R and R Industries (RR) manufactures the 'KinuRest' mattress from a special covering

called Kinutex-infused fabric. The fabric is proven to promote a restful night's sleep and

increased comfort. Additionally, the Kinutex-infused fabric generates kinetic infrared heat to

provide a warm sleep.

R and R patented this process with the 'Baby Boomer' generation in mind. This is the

demographic of the population between the ages of 57 and 75. They are the market that is

most likely to place an emphasis on purchasing a mattress with comfort plus warmth. They

are also the market that is most willing to pay the high sales price of this product. As a

result, RR's sales have been increasing at a steady rate.

The mattresses are sold in retail outlets across the country that specialize in mattress and

bedding products. While loyal, long-time customers can get a special price discount, the

KinuRest mattress never goes on sale.

In the past year, RR's research and development team has been partnering with ABC

Textiles (ABC), its supplier of Kinutex-infused fabric. ABC changed its manufacturing

process to improve the rate that kinetic energy transfers to infrared heat. RR and ABC

shared in the additional cost per metre of fabric resulting from the upgrade. This also

resulted in the need to use more packing material per mattress.

During the year, RR was able to streamline its operations. As such, it was able to remove a

strapping machine from its manufacturing process which reduced overhead costs.

Required

a. State R and R Industries' strategy. Identify three points from the case that give evidence

that supports your choice and explain why they support your choice. (3 marks)

b. Return on investment is a financial measure that can be used to assess the financial

success of an investment centre. Explain 1 advantage and 1 disadvantage of using

return on investment when assessing the success of R and R Industries' operations.

Your answer should be specific to R and R's situation. (4 marks)

c. Two of the Balanced Scorecard perspectives are listed in the first column of the table

below. For each perspective, fill in the following:

A measure that is specific to the R and R's strategy identified in part (a) (1 mark)

Why is this measure important to R and R? Your explanation must relate

specifically to R and R. (2 marks)