Monza Pharma (Monza) is a developer and manufacturer of medical drugs, based in Beeland but selling its products all over the world. As a listed company, the overall objective of the company is to maximize the return to shareholders, and it has used return on capital employed (ROCE) as its performance measure for this objective. There has often been comment at board meetings that it is good to have one, easily understood measure for consideration.
The company has three divisions:
■ The drug development division develops new drug compounds, taking these through the regulatory systems of different countries until they are approved for sale;
■ The manufacturing division then makes these compounds;
■ The sales division then sells them.
Monza’s share price has underperformed compared to the market and the health sector in the last 2 years. The chief executive officer (CEO) has identified that its current performance measures are too narrow and is implementing a balanced scorecard (BSC) approach to address this problem. The current performance measures are:

Return on capital employed 

Average cost to develop a new drug 

Revenue growth

The CEO engaged a well-known consulting firm that recommended the use of a BSC. The consultants began by agreeing with the board of Monza that the objective for the organization’s medium-term strategy was to create shareholder value by innovating in drug development, improving efficiency in drug manufacturing, and successfully selling their products. 

The consulting firm has presented an interim report with the following proposed performance measures:

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Objectives Area Financial Customer Internal business process Learning and growth Measures ROCE Revenue growth Average cost to develop a new drug Training days provided for employees each year