Both the Genesis Energy and Sensible Essentials teams believ

Both the Genesis Energy and Sensible Essentials teams believe that the client engagement was very successful. All the critical learning tools were fully explored. However, the operations management team believes there were several topics that were not covered but are important to their respective disciplines. These topics centered primarily on selecting/developing meaningful and rational measurements of performance as they relate to measuring the success of the company’s expansion strategy. The financial indicators are important, but the team is also concerned about more forward-looking measures that might reflect product quality, customer satisfaction, internal process efficiency, performance, and perhaps, other strategic indicators.

Based on your understanding of the concepts covered in this course, address the following:

Develop and describe a strategic measurement “scorecard” that incorporates the financial measures applied in this course. Consider the prospect of new equity owners and explain why this is important.

Describe the non-financial measures that should be considered and are important to the success of an organization. Explain why these measures should also be considered in the strategic initiatives of the organization.

Solution

Prospective investors and acquirer of new equity would like to see good returns on their investment. The primary objective of any management is to enhance shareholder value.

Strategic management focuses on attaining the above by aligning the organization through its mission statement, vision, corporate objectives and goals and tactics adopted to implement and achieve the above.

For instance Exxon Mobil would typically have its mission statement as to serve mankind in the energy sector.

Its vision may read as being a leader in this field. The corporate objectives could be to increase E & P activities,    R & D and develop new methods for production of oil and gas. At the strategic level the company may think about introducing a measurable number of products and discovered oilfields in the coming couple of years. At the tactical level, the company would allocate resources to the functional areas to address these objectives and break these into near term measurable goals to be achieved by the entity. For instance the drilling activity may have to be increased by 10% and thus the drilling department, materials department, human resources, finance and accounting would have to be provided the necessary resources to address this tactical objective at hand.

The strategic scorecard would address in specific measurable ways the financials by way of revenue growth, the customer by way of enhanced market share and improved CRM. This would entail that internal processes enterprisewide would have to be analyzed, developed and aligned to enable the enterprise to achieve its startegic goals. Training and Development would be crucial in empowering the human resources of the company with the skill sets required to role play effectively. For instance if a strategic objective is for cost reduction then the accountants must be better equipped with the best practices in cost management. The company may like to deploy the state of the art technology in addressing their inventory management for cost reduction and hence the materials people would have to be provided with a RDBMS package accordingly along with necessary training to use that effectively. Cost reduction may also entail to use limited resources where it matters the most and hence the focus would shift away from non-core activities. For instance a scheduled airline would stay clear of MRO activiries.

While strategic decisions are made by the upper management in line with the vision of the company the implementation to achieve the same is to be done at the grass root level. Clear communication enterprisewide, whereby each division, department and employee knows his specific role to achieve the same is comprehended. These have to be measurable to enable one to see how one is performing and thus take remedial measures accordingly. Management has to support this by way of communication enterprisewide, allocation of resources accordingly and being a coordinator to lead the enterprise in successfully implementing the strategies developed for the success of the organization and thus achieve the corporate objective of enhancing shreholder value.