Strategy, balanced scorecard, service company. Snyder Corporation is a small, information systems consulting firm that specializes in helping companies implement sales management software. The market for Snyder’s products is very competitive. To compete, Snyder must deliver quality service at a low cost. Snyder bills clients in terms of units of work performed, which depends on the size and complexity of the sales management system. Snyder presents the following data for the years 2006 and 2007.
2006 2007 1. Units ofwork performed 60 70 2. Selling price $60,000 $57,600 3. Software implementation labour-hours 30,000 32,000 4. Cost per software implementation labour-hour $72.00 $75.60 5. Software implementation support capacity (in units ofwork) 90 90 6. Total cost ofsoftware implementation support $432,000 $442,800 7. Software implementation support capacity cost per unit ofwork $4,800 $4,920 8. Number of employees doing software development 3 3 9. Total software development costs $450,000 $468,000 10. Software development costs per employee $150,000 $156,000 Software implementation labour-hour costs are variable costs. Software implementation support costs for each year depend on the software implementation support capacity (defined in terms of units of work) that Snyder chooses to maintain each year. It does not vary with the actual units of work performed each year. At the start of each year, manage¬
ment uses its discretion to determine the number ofsoftware-development employees. The software-development staff and costs have no direct relationship with the number of units of work performed.
Required 1. Is Snyder Corporation’s strategy one of product differentiation or cost leadership?
2. Describe briefly key elements that you would include in Snyder’s balanced scorecard and your reasons for doing so.