=

Shareholder Value: Shareholder value is included as a performance indicator, even though this measure is a result-not a driver of performance. The measure is included to offset the previous emphasis on gross margin and sales growth, measures that ignored the investments required today to generate growth for tomorrow. In contrast, the shareholder value metric quantifies the impact of proposed investments for business creation and development. The majority of Apple's business is organized on a functional basis such as sales, product design, and worldwide manufacturing and operations so that shareholder's value can be calculated only for the entire company instead of at a decentralized level. The measure, however, helps senior managers in each major organizational unit assess the impact of their activities on the entire company's valuation and evaluate new business ventures. While these five performance indicators have only recently been developed, they have helped Apple's senior managers focus their strategy in a number of ways. Apple uses the measures to adjust the "long wave" of corporate performance, not to drive operating changes. Moreover, the metrics at Apple, with the exception of shareholder value, can be driven both horizontally and vertically into each functional organization. Considered vertically, each individual measure can be broken down into its component parts in order to evaluate how each part contributes to the functioning of the whole. Thought of horizontally, the measures can identify how, for example, design and manufacturing contribute to an area such as customer satisfaction. The five performance indicators at Apple are benchmarked against best-in-class organizations. Today they are used to build business plans and are incorporated into senior executives' compensation plans. Apple has found that its balanced scorecard has helped develop a language of measurable outputs for how to launch and leverage programs. Q.2 Create a BALANCED SCORE CARD for Apple Computer explaining each section of the balanced score card. CASE STUDY 2 (10 marks) Apple Computer: Adjusting the Long-term Performance You have recently joined Apple Computer as a Business Process Analyst Trainee and have been assigned the task of developing a balanced Scorecard to focus senior management on a strategy that would expand discussions beyond gross margin, return on equity, and market share. Towards the direction of preparing a balanced Scorecard you have been introduced to a small committee of various stakeholders. You also have been introduced to 4 managers responsible for 4 different areas such as finance, customer management, operations and quality control responsible for overseeing the four important perspectives such as financial, customer, internal process and the innovation and improvement. Apple's management stressed the importance of the following categories: Customer Satisfaction: Historically, Apple had been a technology and product-focused company that competed by designing better computers but very recently the company has decided to become a customer-driven company. In the past the company was using the services of J.D. Power & Associates, a customer-survey company. However, because Apple recognized that its customer base was not homogeneous, it had to develop its own independent surveys to track its key market segments around the world. Core Competencies: The Company executives wanted employees to be highly focused on a few key competencies: for example, user-friendly interfaces, powerful software architectures, and effective distribution systems. However, senior executives recognized that measuring performance along these competency dimensions could be difficult. As a result, the company is currently experimenting with obtaining quantitative measures of these hard-to-measure competencies. Employee Commitment and Alignment: Apple conducts a comprehensive employee survey. Surveys of randomly selected employees are performed more frequently. The survey questions are concerned with how well employees understand the company's strategy as well as whether they are asked to deliver results that are consistent with that strategy. The results of the survey are displayed in terms of both the actual level of employce responses and the ovcrall trend of responses. Market Share: Achieving a critical threshold of market share was important to senior management not only for the obvious sales growth benefits but also to attract and retain software developers to Apple platforms