Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 28

Validating the Balanced Scorecard; Spreadsheet Application Bernard Daisy Inc. is a chain of home supply and gardening product stores. In 2013, Daisy adopted the balanced scorecard (BSC) for evaluation of store and store manager performance. The BSC has helped Daisy to identify the critical success factors for sales and profitability. In particular, it has helped Daisy better understand its competitive environment and the drivers of success in that environment. On the advice of its chief financial officer, Daisy's board has requested that the company president conduct a study to validate the balanced scorecard. The objective of the study is to make sure that the scorecard measures being used are in fact the key measures associated with success. The following data have been obtained for the most recent quarter's results for each of the company's 30 stores, listed in order of when the store was opened (the most recent is store 30). There are five district managers, each of whom is responsible for six of the stores. In this study a store manager's success is measured by increase in sales of each store for the current quarter over the same quarter last year. The data below include the percentage change in sales and four of the measures included in the customer perspective of the company's BSC. The scorecard measures include:
1. A survey of customers; this measure is taken from a survey form that is handed to customers on a random basis as they leave the store. The customers rate the store's performance on a scale of 0 to 100, where 100 is the highest score.
2. Each district manager evaluates each store once a quarter, using also a scale from 0 to 100, where 100 is the highest score.
3. The district managers have a staff that on a random basis measures the wait time in the check-out line for customers in each store. The figures shown here are the average wait times, in seconds, for the samples taken in the most recent quarter.
4. Average number of store employees who have had one or more of the company's in-house training courses in the past quarter, as a proportion of total employees at the store.
Required
1. Briefly compare the benefits of the profit center approach relative to the balanced scorecard.
2. Use regression or correlation analysis in Excel to analyze the validity of the four scorecard measures in the customer perspective of the BSC; here validity means that the BSC measure contributes to an increase in sales over the prior quarter. What conclusions can you draw from your analysis