Analysis Of TWAP Case Study

1. Why economy division report poor financial performance?

The reason for economic division to portray disappointing financial performance is based on the notion that it has maintained more focus on lower hierarchy of the strategy map. For instance, efforts were made to improve learning and growth of organization along with engagement of workforce. Likewise, the implementation of Just in time (JIT) and Lean management and increasing expertise of employees in same was key target area of economy division. Likewise, targets of enhancement of employees’ capabilities, improvement of customer relationship and improvement of suppliers’ performance were all focusing on strengthening long term existence and competitiveness of TWAP. Given these evidences, it is clear that economy division has focused more on non-financial performance drivers and indicated good performance. On the other hand, the short-term financial goals were not met because of maintaining focus on lower hierarchy of strategy map.

2. Strategy are and business focus of economy and luxury divisions

Strategic and business focus of Luxury division: The key strategic focus of luxury division was to differentiate itself in market based on innovation and technology. The division was engaged in creating new product designs with innovative features, such that market standing can be maintained and luxury customers can be offered highest possible value with innovative technology. The luxury division was concerned about enhancing its Research and Development capabilities to support its strategy. Moreover, the luxury division was concerned about working closely with customers along with lowering the product development time through use of sophisticated technology and equipment.

Strategic and business focus of Luxury division: The focus of economy division was on maintaining quality and sustainability, which helps them to offer high quality products at lower maintenance cost. The business focus of economy division was on creation of JIT and lean management, along with improving learning and knowledge of employees, such that better products can be offered to customers while keeping the cost low.

3. Balanced Scorecard (BSC) of economy and luxury divisions of TWAP

3.1. BSC of Economy Division

Table 1. TWAP Economy division Balanced Scorecard

Objectives Measures
Financial Perspective
Increased ROCE ·         ROCE

·         Earnings before interest and taxes
High gross margins ·         Percentage gross margin

·         Revenue
Customer Perspective
Improved customer satisfaction ·         Surveying % of customers who consider TWAP products as “excellent” and “high quality”

·         % market shares of TWAP in economy segment
Management of customer relationship ·         Number of customers with whom TWAP maintains long run relationship

·         % of customers who are willing to make future purchases from TWAP (surveying the customers who are partnered with TWAP)
Internal Business Perspective
Lower lifetime cost of products ·         % cost on product maintenance

·         Number of defects reported in first year of product consumption
Managing lean production and JIT ·         % efficiency (Time consumed in production of million units) followed by implementation of lean production and JIT

·         Increase in production capacity, measured by average number of units produced in a day
Innovation and Learning Perspective
Transforming employees in JIT/Lean expert ·         % of employees receiving JIT and Kaizan training

·         Total number of lean engineers hired
Enhancing employees engagement ·         % of employees who are motivated by the tasks and goals of their job

·         % of employees who are satisfied with the availability of resources

3.1.1. Explanation of BSC of economy Division

The BSC of economy division is expected to assist the division in enhancing sales in economy segment by keeping the maintenance cost low and by maintaining good quality through JIT and lean management. The focus on employee learning and customer relationship will help the division to support achievement of its financial goals.

The objectives of financial perspective for economy divisions will focus on increasing ROCE and gross margin which are two key financial goals of any organization to assess its capital efficiency and profitability respectively. Additionally, the customer satisfaction and relationship management with customers are important for assuring strong market position of TWAP in emerging economies, such as Asia (Hasan & Chyi, 2017). Moreover, for the internal business processes, the implication of JIT and lean production along with assuring the lower cost of maintenance are important objectives for keeping the quality of products high and cutting cost. Lastly, in order to improve efficiency of JIT and lean production, development of employees’ expertise and their engagement are crucial aspects of learning and growth perspective (Kaldırım, 2020).

3.2. BSC of luxury division

Table 2. TWAP luxury division Balanced Scorecard

Objectives Measures
Financial Perspective
Increased ROCE ·         ROCE

·         Earnings before interest and taxes
Improved gross margin ·          Percentage gross margin

·         Revenue
Customer Perspective
Improved satisfaction of customers ·         Survey: % of customers who are “very satisfied” with TWAP’s products

·         Global market shares of TWAP in luxury segment
R&D partnership with customers ·         Number of customer with whom TWP entered into R&D partnership

·         % of customers who are considering products of TWAP as “innovative” (measured through survey)
Internal Business Perspective
Innovating processes and products ·         Number of new products introduced

·         % of customers who consider that TWAP’s products are “highly innovative”
Improved research and development capabilities ·         Number of new insights obtained through R&D

·         % of products innovated based on R&D results
Learning and Growth Perspective
Increased employee engagement ·         % of employees who are motivated by the tasks and goals of their job

·         % of employees satisfied with the resource availability at their jobs
Continuous learning of employees ·         % of employees who received training during past 12 months

·         % of employees who are willing to pursue future training and development programs

3.2.1. Explanation of luxury division BSC

The focus on development of R&D partnership with customers, improvement of product and process innovation and betterment of R&D capabilities of TWAP are key focal aspects in BSC of luxury division. These aspects are likely to support strategy of luxury division to provide innovative products to luxury customers.

The selection of financial objectives for luxury division is aligned with economy division BSC. Likewise, the customer satisfaction is considered key objective of customer perspective. However, the luxury division focuses on managing R&D partnership with customers, as it can support its goal of innovation and value generation for customers.  Moreover, the internal business processes for luxury division focus on innovation and R&D capabilities as they key aspects are aligned with strategy of luxury division. Finally, to support its processes, employees’ engagement and learning are chosen as objectives of learning and growth perspective.

4. Strategy Maps for economy and luxury divisions

4.1. Strategy map of economy division

Although all objectives are linked with each other, yet it is notable that when employees will be transformed in JIT and lean experts, then overall capability of organization to implement JIT and lean production will improve (Kaldırım, 2020). It will lower product defects and thus will lead to better customer satisfaction and customer relationship. Finally, the effects will be witnessed in the form of better financial performance, as satisfied customers will serve as source of revenue for economy division.

Finance                                                                                               
Customers  
Internal business processes                                              
Learning and growth  

4.2. Strategy map of luxury division

It is noted in strategy map of luxury division that better learning and growth of employees will contribute in improving the R&D capabilities of TWAP. It will then assist the TWAP’s luxury division to manage R&D partnership with customers for c-creation of innovative products. The customers’ will perceive high value and thus sales of luxury segment will increase, leading to better financial performance of luxury division (Mehralian et al., 2017).

Finance                                                                                               
Customers  
Internal business processes                                              
Learning and growth  

References

Hasan, R. U., & Chyi, T. M. (2017). Practical application of Balanced Scorecard-A literature review. Journal of Strategy and Performance Management, 5(3), 87.

Kaldırım, Y. (2020). Performance Measurement and Reporting in Lean Manufacturing Environment: Integration of Balanced Scorecard and Lean Accounting Box Score. İşletme Araştırmaları Dergisi, 12(2), 1098-1108.

Mehralian, G., Nazari, J. A., Nooriparto, G., & Rasekh, H. R. (2017). TQM and organizational performance using the balanced scorecard approach. International Journal of Productivity and Performance Management.