Measuring & Managing Strategic Performance (MMSP)

Professor Bill Lawler (Olin 242C, x4364, lawler@babson.edu)
Session 1 - Jan 24, 2012


in your BCAP rooms, you are supposed to
define your concept of the restaurant

Exercise:
Come up with a restaurant idea and we will do the analysis on that.

Food truck

Rent: 2000 per month

Session 2 - Jan 26, 2012


Case: TenAlpine
Depreciation is something that we need to consider over here because it still is an expense. The finance people will say stay on cash basis and do not consider depreciation.

Do the analysis by keeping Labor as both FC and VC and then compare the risk associated with the business.

Session 3 - Jan 31, 2012
Case: TenAlpine (B)


See the working excel file

Session 4 - Feb 2, 2012
Case - Drager


EVA = Income - (investment * WACC) => 0
economic value added model

two way

Sessions 5 - Feb 7, 2012


Activity Based Costing (ABC)
Case: ACME




Session 6: Feb 14, 2012
ABC - case: TenAlpina (C)

Step 1: Identify Resource Data Step 2: Divide/apportion the resource costs  cross the activities

Step 3: Identify Activity Cost Drivers

Step 4: Compute activity cost driver rates Step 5: Assign costs to cost objects (products) Session: Balanced Scorecard Case: Lodge Industries - Carbon Black  This is a functional organization

If teh plant is a cost center there will be an intrinsic motivation to bring quality down and reduce cost. whereas they are evaluated as an investment center (profits / gross assets) so they are in a way responsible for revenue as well.

Session: Sustainability Imperative
Case: Deploying sustainability at Solea


Article: "THE SUSTAINABILITY IMPERATIVE. By: Lubin, David A., Esty, Daniel C., Harvard Business Review, 00178012, May2010, Vol. 88, Issue 5"
A good article on the execution of strategy. It very clearly explains which says on "What" to do and "How" to do it.

On What

STAGE 2: Do new things in new ways. Firms engage in widespread redesign of products, processes, and whole systems to optimize natural resource efficiencies and risk management across their value chains. DuPont's "zero waste" commitment, for instance, increased the company's prioritization of eco-efficiency across their operations. Its decision to shed businesses with big eco-footprints, such as carpets and nylon, was based on an analysis that the business and environmental risks would outweigh their potential contribution to future earnings.

STAGE 3: Transform core business. As the vision expands further, sustainability innovations become the source of new revenues and growth. Dow's sweeping 2015 Sustainability Goals, designed to drive innovation across its many lines of business, yielded new products or technology breakthroughs in areas from solar roof shingles to hybrid batteries. The core business, which had traditionally relied on commodity chemicals, has shifted toward advanced materials and high-tech energy opportunities.

STAGE 4: New business model creation and differentiation. At the highest level, firms exploit the megatrend as a source of differentiation in business model, brand, employee engagement, and other intangibles, fundamentally repositioning the company and redefining its strategy for competitive advantage. GE's ecomagination initiative, poised to deliver $25 billion in revenues in 2010, enabled CEO Jeff Immelt not just to reposition the company as an energy and environmental solutions provider but to build a green aura into the GE brand.

On How
Leadership: leadership is Attributes X Results. So the leader not only needs to have vision, knowledge and passion also the ability to execute, the responsibility

Last class: Mar 13, 2012
Case: Electronic Commerce Network (B)


When the cost pool is variable in nature - we should use usage cost driver
When the cost pool is fixed in nature - we should use capacity cost driver