2. The results of operations can be exploited for information about the company's strategy. Each connection in the balance scorecard should be regarded as a hypothesis of the form of \"If... then. .. The most important results are those that provide evidence inconsistent with the hypothesis embedded in the balanced scorecard. Such evidence suggests that the company' s strategy needs to be re-examined. Then, Management should try to gure out why performance measure is not showing the improvement. The answer may suggest a shift in the strategy. a. This evidence is inconsistent with the two of the hypotheses underlying the balanced scorecard. The rst of these hypotheses is \"lf customers express greater satisfaction with the accuracy of their charge account bills, then the average age of accounts receivable will improve.\" The second of these hypotheses is \"if customers express greater satisfaction with the accuracy of their charge account bills, then there will be improvement in bad debts.\" There are a number of possible explanations forthe inconsistency of the results with the hypothesis. Two possibilities are that the company' s collection efforts are ineffective and the company's credit reviews are not working property. In other words, the problem may not be with the incorrect charge account bills at all. The problem may be that the procedures for collecting overdue accounts are not working properly. Then, it is suggested that efforts should be shifted form reducing charge account billing errors to improving the internal business process dealings with collections. b. This evidence is inconsistent with the three of the hypotheses underlying the balanced scorecard. The rst of these hypotheses is \"if the average age of receivables declines, then prots will increase.\" The second of these hypotheses is \"If the written off accounts receivable decreases as a percentage of sales, then prots will increase.\" The third of these hypotheses is \"If unsold inventory at the end ofthe season as a percentage of sales declines, then prots will increase.\" There are a number of possible explanations forthe inconsistency of the results with the hypothesis. Management may have decreased the average age of receivables by writing off old accounts. This would decrease the reported prots in the short term. Bad debts as a percentage of sales could be decreased by cutting back on extensions of credit to customers. This would irritate the loyal credit customers and the sales would decrease. The reduction in the unsold inventory at the end of the season as a percentage of sales could have occurred for a number of reasons. Managers might have cut prices on excess inventories in orderto eliminate it before the end of the season. Comment Financial Total profit Average age of Written-off accounts receivable accounts receivable as a percentage of sales Customer Customer satisfaction with accuracy of charge + account bills Internal Unsold inventory at Business Percentage of charge account bills end of season as a Processes containing errors percentage of total cost of sales Percentage of suppliers making + just-in-time deliveries Learning and Percentage of sales Growth clerks trained to correctly enter data + on charge account slipsRequirements: What could be the possible question to ask based on the scenario above? Please give a possible answer also. Thank you. connect BUILDING YOUR SKILLS CASE LO10-4 Haglund Department Store is located in the downtown area of a small city. While the store had been profitable for many years, it is facing increasing competition from large national chains that have set up stores on the outskirts of the city. Recently the downtown area has been undergoing revitalization, and the O owners of Haglund Department Store are somewhat optimistic that profitability can be restored. In an attempt to accelerate the return to profitability, management of Ilaglund Department Store is in the process of designing a balanced scorecard for the company. Management believes the company should focus on two key problems. First, customers are taking longer and longer to pay the bills they incur using the department store's charge card, and the company has far more bad debts than are normal for the industry. If this problem were solved, the company would have more cash to make much needed renova- tions. Investigation has revealed that much of the problem with late payments and unpaid bills results from customers disputing incorrect charges on their bills. These incorrect charges usually occur because salesclerks incorrectly enter data on the charge account slip. Second, the company has been incurring large losses on unsold seasonal apparel. Such items are ordinarily resold at a loss to discount stores that specialize in such distress items. The meeting in which the balanced scorecard approach was discussed was disorganized and ineffectively led-possibly because no one other than one of the vice presidents had read anything about how to build a balanced scorecard. Nevertheless, a number of potential performance measures were suggested by various managers. These potential performance measures are: a. Percentage of charge account bills containing errors. b. Percentage of salesclerks trained to correctly enter data on charge account slips. C. Average age of accounts receivables. d. Profit per employee. e. Customer satisfaction with accuracy of charge account bills from monthly customer survey. f. Total sales revenue. g. Sales per employee. h. Travel expenses for buyers for trips to fashion shows. i. Unsold inventory at the end of the season as a percentage of total cost of sales. j. Courtesy shown by junior staff members to senior staff members based on surveys of senior staff. k. Percentage of suppliers making just-in-time deliveries. 1. Sales per square foot of floor space. m. Written-off accounts receivable (bad debts) as a percentage of sales. n. Quality of food in the staff cafeteria based on staff surveys. o. Percentage of employees who have attended the city's cultural diversity workshop. p. Total profit.Required: 1. As someone with more knowledge of the balanced scorecard than almost anyone else in the company, you have been asked to build an integrated balanced scorecard. In your scorecard, use only performance measures listed previously. You do not have to use all of the performance measures suggested by the managers, but you should build a balanced scorecard that reveals a strategy for dealing with the problems with accounts receivable and with unsold merchandise. Construct the balanced scorecard following the format used in Exhibit 10-5. Do not be concerned with whether a specific performance measure falls within the learning and growth, internal business process, customer, or financial perspective. However, use arrows to show the causal links between performance measures within your balanced scorecard and explain whether the performance measures should show increases or decreases. 2. Assume the company adopts your balanced scorecard. After operating for a year, some performance measures show improvements, but not others. What should management do next? 3. a. Suppose customers express greater satisfaction with the accuracy of their charge account bills but the performance measures for the average age of accounts receivable and for bad debts do not improve. Explain why this might happen. b. Suppose the performance measures for the average age of accounts receivable, bad debts, and unsold inventory improve, but total profits do not. Explain why this might happen. Assume in your answer that the explanation lies within the company