The Dana Company manufactures a specialized piece of manufacturing equipment. Its machine has always been distinct from its competitors' machines and is considered to be superior to their products, too. However, its competitors are catching up both in terms of features and quality. Dana has refined its manufacturing to the point that it never produces defective machines, relying on well-trained workers and highly-complex manufacturing equipment. Without these workers and this equipment, Dana would have a difficult time producing its products without defects. Since a large amount of materials are wasted in production, however, one of its goals is to reduce the amount of direct materials used to produce the machines. Given the unique and specialized nature of the machines, Dana often needs to provide a significant amount of support to its customers.
a) Based on this information, what type of strategy do you believe Dana is pursuing? Be sure to back up your claim with specific evidence.
b) List and justify eight metrics (2 in each of the Balanced Scorecard perspectives) that you believe Dana should include in its Balanced Scorecard.
c) Dana calculates the following figures:
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2012 operating income
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$2,700,000
|
|
2013 operating income
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$3,319,500
|
|
Growth component
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$280,000
|
|
Price-recovery component
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$247,500
|
|
Productivity component
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$92,000
|
In 2013, Dana sold more units and charged a higher price than in 2012. Dana also paid more for raw materials in 2013 than it did in 2012.
Based on this information, do you believe Dana's increase in operating income in 2013 is consistent with its goals and strategy? Be sure to justify your answer with specific information.