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Store24

ACC 685 | Section 2
by

Seth Ling

on 23 May 2013

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Transcript of Store24

Store24 ACC 685 | Section 2 Background
Balanced Scorecard
Compensation Structure
Regression Analysis
Aftermath
Q&A Agenda Store24 is a chain of convenience stores
30 stores in urban areas, 45 in suburbs
Established strategy "Cause You Just Can't Wait" (CYJCW)
Focuses on store operation excellence
High competition in industry Background Regression Analysis BB has merits when well executed
Store24 need to maintain traditional value propositions
Conduct "fit" analysis on per store basis
resource availability,
willingness of management
skill capacity
customer demographics Conclusion & Recommendation Ban Boredom Introduced new strategy to differentiate brand
Brand loyalty from 14 - 29 year old urban customers
Aims to provide a fun, enjoyable shopping experience
How?
Head office provides themes for promotional sales
Each store has full control on how to set up their displays with promotional items
Ice Breaker for customer interaction to build rapport (-) correlation between BB score and financial performance for stores with < avg. crew skills
(+) correlation between BB score and financial performance for stores with > avg. crew skills
Adjusted R squared - 98%
BB initiative dependent on:
management intiative
customer interactions
execution by crew members Appendix | Regression Sample size: 15
Light shade columns: Stores with below Average Crew Skills
Dark shade columns: Stores with above Average Crew Skills
R2 = 98% for both groups Regression Analysis Given that the industry is competitive, what factor may help Store24 improve its financial results?
(Hint: this week’s research article) Question Customer satisfaction 

Store24 wanted to differentiate its brand by increasing customer satisfaction from its target customer base
Many managers did not follow the strategy!
Some used the shelf space for traditional items (i.e. chips) instead
For Ban Boredom to succeed, what do managers need to do well in? Question Each store’s basic operations must be fully functioning so that managers may focus their effort towards implementing the BB initiative
A high level of creativity and knowledge of customers is required by the store staff to set up suitable themed displays to promote sales Answer Balanced Scorecard Balanced Scorecard
Learning and Growth Measures Strengths
Bi-annual evaluations of manager and crew skills
Manager skills evaluated based on a number of criteria

Weaknesses
Lack of information regarding the dimensions used to evaluate crew skills
No measure for employee satisfaction
No process for learning and growth Balanced Scorecard
Learning and Growth Measures Recommendations
Increase Dimensions Detail in Crew Skills
Create Employee Satisfaction Objectives/Measures Balanced Scorecard
Learning and Growth Measures Balanced Scorecard
Internal Measures Strengths
Identification of strategic objectives
Walk-through audits

Weaknesses
No breakdown of audit scores
Announced visits Balanced Scorecard
Internal Measures Balanced Scorecard
Internal Measures Balanced Scorecard
Customer Measures Strengths
Customer volume is quantifiable and easy to measure
Targets can be set and are comparable

Weaknesses
Comment cards can be biased and non-quantitative
No information about how the proposed strategies are being implemented Balanced Scorecard
Customer Measures Recommendations
Incorporate mix of measures from third-party telephone and market survey results
Enhance comment cards to include quantitative metrics and implement easier data collection methods Balanced Scorecard
Customer Measures Balanced Scorecard
Financial Measures Strengths
Easily measurable and useful
Frequent calculation of financial information

Weaknesses
Revenue growth and productivity linkages missing
Difficult to understand one dimensional numbers
High level measures that are difficult to relate to strategy Balanced Scorecard
Financial Measures Recommendations
Use Return on Investment as the overall financial measure
Enhance usefulness of current measures
Use additional financial measures to gain feedback on strategy implementation impacts Balanced Scorecard
Financial Measures Overall Strengths
Simple structure and easy to comprehend
Some objectives and related measures are identified
Quantifiable
Overall Weaknesses
Difficult to establish cause and effect relationships
Targets, action plans, budgeted and actual performance missing
Lack of research before strategy implementation Balanced Scorecard
Overall Strengths and Weaknesses Revamped Balanced Scorecard Overall Changes and Strengths
Cause and effect linkages are clearer
Objectives, action plan, and initiatives to achieve strategy
Targets, budgets, and actual performance identified
Measures provide more useful information to users Revamped Balanced Scorecard Reward Store Managers and Store Crew
Based on performance metrics
Current design has good and bad points Linking Compensation to Performance Directly covers 3 of 4 motivation drives
Two levels of measurement for two levels of control
Feedback on all four dimensions
Discussion with senior management
President's Club force national competition Strengths of Linkage Directly covers 3 of 4 motivation drives
Two levels of measurement for two levels of control
Feedback on all four dimensions
Discussion with senior management
President's Club force national competition Strengths of Linkage Metrics fail to tie together into strategic map
Can lead to tunnel visioning of managers
Customer dimension does not directly impact bonus
Audit scores vulnerable
Target setting may be biased
Timing difference of senior management visits to bonus payout Weaknesses of Linkage Bonuses scale according to ability to go above targets
Targets are adjusted by senior management
Bonus consideration to include customer rating on fun and convenience
Audit dates unannounced
Mystery shopper rating system
Scorecard driven bonus to be annual
Bonus performance ratings for collaboration Recommendations Sample size: 15
Light shade columns: Stores with below Average Crew Skills
Dark shade columns: Stores with above Average Crew Skills
R2 = 98% for both groups Regression Analysis Recommendations
Breakdown both strategy measures into sub-components Conclusions and Recommendations Q&A Conclusions and Recommendations Each Aftermath 2 years later, CEO Bob Gordon scrapped the Ban Boredom campaign

"It might have worked if we had done a better job of training our staff and had spent more on advertising to create customer awareness. But this is a difficult business in which to develop those kinds of employee skills. I guess we learned that this kind of differentiation strategy may not be realistic in the convenience-store industry" (CEO, Bob Gordon)
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