4 Case Study Firm’s Background
4.2 Firm’s Present Balanced Scorecard
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4.2 Firm’s present Balanced Scorecard
Both strategies are fully embedded into the firm’s balanced scorecard (Figure 3). It is divided into four levels: Financial Perspective, Customer Perspective, Internal Processes Perspective, and Learning & Growth Perspective.
1. Financial Perspective. There are two themes here. The first one, “Revenue Growth”, which is achieved through the “Total Solutions’ Provider”, and partly through the “Operational Excellence” strategies. The second one, “Cost Reduction and Control”, is achieved solely through the “Operational Excellence” strategy.
2. Customer Perspective. There are two themes here. “Total Solutions’ Provider” is meant to create the ability to find or create the most appropriate fabric, that will satisfy the needs of clients. “Operational Excellence” strategy’s foremost goals are: eliminate poisonous elements from the products produced, and make the selling price adoptable to the level of prices on the market.
3. Internal Perspective. It includes three themes. All of them deal with the ability to manage effectively. The first theme, “Total Solutions’ Provider Management” is aimed at managing the process of new technologies & knowledge development. “Sustainable Quality of Goods without Hazardous Substances Management” theme’s goal is to set up high level of new non-toxic materials’ development. “Costs’ Control Management” theme underscores the influence of time on costs, and initiates implementation of time-driven activity based costing system.
4. Learning Perspective. There are five themes here; four of them are meant to raise the skills of workers. “Total Solutions’ Provider Skills” has to stimulate effective team work to create total solutions for clients. “Quality Management Skills” theme’s purpose is to set new
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quality management standards, and becoming capable of complying with them. “Production Scheduling Skills” theme includes only introducing the ERP system to the production.
“Costs’ Control Skills” theme is meant to educate the employees about the ABC system.
The fifth theme “Create Climate of Cooperation inside Themes” is a major one. It penetrates through the previous four themes by its fundamental purpose to make the team work, in general, more effective. It introduces the system of mentoring, when more experienced employees will have to share their experiences with junior specialists, and it suggests the introduction of fair-money-for-idea initiative, that will stimulate the employees’ active participation in the creative process. The present Balanced Scorecard is represented in Figure 3:
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Revenue Growth Cost Reduction and Control
Sustainable Quality, Reasonable Price of Goods Produced (Operational Excellence)
Become First Choice for Strategic Clients, Who
Need Outside Fabrics’ Total Solution Sustainable Quality of Goods without Hazardous Substances
Reasonable Price
Total Solutions' Provider Management Sustainable Quality of Goods without Hazardous Substances Management
Costs’ Control Management
Proactively Initiate New Projects Design New Techniques Meeting Clients' Demand Fast
Develop New Non-Hazardous Production Materials Create Computer-Based SOP of Production Process
Create System of Quality Management
Create Best Scheduling System Implement ABC system
Total Solutions' Provider Skills Qualitёy Management Skills Production Scheduling Skills
Costs' Control Skills
New Projects' Task Team
New Techniques Designing Task Group
New Non- Hazardous Materials Development Task Group
Production Specialist Quality Control Specialist
Implement ERP System ABC specialist New Projects' Management System
Fabrics' Processing Specialized Database
Create climate of cooperation inside teams
Mentoring System
Profit Increase
Money-for-Iniciative Sharing System
F in a n c ia l C u s t o m e r I n t e r n a l L e a r n i n g
Total Solutions' Provider
Figure 3. Present Balanced Scorecard
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5. Research Methodology
5.1 Methodology of new strategies development
To understand the mechanism of the new strategies’ development, a case firm from the textile industry is taken as an example. Its main characteristics serve as support points to guide the sequence of the new strategy creation.
The main purpose of the case-firm's new would-be strategy is to open up new market spaces, by introducing value innovations. To come up with fresh ideas to set up new strategy, the author borrows a set of tools designed for the Blue Ocean strategies (Kim and Mauborgne 2005) and adds an additional one- discrepancy. The tools applied, are:
1) Four Actions Framework. Which of the factors that the industry takes for granted should be eliminated ? Which factors should be reduced well below the industry’s standard ? Which factors should be raised well above the industry’s standard ? Which factors should be created that the industry has never offered ?
2) Six-paths framework to reconstruct market boundaries. It includes: looking across alternative industries, looking across strategic groups within industries, looking across the chain of buyers, looking across complimentary products and services, looking across functional or emotional appeal to buyers, looking across time.
3) Value curve. First, it is used to align the proposed innovations with utility, price, and cost positions to make them harmoniously fit all the necessary dimensions of ideal product.
Second, value curve helps to identify the focus, divergence, and the compelling tagline of a new product.
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4) The fourth tool belongs to the textbooks on psychology, and can be singled out as a separate medium to leap from customers to noncustomers. It can be called a “discrepancy” tool, and it works both ways. It can be used on physical and psychological levels to identify noncustomers.
5.2 Methodology of strategy execution development
The developed Blue Ocean Strategy should be implemented. Balanced Scorecard was chosen as a presumably most effective tool for such purpose.
The Balanced Scorecard methodology is a technique to express the organization’s strategy in quantifiable goals, in order to measure its performance.
This methodology analyzes the organization’s performance in four perspectives: financial analysis, a traditional way to estimate a firm’s results by such lag indicators, as operational costs or return-on-investment; customer analysis, the way to measure, what the market wants, before it reflected itself in the financial indicators (this approach allows the organization to act faster, using lead indicators for measuring performance, instead of lag indicators); internal analysis shows how prepared the organization is to meet the customer demand, in terms of internal operations and innovative approaches to achieve the goals in the customer perspective; the learning and growth perspective identifies, what skills of employees, and information systems inside the organization are required to become capable of implementing the goals in the internal perspective.
Balanced Scorecard structure breaks all the goals, mentioned above, successively into strategies, tactical approaches, and measurement systems.
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6. Strategy
Beneath, there are two types of strategies for the case-firm (a New Channel Strategy and a Niche Innovator Strategy); and they consist of the ideas, proposed in the frames of the Blue Ocean concept.