QUESTION 1 (20 MARKS)

Ashby Associates is an architectural firm located in Barbados that has been in practice only a few years.The market for architectural services is very competitive.To compete successfully, Ashby must deliver quality services at a low cost. Ashby presents the following data for 2018 and 2019.

2018

2019

1.

Number of jobs billed

40

50

2.

Selling price per job

$32,000

$30,000

3.

Architect labour hours

24,000

27,000

4.

Cost per architect labour hour

$35

$36

5.

Architect/software support capacity (number of jobs the firm can do)

60

60

6.

Total cost of software-implementation support

$168,000

$180,000

7.

Software-implementation support-capacity cost per job (row 6/row 5)

$2,800

$3,000

Architect labor-hour costs are variable costs. Architect (software) support costs for each year depend on the Architect support capacity that Ashby chooses to maintain each year (that is, the number of jobs it can do each year). Architect support costs do not vary with the actual number of jobs done that year.

Required:

i.Is Ashby Associates' strategy for 2019 one of product differentiation or cost leadership? Explain briefly. (2 marks)

ii.For each of the four perspectives (Financial, Customer, Internal Business Process, Learning and Growth) identify and describe two (2) key measures that you would include in Ashby's 2019 balanced scorecard and your reasons for doing so. (12 marks)

The following tabular format is recommended:

PERSPECTIVES

MEASURES

REASONS

iii. How might a consideration of social and environmental issues present an opportunity for Ashby Associates to pursue a product differentiation strategy? (6 marks)