In this simulation, you'll experience the benefits and challenges of using a scorecard to implement strategic initiatives and monitor a firm’s performance. At the end, each team’s company will be purchased by a private investor.

Simulation scenario

You are the CEO of Delta/Signal company. You will select among four firm strategies and then design a strategy map and balanced scorecard to assist in the firm’s strategy implementation and performance evaluation. Students will spend eight periods (four game years) implementing their chosen strategy by choosing initiatives to fund within the limits of budget constraints. Successful companies will choose initiatives that are both consistent with their chosen strategy and effective.

This simulation will be used in week 5 and week 6. For this week, you will be responsible for years 1 and 2 of the simulation.

Simulation Year 1 & 2 Debrief

Students will create a strategy and implementation plan for Delta/Signal. Upon completion of 4 periods in years 1 & 2, you will write a debrief paper reflecting on the 4 rounds of the simulation. In order to prepare, analyze, and discuss your strategy, and discuss the contextual nature of change. Your debrief will describe your plan and explain the results of that week’s round of the simulation, using topics found in the Week 5 module.

You will be graded upon completion of the simulation each week, in combination with the synopsis submission. You are not graded on the success of the run, but on your understanding of the implementation process and the analysis of your results. This paper should be no more than 2 pages in APA format.

Delta Signal Case Balance Score Card

A study of the Delta/Signal case revealed important objectives the company can utilize in streamlining its operations toward achieving its strategic goals. The company focused its efforts on the sale of luxury items in the market by improving customer sales process participation while aiming to provide durable high quality items, and the case study noted that most of Delta/Signal competitors had identified profitable market investment opportunities in Asia and as a result, Delta/Signal was able to take advantage of the less competitive luxury segment market in the U.S. and European OEM markets due to the market shift in the focus of competitors (Narayanan et al, 2013).

Leading the cost strategy was the most applicable strategy for Delta/Signal Corporation, as the strategy would allow the company to dominate the luxury segment market through competitive advantage, increase sales and total revenue, and support the company’s long-term plans. The strategy was adopted after analyzing Delta/Signal financials and those of its competitors, namely, Vulferam AG, Odawa System Corporation, and Shagimaw Corporation. The financial performance metrics illustrated the gaps that existed and supported the adoption of the strategy.

Strategic objectives were drawn from four balanced scorecard perspectives: financial, customer, internal processes, and learning and growth. One chosen objective, OL-11, centered on enhancing understanding of product costs, thereby enabling financial reporting to reflect value of the product and meet compliance reporting standards. Likewise, OP-15, aimed at reducing administrative expenses, was based on the assumption that employee product knowledge would eliminate the need for added administrative costs.    

Once objectives were selected, a strategy map was created to show the logical connections between all the objectives from base through to apex. While approximately twenty objectives were considered, only fifteen were put into the final map to avoid losing focus and straying from the core of strategic intent. These fifteen objectives were interlinked and formed the bedrock for the balanced scorecard that Delta/Signal employed to operationalize its strategy.

Management allocated the budget of 25 million dollars focusing on the initiatives, which she thought, would help achieve the set goals. Because of the ambiguity surrounding the initiatives, the management adopted a sort of trial-and-error approach, which provided flexibility to remodulate initiatives, at the beginning of each time period. After the initiatives started to unfold, the management began to delegate budgets towards the more productive initiatives. Most of the notable improvements were recognized between the fourth and fifth time periods. The company maintained the customer metric “Company Guarantee—Best in Class” and dropped the “Innovative Trade Marketing Program” since it did not come with a supporting strategy simulation. These decisions enhanced the sales, the gross margins and the overall “Best in Class” performance.

Some indicators demonstrated slight advancement over several periods, such as customer suggestion levels and “products with leading performance.” Funding for the “Low-Price Trade Marketing Program” was avoided as it could lead to brand dilution by facilitating entry into value tier markets and broadening the accessible range for the brand's luxury positioning. Funding was discharged to the “Customer Feedback Data Capture Project” which, even though it demonstrated early improvement, stagnated and showed no further progress after six periods. Once the initiative was recognized in terms of its limited long-term value, it was closed. Moreover, between periods seven and eight, a drop in sales was registered along with a lack of strategic modifications. To close the gaps in performance, a larger budget was allocated to “Technology Product Trends Identified” and “Customers in Company-Sponsored Training” to achieve better the objectives of the balanced scorecard.

Benefits and Challenges of Using the Balanced Scorecard and Strategy Maps

The balanced scorecard and strategy map has provided Delta/Signal with a more structured pathway to measure performance across different perspectives, especially with financial performance. One of the major strengths of these tools was that they offered management a more holistic view of how the organization operated, allowing for better performance of the organization in terms of making the right choices, improving systems, and executing strategies effectively. Furthermore, the balanced scorecard assists in shifting the focus from a broad primary objective to the company's strategy.

However, there are some constraints associated with these tools. A balanced scorecard and strategy map often overlook an organization’s uncertainty and risk. Also, the elusive customer perspective is often not captured. Implementing and managing, for example, a balanced scorecard system is also a demanding and complex process which can overwhelm an organization if not managed properly.

Conclusion

It is clear from the analysis of the Delta/Signal case study that meaningful development occurs only when ineffective activities are mitigated or initiatives are modified. In a nutshell, a company cannot afford to keep initiatives that do not lead to profitability or add to the bottom line. Thus, an organization must choose the right performance measure to determine whether its resources and capital are used optimally. This is a critical consideration for the firm to improve its financial performance.

References

Narayanan V.G., Brem L., & Packard M. (2013). Delta/signal corp. Harvard Business School. 1- 15.