Lee SA manufactures various types of colour laser printer in a highly automated facility with high fixed costs. The market for laser printers is competitive. The various colour laser printers on the market are comparable in terms of features and price. Lee believes that satisfying customers with products of high quality at low costs is key to achieving its target profitability. For 2023, Lee plans to achieve higher quality and lower costs by improving yields and reducing defects in its manufacturing operations. Lee will train workers and encourage and empower them to take the necessary actions. Currently, a significant amount of Lee’s capacity is used to produce products that are defective and cannot be sold. Lee expects that higher yields will reduce the capacity that Lee needs to use to manufacture products. Lee does not anticipate that improving manufacturing will automatically lead to lower costs because Lee has high fixed costs. To reduce fixed costs per unit, Lee could lay off employees and sell equipment or use the capacity to produce and sell more of its current products or improved models of its current products.

Lee’s balanced scorecard for the just-completed financial year 2022 is shown below. For brevity, the initiatives taken under each objective are omitted.

Required

1 Was Lee successful in implementing its strategy in 2022? Explain.
2 Is Lee’s balanced scorecard useful in helping Lee understand why it did not reach its target market share in 2022? If it is, explain why. If it is not, explain what other measures you might want to add under the customer perspective and why.
3 Would you have included some measure of employee satisfaction in the learning and growth perspective and new product development in the internal business process perspective? That is, do you think employee satisfaction and development of new products are critical to Lee for implementing its strategy? Why or why not? Explain briefly.
4 What problems, if any, do you see in Lee’s improving quality and significantly downsizing to eliminate unused capacity?

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Objectives Financial perspective Increase shareholder value Customer perspective Measures Target Actual performance performance Operating profit changes from productivity 1 000 000 400 000 Operating profit changes 1 500 000 600 000 from growth Market share in colour laser printers 5% 4.6% Increase market share Internal business process perspective Improve manufacturing quality Reduce delivery time to customers Learning and growth perspective Develop process skills Yield 82% 85% Order delivery time 25 days 22 days. Percentage of employees 90% 92% trained in process and quality management Enhance information system capabilities Percentage of 85% 87% manufacturing processes with real-time feedback