Read the Haglund Department Store case in the textbook and answer the questions (Qs 1, 2, 3a and 3b):

A few notes/tips:

• You can prepare your answers in almost any program/app - e.g., Microsoft word, powerpoint, etc. Just make sure to save your file as a pdf at the end, and upload the pdf file.
• You may want to use boxes for each of the four sections of the balanced scorecard to organize your balanced scorecard.
• Question 1 asks you to use arrows to show links, however that may be difficult to do. Feel free to describe the links in notes above or below your balanced scorecard, instead of using arrows in the scorecard itself. However you choose to present it, make sure you do not skip this step. Make sure to explain or show the links.
• Remember that you do not have to use all of the measures listed in the case. Use only the ones that you think are most relevant given Haglund's strategy. (Part of creating a good balanced scorecard is choosing which measures NOT to use.)
• There are no right answers for this case. The key is to think carefully about each question, and to provide a thoughtful answer and clear explanations of your reasoning. You will be graded on the completeness of your answers.
• Discussing this question in small groups, and comparing your individual answers, can be very helpful.
• Make sure to answer each question/question part

O Haglund Department Store is located in the downtown area of a small city. While the store had been profitable for many years, it is facing increasing competition from large national chains that have set up stores on the outskirts of the city. Recently the downtown area has been undergoing revitalization, and the owners of Haglund Department Store are somewhat optimistic that profitability can be restored. In an attempt to accelerate the return to profitability, management of Haglund Department Store is in the process of designing a balanced scorecard for the company. Management believes the company should focus on two key problems. First, customers are taking longer and longer to pay the bills they incur using the department store's charge card, and the company has far more bad debts than are normal for the industry. If this problem were solved, the company would have more cash to make much needed renovations. Investigation has revealed that much of the problem with late payments and unpaid bills results from customers disputing incorrect charges on their bills. These incorrect charges usually occur because salesclerks incorrectly enter data on the charge account slip. Second, the company has been incurring large losses on unsold seasonal apparel. Such items are ordinarily resold at a loss to discount stores that specialize in such distress items. The meeting in which the balanced scorecard approach was discussed was disorganized and ineffectively led-possibly because no one other than one of the vice presidents had read anything about how to build a balanced scorecard. Nevertheless, a number of potential performance measures were suggested by various managers. These potential performance measures are: a. Percentage of charge account bills containing errors. b. Percentage of salesclerks trained to correctly enter data on charge account slips. c. Average age of accounts receivables. d. Profit per employee. e. Customer satisfaction with accuracy of charge account bills from monthly customer survey. f. Total sales revenue. g. Sales per employee. h. Travel expenses for buyers for trips to fashion shows. i. Unsold inventory at the end of the season as a percentage of total cost of sales. j. Courtesy shown by junior staff members to senior staff members based on surveys of senior staff. k. Percentage of suppliers making just-in-time deliveries. 1. Sales per square foot of floor space. m. Written-off accounts receivable (bad debts) as a percentage of sales. n. Quality of food in the staff cafeteria based on staff surveys. o. Percentage of employees who have attended the city's cultural diversity workshop. p. Total profit. Required: 1. As someone with more knowledge of the balanced scorecard than almost anyone else in Page 569 the company, you have been asked to build an integrated balanced scorecard. In your scorecard, use only performance measures listed previously. You do not have to use all of the performance measures suggested by the managers, but you should build a balanced scorecard that reveals a strategy for dealing with the problems with accounts receivable and with unsold merchandise. Construct the balanced scorecard following the format used in Exhibit 12-9. Do not be concerned with whether a specific performance measure falls within the learning and growth, internal business process, customer, or financial perspective. However, use arrows to show the causal links between performance measures within your balanced scorecard and explain whether the performance measures should show increases or decreases. 2. Assume the company adopts your balanced scorecard. After operating for a year, some performance measures show improvements, but not others. What should management do next? 3. a. Suppose customers express greater satisfaction with the accuracy of their charge account bills but the performance measures for the average age of accounts receivable and for bad debts do not improve. Explain why this might happen. b. Suppose the performance measures for the average age of accounts receivable, bad debts, and unsold inventory improve, but total profits do not. Explain why this might happen. Assume in your answer that the explanation lies within the company. O Haglund Department Store is located in the downtown area of a small city. While the store had been profitable for many years, it is facing increasing competition from large national chains that have set up stores on the outskirts of the city. Recently the downtown area has been undergoing revitalization, and the owners of Haglund Department Store are somewhat optimistic that profitability can be restored. In an attempt to accelerate the return to profitability, management of Haglund Department Store is in the process of designing a balanced scorecard for the company. Management believes the company should focus on two key problems. First, customers are taking longer and longer to pay the bills they incur using the department store's charge card, and the company has far more bad debts than are normal for the industry. If this problem were solved, the company would have more cash to make much needed renovations. Investigation has revealed that much of the problem with late payments and unpaid bills results from customers disputing incorrect charges on their bills. These incorrect charges usually occur because salesclerks incorrectly enter data on the charge account slip. Second, the company has been incurring large losses on unsold seasonal apparel. Such items are ordinarily resold at a loss to discount stores that specialize in such distress items. The meeting in which the balanced scorecard approach was discussed was disorganized and ineffectively led-possibly because no one other than one of the vice presidents had read anything about how to build a balanced scorecard. Nevertheless, a number of potential performance measures were suggested by various managers. These potential performance measures are: a. Percentage of charge account bills containing errors. b. Percentage of salesclerks trained to correctly enter data on charge account slips. c. Average age of accounts receivables. d. Profit per employee. e. Customer satisfaction with accuracy of charge account bills from monthly customer survey. f. Total sales revenue. g. Sales per employee. h. Travel expenses for buyers for trips to fashion shows. i. Unsold inventory at the end of the season as a percentage of total cost of sales. j. Courtesy shown by junior staff members to senior staff members based on surveys of senior staff. k. Percentage of suppliers making just-in-time deliveries. 1. Sales per square foot of floor space. m. Written-off accounts receivable (bad debts) as a percentage of sales. n. Quality of food in the staff cafeteria based on staff surveys. o. Percentage of employees who have attended the city's cultural diversity workshop. p. Total profit. Required: 1. As someone with more knowledge of the balanced scorecard than almost anyone else in Page 569 the company, you have been asked to build an integrated balanced scorecard. In your scorecard, use only performance measures listed previously. You do not have to use all of the performance measures suggested by the managers, but you should build a balanced scorecard that reveals a strategy for dealing with the problems with accounts receivable and with unsold merchandise. Construct the balanced scorecard following the format used in Exhibit 12-9. Do not be concerned with whether a specific performance measure falls within the learning and growth, internal business process, customer, or financial perspective. However, use arrows to show the causal links between performance measures within your balanced scorecard and explain whether the performance measures should show increases or decreases. 2. Assume the company adopts your balanced scorecard. After operating for a year, some performance measures show improvements, but not others. What should management do next? 3. a. Suppose customers express greater satisfaction with the accuracy of their charge account bills but the performance measures for the average age of accounts receivable and for bad debts do not improve. Explain why this might happen. b. Suppose the performance measures for the average age of accounts receivable, bad debts, and unsold inventory improve, but total profits do not. Explain why this might happen. Assume in your answer that the explanation lies within the company