Creating a BSC and Strategy Map

Chips Ltd manufactures microchips for modems and communication networks. Their best-selling product, the CX1, has superior features relative to its competition, however severe competition exists in respect to price. Chips Ltd has determined that, to remain competitive, they need to reduce the unit cost, without any decrease in reliability. They believe that if they can reduce the price by around 5% then, all other things being equal, they will increase market share dramatically. However, if reliability reduces, they will lose significant market share. Investigations reveal a significant amount of non-value add time in their production processes. This non-value-added time affects both product cost and quality. To reduce non-value add time, their plan is to train all staff in quality processes and ask for their suggestions as to how the processes can be improved.

Required:

a) Based on the info above, identify objectives for each of the four perspectives of the Kaplan and Norton BSC. You should identify at least one objective for the financial perspective, and at least two objectives each for the other three. (Suggestion for discussion leaders: Brainstorm this with the class and write down all suggestions on the whiteboard under each of the perspectives. Then lead the class to agreement on one set of objectives to go onto the strategy map.)

b) Create a strategy map showing the relationships between each of the objectives you had chosen. (Suggestion for discussion leaders: Go around the class asking each student to identify one relationship, and then draw an arrow to represent that relationship. Each class member may either create a new relationship or they may want to change one is already there as long as they can explain why and argue their case. Conclude the exercise by giving your opinion on the completed strategy map.)