6 hours and 27 minutes (or what seemed like 6 months and 27 days). That is how l

Question

6 hours and 27 minutes (or what seemed like 6 months and 27 days). That is how long our group meeting lasted. You and your BSG simulation teammates were trying to figure out how to evaluate your company and the success of our strategy. You know that the investors have some financial targets they expect you to hit each year but you also know that those do not tell the entire story. Therefore, you concluded that it would be best to construct a balanced score card for your simulation shoe company. So, using your simulation company construct a balanced scorecard. Be sure to determine what should be included in each aspect of the scorecard and the specific metric that should be used to measure each attribute.

Explanation / Answer

Each company’s Best-in-Industry (B-I-I) Score is equal to its combined point total on the five performance measures.In order to receive a score of 100, a company must (1) be the best-in-industry performer on EPS, ROE, stock price, and image rating, (2) achieve the targets for EPS, ROE, stock price and image rating set by the company’s Board of Directors, and (3) have an A+ credit rating. B-I-I scores of 80 to 100 reflect good-to-excellent performance; scores under 50 should cause company co-managers great concern and signal the need for immediate strategy improvement.

Below are some important aspects of how the Best-in-Industry Scores for a given year are calculated:

The highest possible Best-in-Industry (B-I-I) Score is 100, earned only if a company is the best performer on EPS (with an EPS equal to or above the target), the best performer on ROE (with an ROE of at least 15%), the best performer on stock price (with a stock price equal to or above the yearly target), and the best performer on image rating (with an image rating of at least 70) and also has an A+ credit rating.

Combining the Annual and Game-to-Date I.E. Scores and B-I-I Scores into Overall Scores. The scoring includes both an annual and a game to date “Overall Score”for each company. These scores are determined by combining each company’s Investor Expectation Score and the Best-in-Industry Score into a single score using whatever weighting you wish (the default weighting—which we strongly recommend—is 50-50). The Annual Overall Scores for the various companies are a weighted average of their respective annual I.E. scores and the annual B-I-I scores, while the Game-to-Date Overall Scores are a weighted average of the game-to-date I.E. scores and the game-to-date B-I-I scores.

Since I.E. scores can range as high as 120, it is common for the Overall Scores of the very best-performing companies to be greater than 100. Overall Scores greater than 100 are clearly indicative of superior company performance and are definitely worthy of an A or A+. As a general rule, we think that companies with an overall performance score of 90 or above at the conclusion of the decision rounds should get anywhere from an A– to an A+ on this portion of the BSG exercise. Companies with overall game-to-date scores of 80-89 should get a B– to a B+ (or higher if there are no companies with scores of 90 or more). Companies with an overall performance score of 70-79 above should get a grade in the C range (or higher depending on how many companies have higher scores). You may find it desirable to scale the company grades if competition turns out to be so fierce or cutthroat that companies in the industry can’t earn profits that meet investors’ performance expectations and thus end up with “low” overall game-to-date scores. In most of our classes, we end up scaling the performance scores of companies with overall scores below 70, but there is usually at least one company with a score above 90 (clearly meriting an A)—hence scaling the grades on the upper end of the industry rankings is typically unnecessary.

The latest Game-to-Date I.E. scores, Game-to-Date B-I-I scores, Game-to-Date Overall Scores, and industry rankings (based on the Overall Scores) are shown on the same page as the Administration Menu for each “industry” you have created for your class or classes. A Scoreboard Box containing the same information is always prominently displayed on each company’s Corporate Lobby page (the first screen they see when they log on at www.bsg-online.com). Moreover, after each decision round, all company co-managers can view or print a complete Company Scoreboard showing each company’s performance on every aspect of the scoring, including all the scoring weights. The Help sections for each page of the 3-page Company Scoreboard provide detailed, easy-to-understand explanations of the scoring so company co-managers should encounter no “mystery” factor about how the scoring works or where each company stands in the industry performance rankings.

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