=+15-39 KKK Using the balanced scorecard for performance evaluation, strategy maps and incorporating environmental performance OBJECTIVE 3 Chemico Pty Ltd produces an innovative type of plastic that is replacing steel in the production of cars. The industry is very competitive, but Chemico has a very successful strategy focused on capturing market share by providing a high-quality product while carefully managing costs. The production process involves thousands of variables that must be monitored and adjusted to determine the energy requirements and yield (output compared with input). Highly trained and experienced engineers are the key to ensuring that the process is efficient and that improvements are continually identified.

In summary, Chemico’s strategy is to invest in training and workplace conditions to improve the engineers’ innovation and process management skills. Improvements from employee suggestions increase product quality and process efficiency, so market share then increases while production costs decrease. Increasing market share and decreasing production costs lead to higher profit margins and return on equity. The CEO has also made a commitment to managing Chemico’s environmental impact.

As the management accountant you will evaluate the performance of a pair of managers based on measures presented in the balanced scorecard format. In order to compare the performance of the two managers you will first construct a strategy map that shows the causal links between the performance measures. You can then evaluate each manager’s performance and determine their share of the bonus pool.