Question

Vic Corporation refines petrol and sells it through its own petrol gas stations. On the basis of market research, Vic Corporation determines that 60% of the overall petrol 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 petrol. The remaining 40% of the overall market are “price shoppers” who look to buy the cheapest petrol available. Vic Corporation’s strategy is to focus on the 60% of service-oriented customers. Vic Corporation’s balanced scorecard for 2018 follows. For brevity, the initiatives taken under each objective are omitted.

Objectives	Measures	Target Performance	Actual Performance
Financial Perspective
Increase shareholder value	Operating-income changes from price 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
Improve gasoline quality	Quality index	92 points	93 points
Improve refinery performance	Refinery-reliability index (%)	91%	91%
Ensure gasoline availability	Product-availability index (%)	99%	99.5%
Learning-and-Growth Perspective
Increase refinery process capability	Percentage of refinery processes with advanced controls	94%	95%

Required:

1. Was Vic Corporation successful in implementing its strategy in 2018? Explain your answer.
2. Would you have included some measure of employee satisfaction and employee training in the learning-and growth perspective? Are these objectives critical to Vic Corporation for implementing its strategy? Why or why not? Explain briefly.
3. Explain how Vic Corporation did not achieve its target market share in the total gasoline market but still exceeded its financial targets. Is “market share of overall gasoline market” the correct measure of market share? Explain briefly.
4. Do you agree with Vic Corporation’s decision not to include measures of changes in operating income from productivity improvements under the financial perspective of the balanced scorecard? Explain briefly.

Answer 1

Q.1. Following are the some points based on balanced score card of Vic corporation.

Target Market share 4% but actual market share 3.8% which is less than target market share. But performance in the form of operating income is achieved.

1. Vic corporations strategy is to focus on 60 % of service oriented customer. Considering this corporation targeted for 4% market share but in actual, corporation achieved its market share by 3.8% in 2018, which is 95% of target market share.
2. Chang in income level because of Growth and Price recovery. Actual operating performance is increased than target performance. Operating income increased due to price recovery and growth that increased shareholders value in actual as compared to target.
3. Considering customer focus Vic corp achieved its target performance in the form of Gasoline quality, & availability ,refinery performance, process capability.

However whether actual market share is less than target but improved other performance than target performance. Based on these facts we can conclude that Vic corp. is successful in implementing its strategy in 2018.

Q.2 . Learning and growth perspective of balanced score card includes employee satisfication, employee retention and employee growth. It says that business growth is depend upon employee satisfaction and growth.

So, employee satisfication and employee traininng measures included in the learning and growth perspective. Employee satisifcation and its retention is important for every business organisation for developing and growing its business performance. For quality and better performance it is necessary to provide employee trainning and employee growth and their satisfication.

Employee satisfication and trainning is key to improving productivity ,functionality and quality of performance. In this case Vic corps strategy is to focus on service oriented customers, who are medium to high income level peoples willing to pay higher price for gas if gas stations can provide clean facility, convenience store, friendly employee, excellent customer service and want to by high quality product. For learning and growth perspective of balanced score card of Employee satisfaction include employee retention , increase employee confidence, skill. It is essential for learning and growth objective of business include employee satisfaction and employee training. Therefore these factors are essential for Vic corporation strategy implementation.

Q.3 Vic corporation target market share is 4% but actual share is 3.8% which is less than target market share by.2%. It means Vic corporation did not achieve target market share in total gasoline market but achieved 95% level of target market share in actual. But its financial targets are achieved because of change in price recovery considering service oriented customers, who are medium to high income level peoples willing to pay higher price and simultaneously increase in actual market share not able to meet target share but increase in share by 3.8% helps to meet financial targets. And other factor is growth of the corporation factors responsible for growth and price recovery is quality, prformance,availability and capability.

Vic corporation currently refining and selling petrol from its gas stations. Market share of company calculated by total sales of target company divided by entire industrys total market sales, therefore market share of overall gasoline market is the correct. To calculate market share of Vic it necessary to consider overall gasoline industry market.

Q.4 Balanced score card approach provides for measurement of performance of business. Financial perspective of balanced scorecard include operating income, return on capital employed.Productivity Improvements means increasing or raising productivity using material, labour, technology. Productivity improvement is an improvement in process, quality, technology that overall increase productivity of organisation. However productivity improvement helps in increase in opearting income it should be considered in financial perspective.

Therefore corporations decision regarding not to include measures of of changes in operating income from productivity improvement under financial perspective is not correct. Therefore not agreed.