Deer Creek ski resort was for many years a small, family-owned resort serving day skiers from nearby towns. Deer Creek was recently acquired by Mountain Associates, a major ski resort operator with destination resorts in several western states. The new owners have plans to upgrade the resort into a destination resort for vacationers staying for a week or more. As part of this plan, the new owners would like to make major improvements in the Lynx Lair Lodge, the resort’s on-the-hill fast-food restaurant. The menu at the Lodge is very limited—hamburgers, hot dogs, chili, tuna fish sandwiches, French fries, and packaged snacks. The previous owners of the resort had felt no urgency to upgrade the food service at the Lodge since there is little competition. If skiers want lunch on the mountain, the only alternatives are the Lynx Lair Lodge or a brown bag lunch brought from home.

As part of the deal when acquiring Deer Creek, Mountain Associates agreed to retain all of the current employees of the resort. The manager of the Lodge, while hardworking and enthusiastic, has very little experience in the restaurant business. The manager is responsible for selecting the menu, finding and training employees, and overseeing daily operations. The kitchen staff prepares food and washes dishes. The dining room staff takes orders, serves as cashiers, and cleans the dining room area.

Shortly after taking over Deer Creek, management of Mountain Associates held a day-long meeting with all of the employees of the Lynx Lair Lodge to discuss the future of the ski resort and management’s plans for the Lodge. At the end of this meeting, top management and Lodge employees created a balanced scorecard for the Lodge that would help guide operations for the coming ski season.

Almost everyone who participated in the meeting seemed to be enthusiastic about the scorecard and management’s plans for the Lodge.

The following performance measures were included on the balanced scorecard for the Lynx Lair Lodge:

• Customer satisfaction with service, as measured by customer surveys.

• Total Lynx Lair Lodge profit.

• Dining area cleanliness, as rated by a representative from Mountain Associates management.

• Average time to prepare an order.

• Customer satisfaction with menu choices, as measured by surveys.

• Average time to take an order.

• Percentage of kitchen staff completing institutional cooking course at the local community college.

• Sales.

• Percentage of dining room staff completing hospitality course at the local community college.

• Number of menu items.

Mountain Associates will pay for the costs of staff attending courses at the local community college.

Required:

1. Using the above performance measures, construct a balanced scorecard for the Lynx Lair Lodge. Use Exhibit 10–12 as a guide. Use arrows to show causal links and indicate with a + or – whether the performance measure should increase or decrease.

2. What hypotheses are built into the balanced scorecard for the Lynx Lair Lodge? Which of these hypotheses do you believe are most questionable? Why?

3. How will management know if one of the hypotheses underlying the balanced scorecard is false?