecard

1) The complete implementation should be staged while communication can commence within a short time.

2) There is difficulty in working out which are right goals, and the connection with strategy is often loose and not necessarily based on a shared interpretation of what the strategy should lead to.

2. Industry change between 1996 and 2001. From 1996 to 2001, the sales, sales growth, profit margins and the return or assets have a stability growth during the period. The fact help the growth rate is that: ADI’s evolving products mix included components for internet-related capital equipment, such as fiber-optic rooters, ADSL switches and voice-over-next work services.

The balanced scorecard of ADI:

Internal perspective

Objectives Measures Targets Initiatives

Manufacturing and productivity improvement Yield cycle time Increasing to 80%.Decreasing 6% p.a. Total quality management.

Redeveloped equipments.

Applying technology.

Business growth  Product segments number

 New product’s tine to market

 Time to first silicon.  4 or more

 Less than 10 months

 Less than 4 months.  Expanding from SLICs to SPLICs and DSPICs.

 Pursuer growth opportunities

 Encourage new product designs multi-function chip.

Improving demand for existing products. Sales of old products. More than 50% Invest in better e-commence application and increase resources available to the sales force.

Costs and quality Return rate 0%  Standardizing production across sites

 Combing assembly and testing less than one roof.

 Finding off-share sites for cheep testing.

 More efficiently releasing new product designs to factories.

Learning and growth perspective

Employ satisfaction  Employee satisfaction surveys.

 Turnover rate,  More than 90%

 Less than 7%.  Surveys (internal and external)

 Bonus and incentive programmers.

Skills and competencies of all employees Staff training fees 20% of the revenue of company.  Special training programmers.

 Government support projects.

System alignment Databases and networks outcomes. Rapid refresh information once-half year. Technical people to manage and control these systems.

Organizational alignment Culture, knowledge sharing Employee meeting 3 months once Sharing experiences each other, establish group that include new and old employees.

Financial perspective

Revenue (growth) Revenue growth rate. Keeping at a relative high rate (fixed rate) E.g. 30% p.a. Building strong relations with customers.

Manage operating costs SMGA rate Keeping at a lower rate. E.g. 25% p.a. Avoiding costing waste, effective utilization

Profitability Return on equity High rate 75% Increasing operating profits.

Customer perspective

Customer satisfaction Surveys

Defect level

Customer- detected defects. Up to 10%

Less than 45ppm Better after-sale services

Good quality products.

Responsive supply On-time delivery

Cycle time More than 95%. Reduced by 8% p.a. High speed processing orders/ high performance.

Market share Customer intention rate

Number of new customers Increasing to 100%

15% growth/1000. Conducting customer profitability analysis and maintain good and closely relations with customers.

Focusing on target segment, innovation unique-design products customer loyalty programmers.

3. Justify my choice of measures and targets for the scorecard.

First of all, the whole measures and targets should comply with the strategies of organization. The strategies in 1996 were obvious.

1) Becoming technological leadership.

2) First-to-market with new products that had superior performance features.

3) Expand traditional SLIC businesses.

4) Purpose growth opportunities for system-level signal processing ICS.

5) Leverage core technologies to develop innovation products.

I suggest that put importance on the new products related with internal perspective. The most critical goal of ADI is making sore the position of leader, so new products with high technology will bring lots of benefits to the organization. Nevertheless, the period of introducing and developing new products is a factor to win market share and attract customers.