Question

Soring Motor Corporation, manufactures reliable energy efficient automobiles. While quality vehicles has always been the goal, most recently Soring has had to recall within 8 months over 3 million vehicles due to the fact that gas pedals began to stick which has caused massive unpredictable acceleration. Due to the recalls and issues of safety, production of several models have been halted. The break in production caused the company to lose a little more than $15 million in sales and about 23% of their customer base. Of course in losing the customer base is caused by many factors not limited to reputation, credibility and quality factors of the vehicles.

Questions:

1. Coming from the perspective of an automobile consumer, explain the financial and nonfinancial performance measures to evaluate quality and time.
2. Explain how Soring Motor can determine what needs to be implemented to regain consumer trust. Be sure to include in your explanation the elements of the balanced scorecard.

Answer 1

Financial and Non Financial Performance Measure

Performance measurement systems plays a key role as a source of information about financial outcomes and the internal operations shown in the financial statements.Performance measurement systems are considered information systems that are used to evaluate both individual and organizational performance.Orgaization should closely review the performance in terms of both financial and non financial perspective.

Financial Measures- Focuses on profitability,growth and shareholder value, such as return on investment,residual income and other financial measures which are fianancially related.Financial performance measures the degree to which financial objectives have been accompolished.

Non-Financial Measures- Non Financial performance measures are expressed in non-monetary terms and include measures of customer satisfaction, customer retention, Quality,Employee satisfaction etc.

Balance Scorecard- Balance Scorecard is a strategic management system which translate an organizations strategy into specific performance measures.There are 4 primary perspective of performance measurement in balance scorecard-

1-Financial Perspective - Focuses on profitability,growth and shareholder value, such as return on investment,residual income and other financial measures which are fianancially related.

2-Customer Perspective- Focuses on customer satisfaction, retention and providing quality to the customer.

3-Internal Business Process perspective- Measures the operating effectiveness and efficiency for the organization.(eg- Measuring defects in production)

4-Learn and Growth Perspective- Focuses on employee satisfation, retention ,learning and development.

Note - In the given question it is mentioned that due to defect in Gas pedal production and safety concerns, which  has caused massive unpredictable acceleration, production of several models have been halted.

This is the issue related to quality of the product and it belongs to customer perspective measures in balance scorecard.Soring Motor Corporation should immediately work on eliminating defects in pedal production and improve quality of the product becuase this is related to safety of customers which can impact companys reputation in long run. Soring Motor Corporation shoud immediatelt stop selling defect products as it is very critical and belongs to safety category.Soring Motor Corporation should recall defective products and in exchange customer should be provided with adequate and perfect product.