Do you agree with caltexs decision not to include measures
Course:- Managerial Accounting
Reference No.:- EM13936719

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Balanced scorecard. (R. Kaplan, adapted)

Caltex GmbH refines petrol and sells it through its own Caltex petrol stations. On the basis of market research, Caltex determines that 60% of the overall petrol market consists of 'service-oriented customers', medium- to high-income individuals who are willing to pay a higher price for petrol if the petrol stations can provide excellent customer service such as a clean facility, a convenience store, friendly employees, a quick turnround, the ability to   pay by credit card, and high-octane premium fuel. The remaining 40% of the overall market are 'price shoppers' who look to buy the cheapest petrol available. Caltex's strategy is to focus on the 60% of service-oriented customers. Caltex's balanced scorecard for the year 2008 is given below. For brevity, the initiatives taken under each objective are omitted.






Actual performance

Financial perspective

Increase shareholder value

Operating profit changes from price recovery

€90 000 000

€95 000 000

Operating profit changes           €65 000 000         €67 000 000 from growth

Customer perspective

Increase market share               Market share of overall                     10%                      9.8%

petrol market

Internal business process perspective

Improve petrol quality              Quality index                           94 points             95 points

Improve refinery performance   Refinery reliability index (%)      91%                    91%

Ensure petrol availability           Product availability index (%)    99%                    100%

Learning and growth perspective

Increase refinery process          Percentage of refinery              88%                    90%

capability controls                    processes with advanced


1. Was Caltex successful in implementing its strategy in 2008? Explain your answer.

2. Would you have included some measure of employee satisfaction and employee training in the learning and growth perspective? Are these objectives critical to Caltex for implementing its strategy? Why or why not? Explain briefly.

3. Explain how Caltex did not achieve its target market share in the total petrol market but still exceeded its financial targets. Is 'market share of overall petrol market' the correct measure of market share? Explain briefly.

4. Is there a cause-and-effect linkage between improvements in the measures in the internal business process perspective and the measures in the customer perspective? That is, would you add other measures to the internal business process perspective or the customer perspective? Why or why not? Explain briefly.

5. Do you agree with Caltex's decision not to include measures of changes in operating profit from productivity improvements under the financial perspective of the balanced scorecard? Explain briefly.

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