Question 1 (15 marks) 1. Vic Corporation refines petrol and sells it through its own petrol gas stations. On the basis of market research, Vic Corporation determines that 60% of the overall petrol market consists of "service-oriented customers," medium- to high-income individuals who are willing to pay a higher price for gas if the gas stations can provide excellent customer service, such as a clean facility, a convenience store, friendly employees, a quick turnaround, the ability to pay by credit card, and high-octane premium petrol. The remaining 40% of the overall market are "price shoppers" who look to buy the cheapest petrol available. Vic Corporation's strategy is to focus on the 60% of service-oriented customers. Vic Corporation's balanced Scorecard for 2018 follows. For brevity, the initiatives taken under each objective are omitted. Target Actual Objectives Measures Performance Performance Financial Perspective Increase shareholder value Operating-income changes from price recovery $80,000,000 $85,000,000 Operating-income changes from growth $60,000,000 $62,000,000 Customer Perspective Increase market share Market share of overall gasoline market 4% 3.8% Internal-Business-Process 1:13: 3320 ORO HD For brevity, the initiatives taken under cach od Target Performance Actual Performance $80,000,000 $85,000,000 $60,000,000 $62,000,000 4% 3.8% Objectives Measures Financial Perspective Increase shareholder value Operating-income changes from price recovery Operating-income changes from growth Customer Perspective Increase market share Market share of overall gasoline market Internal-Business Process Perspective Improve gasoline quality Quality index Improve refinery performance Refinery-reliability index (%) Ensure gasoline availability Product-availability index (%) Learning-and-Growth Perspective Increase refinery process Percentage of refinery processes capability with advanced controls I 92 points 91% 99% 93 points 91% 99.5% 94% 95% s Wind S- Required: 1. Was Vic Corporation successful in implementing its strategy in 2018? Explain your answer. (3 marks) 2. Would you have included some measure of employee satisfaction and employee training in the learning and growth perspective? Are these objectives critical to Vic Corporation for implementing its strategy? Why or why not? Explain briefly. (4 marks) 3. Explain how Vic Corporation did not achieve its target market share in the total gasoline market but still exceeded its financial targets. Is "market share of overall gasoline market" the correct measure of market share? Explain briefly. (4 marks) 4. Do you agree with Vic Corporation's decision not to include measures of changes in operating income from productivity improvements under the financial perspective of the balanced Scorecard? Explain briefly. (4 marks) Question 1 (15 marks) 1. Vic Corporation refines petrol and sells it through its own petrol gas stations. On the basis of market research, Vic Corporation determines that 60% of the overall petrol market consists of "service-oriented customers," medium- to high-income individuals who are willing to pay a higher price for gas if the gas stations can provide excellent customer service, such as a clean facility, a convenience store, friendly employees, a quick turnaround, the ability to pay by credit card, and high-octane premium petrol. The remaining 40% of the overall market are "price shoppers" who look to buy the cheapest petrol available. Vic Corporation's strategy is to focus on the 60% of service-oriented customers. Vic Corporation's balanced Scorecard for 2018 follows. For brevity, the initiatives taken under each objective are omitted. Target Actual Objectives Measures Performance Performance Financial Perspective Increase shareholder value Operating-income changes from price recovery $80,000,000 $85,000,000 Operating-income changes from growth $60,000,000 $62,000,000 Customer Perspective Increase market share Market share of overall gasoline market 4% 3.8% Internal-Business-Process 1:13: 3320 ORO HD For brevity, the initiatives taken under cach od Target Performance Actual Performance $80,000,000 $85,000,000 $60,000,000 $62,000,000 4% 3.8% Objectives Measures Financial Perspective Increase shareholder value Operating-income changes from price recovery Operating-income changes from growth Customer Perspective Increase market share Market share of overall gasoline market Internal-Business Process Perspective Improve gasoline quality Quality index Improve refinery performance Refinery-reliability index (%) Ensure gasoline availability Product-availability index (%) Learning-and-Growth Perspective Increase refinery process Percentage of refinery processes capability with advanced controls I 92 points 91% 99% 93 points 91% 99.5% 94% 95% s Wind S- Required: 1. Was Vic Corporation successful in implementing its strategy in 2018? Explain your answer. (3 marks) 2. Would you have included some measure of employee satisfaction and employee training in the learning and growth perspective? Are these objectives critical to Vic Corporation for implementing its strategy? Why or why not? Explain briefly. (4 marks) 3. Explain how Vic Corporation did not achieve its target market share in the total gasoline market but still exceeded its financial targets. Is "market share of overall gasoline market" the correct measure of market share? Explain briefly. (4 marks) 4. Do you agree with Vic Corporation's decision not to include measures of changes in operating income from productivity improvements under the financial perspective of the balanced Scorecard? Explain briefly. (4 marks)
