Reference no: EM132510182
The CMYK (cyan, magenta, yellow, and black) Company manufactures various types of color laser printers in a highly automated facility with high fixed costs. The market for laser printers is competitive and the various color laser printers on the market are comparable in terms of features and price. CMYK's strategy to achieve target profitability is to produce and sell high quality laser printers at a low cost.
For 2019, CMYK planned to increase quality and lower costs by improving yields and reducing defects in its manufacturing operations, and to train workers and encourage them to seek real-time feedback. Currently, a significant amount of CMYK's capacity is used to produce products that are defective and cannot be sold. CMYK expects that higher yields and reduced defects will lower some costs. The higher yields will also allow CMYK to reduce the fixed costs of capacity that the company needs to manufacture products, e.g., by reducing the number of employees and the amount of required plant and equipment. Alternatively, CMYK could maintain its current level of capacity but produce and sell more of its current products or improved models of its current products.
CMYK's balanced scorecard for the just-completed fiscal year 2019 as follows:
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Objective
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Measure(s)
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Target
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Actual
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Performance
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Performance
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Financial Perspective
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Increase shareholder value
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Increase in operating income due to reduced defects and higher yields
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$ 1,000,000
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$ 400,000
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Increase in operating income due to decrease in fixed capacity costs
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$ 750,000
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$ 125,000
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Customer Perspective
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Increase market share
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Share of laser color printer market
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5%
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4.6%
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Internal-Business-
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Process Perspective
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Improve manufacturing quality
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Yield
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82%
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36%
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Reduce delivery time to customers
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Order-delivery time
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25 days
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22 days
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Learning-and-Growth
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Perspective
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Develop process skills
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Percentage of employees trained in process and quality management
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90%
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94%
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Enhance information system capabilities
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Percentage of manufacturing processes with real-time feedback
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85%
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38%
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Question 1.) Based on results in the balanced scorecard above, do you think CMYK was successful in implementing its strategy in 2019? Explain.
Question 2.) Is CMYK's balanced scorecard useful in helping the company understand why it did not reach its target market share in 2019? If it is, explain why. If not, explain what other measures you might want to add under the customer perspective and why.
Question 3.) Should CMYK have included some measure of employee satisfaction in the learning-and-growth perspective and/or a measure of new-product development in the internal-business-process perspective? That is, do you think employee satisfaction and development of new products are important for CMYK to implement its strategy?
Question 4.) What issues do you see in CMYK efforts to improve quality and significantly downsize to eliminate unused capacity?
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