AP is a small, family-owned store that sells car parts. AP has operated in its town for many years. In the last two years, a number of low cost competitors have entered the market offering similar products for a lower selling price. As a result, AP’s market share has dropped from 20% to 15%. In response, AP’s management has prepared a new strategy to offer only branded, high-quality car parts that are superior to the non-branded low-cost parts offered by its competitors. AP’s management also plans to offer a warranty for all car parts and a free fitting service for basic car parts such as wiper blades and car bulbs.

The following additional information is relevant:

• AP hopes to increase operating profit by €10 000, specifically €8 000 from growth and
  €2 000 from price recovery
• AP has noticed increased customer complaints but there is less detailed information about what these customer complaints relate to specifically
• AP won a local customer service award every year for the past 10 years, although did not win any award last year
• AP’s customers require on average two employees to help with basic queries
• As part of its employee annual reviews, AP’s management noticed that current levels of employee training were insufficient
• AP’s employees use a hardcopy book to match car parts to car models

BAP’s management have decided to use a balanced scorecard to implement and measure the success of its new strategy.

Required

1. EXPLAIN the strategy that AP’s management has chosen to adopt.
2. PREPARE a balanced scorecard that AP could use to implement and measure the success of its strategy. Your balanced scorecard should include one objective, and two associated performance measures and targets for EACH of the perspectives of the balanced scorecard. (In total you should have 4 objectives, 8 performance measures and 8 targets).
3. EXPLAIN whether AP’s success in the learning and growth perspective impacts on the objectives in the other three perspectives (financial, customer and internal business).
4. EXPLAIN two strengths and two weaknesses of the balanced scorecard you presented in part 2.