Balanced scorecard. Caltex Inc. refines gasoline and sells it through its own Caltex Gas Stations. On the basis of market research, Caltex determines that 60% of its customers

(medium- to high-income individuals) are willing to pay a higher price for its gas if the gas stations can provide excellent customer service such as a clean facility, a convenience store, friendly employees, quick turnaround, the ability to pay by credit card, and high-octane premium fuel. Marketwide prices for inputs and outputs and the market size did not change in 2009. Caltex’s balanced scorecard for 2009 follows. For brevity, the initiatives taken under each objective are omitted.

REQUIRED 1. Was Caltex successful in implementing its strategy in 2009? Explain your answer.
2. Would you have included some measure of employee satisfaction and employee training in the learning and growth perspective? Are these objectives critical to Caltex for implementing its strategy? Why or why not? Explain briefly.
3. Explain how Caltex did not achieve its target market share in the total gasoline market but still exceeded its financial targets. Is “market share of total gasoline market” the correct measure of market share? Explain briefly.
4. Is there a clear cause-and-effect linkage between improvements in the measures Strateny, Balanead in the internal business process perspective and the measures in the customer perspective? That is, would you add other measures to the internal business process perspective or the customer perspective? Why or why not? Explain briefly.
5. Do you agree with Caltex’s decision not to include measures of changes in operating income from productivity improvements under the financial perspective of the balanced scorecard? Explain briefly.LO1

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Objectives Financial Perspective Increase shareholder value Measures Target Actual Performance Performance Operating income changes $108,000,000 $114,000,000 from price recovery Operating income Customer Perspective Increase market share Internal Business Process Perspective Improve gasoline quality Improve refinery performance Market share of total gasoline market Quality index changes from growth $ 78,000,000 $ 80,400,000 10% 9.8% 94 points 95 points Refinery reliability 92% 92% index (%) Ensure gasoline availability Product availability 99% 100% index (%) Learning and Growth Perspective Increase refinery process capability Percentage of refinery 88% 90% processes with advanced controls