问答题 2.Victoria-Yeeland Logistics (Victoria) is a logistics support business, which operates a fleet of lorries to deliver packages of goods on behalf of its customers within the country of Yeeland. Victoria collects packages from its customers’manufacturing sites or from the customers’ port of importation and delivers to the final user of the goods. The lorries are run and maintained from a set of depots spread throughout Yeeland. The overall objective of Victoria is to maximise shareholder wealth. The delivery business in Yeeland is dominated by two international companies and one other domestic business and profit margins are extremely tight. The market is saturated by these large operators and a number of smaller operators. The cost base of Victoria is dominated by staff and fuel, with fuel prices being highly volatile in the last few years. In order to improve performance measurement and management at Victoria, the chief financial officer (CFO) plans to use the balanced scorecard (BSC). However, she has been pulled away from this project in order to deal with an issue with refinancing the business’ principal lending facility. The CFO has already identified some suitable metrics but needs you, as her assistant, to complete her work and address any potential questions which might arise when she makes her presentation on the BSC to the board. The CFO has completed the identification of metrics for three of the perspectives (Appendix 1) but has yet to complete the work on the metrics for the customer perspective. This should be done using the data given in Appendix 2. Additionally, two issues have arisen in the reward management system at Victoria, one in relation to senior management and the other for operational managers. Currently, senior management gets a fixed salary supplemented by an annual bonus awarded by the board. Shareholders have been complaining that these bonuses are not suitable.The operational managers also get bonuses based on their performance as assessed by their management superiors.The operational managers are unhappy with the system. In order to address this, it has been suggested that they should be involved in bonus target setting as otherwise there is a sense of demotivation from such a system. The CFO wants an evaluation of this system of rewards in light of the introduction of the BSC and best practice.
问答题 (a) Discuss how Victoria’s success in the customer perspective may impact on the metrics given in the financial perspective. (5 marks)
【正确答案】The success factors in the customer perspective will drive improved customer satisfaction. This should improve the customer perception of our service and so drive revenue growth. The increase in revenue could come through two routes: 1. winning customers from the competition and thus increasing volume or 2. increased selling prices as we may be perceived to offer a premium service. Increased selling prices will immediately improve the profit margin of the service. Increased volumes may indirectly improve our margins as we can spread the increased activity over our existing fixed cost base, for example, by increasing capacity utilisation (having more packages on each lorry). As these improvements to operating profit occur without additional capital expenditure, they may feed through to an increased return on capital employed.
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问答题 (b) Recommend, with justification, and calculate a suitable performance metric for each customer perspective success factor. Comment on the problems of using customer complaints to measure whether packages are delivered safely and on time. (11 marks)
【正确答案】Ability to meet customers’ transport needs This is a measure of the flexibility of the business and would be measured by the percentage of customer requests which Victoria can actually undertake: Ability to deliver packages quickly The difficulty of this measure is that different packages may travel different distances and so take longer. Therefore, a measure based on time taken per kilometre which a package travels is appropriate: Ability to deliver packages on time This is measured by the number of packages delivered within the time window given to the customer: Ability to deliver packages safely This is measured by the number of undamaged packages delivered within the time window given to the customer:
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问答题 (c) Advise Victoria on the reward management issues outlined by the CFO. (9 marks)
【正确答案】The senior management rewards system appears open to manipulation as the board is effectively setting their own rewards.There is the danger that targets are set to be easily achieved and so the profits of the business are siphoned off to the managers rather than the shareholders. The introduction of the BSC should assist in creating coherence between the objectives of the senior management and those of the shareholders. However, it appears that the major, financial measures suggested in the BSC do not directly address shareholder wealth although return on capital will be related. Finally, in a market where competition is fierce, the ability of management to grow revenue will be heavily constrained and there appear to be important factors in profit which are outside of the control of senior managers (fuel costs). The operational managers should have their measures of performance set through a cascade down from the strategic measures in the BSC. These measures will often come from the customer and process perspectives. In this way, the reward system should be consistent with the overall objectives of the business. The suggestion that operational managers should be involved in setting their own targets should be treated carefully as it may present problems. This suggestion often arises from a confusion of the idea of explaining the target setting process to the manager with the idea of actually setting the target. The setting of the target should be done by a higher level of management so that the target is achievable with above normal effort.The target should not be set to be unreachable as this can cause demotivation. The target set should then be explained to the employee involved so that they understand what they have to do in order to earn this additional reward. It would be advisable for operational management, where most improvements are incremental, that the target is one where the bonus increases as the performance improves rather than a simple one of obtaining a given level of performance. [Tutor note: The building block model headings of fair, achievable, owned standards and clear, motivational and controllable rewards are relevant to this answer but the answer needs to distinguish between the standards used and the targets set.]
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