Health and Wealth Bhd (HWB) is a public listed company with a chain of 50 general department stores in Malaysia. The company is known for the high quality of its products, mainly food. The majority of its goods are sourced from trusted manufacturers and branded under the company’s own “Health&Wealth” label. Currently, HWB faces a tough competitive environment with all the major players in its market trying to secure their positions. Poor economic conditions worldwide have significantly affected the country. Consumer spending is falling throughout the economy and there is no immediate likelihood of a resumption of growth. HWB’s chief executive officer (CEO) has recently conducted a strategic review of the business in the context of the current economic recession. He has identified the following strategy as critical for HWB’s success:
- focus on key customers – those who are occasional shoppers but not
currently loyal to the business
- ensure HWB’s offering addresses their needs
- cut out costs which do not address these customers’ priorities
- amend current processes to meet this new focus
- build for the future with a programme of sustainable development.
The company needs to address the impact of this new strategy on its performance measurement systems. HWB uses a balanced scorecard to assess its strategic performance and the scorecard is used to link the business strategy with its more detailed performance measures. Currently, Armstrong uses Economic Value Added (EVA), earnings per share (EPS) growth and share price performance to monitor its financial performance. Financial data for the previous two years are available as follows:
2018 2019
Profit for the year RM353.8m* RM271.7m
Average number of shares in issue 1,600m 1,600m
EVA RM306m RM110m
Average share price RM2.45 RM2.08m* - millions

The CEO has asked you to consider the implications of the new strategy for the performance measures used by the business.
Required:
a) Describe the four perspectives of the balanced scorecard showing how the new strategy of the business as outlined by the CEO links to the different perspectives. Illustrate your answer by suggesting appropriate performance measures for HWB for each of the detailed points within the strategy.

b) Assess the financial performance of the company using the three shareholder performance indicators.

c) Critically evaluate the use of these performance metrics and how they may affect management’s behavior.