Question 3 -Balanced scorecard (50 points) You recently started your job as controller at SPRINT sports clothing. SPRINT has a long history in sports clothing existing for more than 50 years. The goal of SPRINT is - and has always been-to provide high-quality sports clothing for all outdoor and indoor sports. Although the brand is well-known within the industry, SPRINT struggled in the last couple of years. According to industry experts, there are several reasons for the downturn of SPRINT. First, SPRINT failed to differentiate their high-quality products from cheaper non-brand products that competitors offer. At this point in time, many customers prefer competitors' lower quality products over SPRINT's higher quality, but more expensive products. Second, SPRINT generally reacts slowly to market trends. While their competitors pick up new fashion trends and design new products within weeks, SPRINT only includes such trends in their yearly collections - which is often too late. This gives SPRINT the reputation of being old-fashioned and outdated. Finally, the founder of the company shifted his/her focus away from SPRINT, focusing instead on other businesses in his/her portfolio. As a result, he/she cut down SPRINT's funds by about 30% over the last 5 years. This put a lot of pressure on SPRINT's management, who therefore reduced R\&D activities and cut on input materials, leading to overall lower quality products (that are sold at similar, high prices). Given the current market trends and innovations, this was a big disadvantage for SPRINT. As a result, many customers switched to competitors. Collectively, industry experts argue that SPRINT cannot keep up with its competitors anymore. Overall, the sports clothing market in Europe is a strong and growing market. Given the trend to care more about health, work-life balance, and staying active in early and later stages of life, the market is expected to continue this growth for the foreseeable future. The sports clothing industry is divided into two different segments. On the one hand, there is a market for lower quality products - where non-brand products and providers of cheap products dominate the field. On the other hand, there is the high-end market-where customers care about quality and the brand of the company. This segment is driven by constant innovation and new technologies. A few big firms dominate this market, but there is a strong competition for market share. Despite such competition, high-end customers are relatively loyal. That is, once they connect with a specific brand and are convinced by its products, then they will buy products from this brand regularly. However, if the quality of the products decreases and/or competitors offer better quality for the same price, high-end customers certainly are willing to switch brands. This is also what happened to SPRINT-they used to be number 3 in terms of market share in this segment but now dropped to number 7 . Although there were rumors that SPRINT would soon go bankrupt, LEILA, a major nonsports clothing company in Europe, decided to buy SPRINT and integrate it in their company as independent division. By integrating a sports division, LEILA strives to strengthen its market position as the leading clothing brand in Europe. At the same time, SPRINT can benefit from the knowledge that LEILA has with respect to fashion trends, new technology, better distribution channels, and higher market power for buying input materials at reasonable prices. In short, LEILA's mission is to become number 1 in terms of market share in all markets. Moreover, LEILA aims to have each division earn returns exceeding the firm's weighted-average cost of capital. Only in cases where a division is undergoing a major restructuring, LEILA's management is willing to consider other aspects of performance, such as sales growth or other financial improvements. LEILA saw much potential in SPRINT, because SPRINT fits nicely in the overall strategy to focus on high-quality brands. Moreover, they seem to target a similar type of customers-mid- to high-income customers, who appreciate high-quality products. In this regard, LEILA has a well-established distribution network. Thus, LEILA hopes that their existing customers will start to buy SPRINT sports clothing, and vice versa. In the short-term, LEILA plans to overcome the main problems leading to the downturn of SPRINT by increasing SPRINT's R\&D budget to a level exceeding those of all competitors, allowing SPRINT to become the leading provider of high-end sports clothing. This would not only make sure that SPRINT leads the market's product developments, but it should also make sure that customers see and value SPRINT's leadership. Moreover, LEILA knows that they need to increase the attractiveness of SPRINT products. As such, SPRINT's current product line needs to be made more fashionable, and SPRINT needs to be more agile and responsive to trends in the fashion market. To achieve all the above, LEILA knows that major changes at SPRINT are necessary. Many of SPRINT's employees seem to be uncertain about their future at LEILA and are afraid to be fired during the restructuring. Some employees even started to look for new jobs at competitors. LEIL.A knows this is problematic because: (1) it decreases employees' morale; and (2) they might lose a lot of knowledge if talented employees leave the firm. However, at the same time, LEILA knows that-to become leader in the sports clothing industry-they must invest and hire new talented employees. seeThey aim to hire new employees from competitors, but also from universities and other research institutes. 5. Explain the potential (dis-)advantages of implementing a Balanced Scorecard for the restructuring of SPRINT. Why should they or why should they not implement a Balanced Scorecard? Points: 10, word limit: 250 . Your answer goes here. 6. Build a strategy map for SPRINT and explain how this map can contribute to the overall success of the firm. Points: 10, word limit: 300. Your answer goes here. 7. Based on your strategy map, develop a Balanced Scorecard for SPRINT that helps to operate their business. Thereby, include the perspectives necessary for SPRINT, propose 2 specific measures per perspective. In addition, discuss why you chose them (e.g., benefits, costs, etc.). Points: 30 , word limit: 450 . Your answer goes here