Balanced scorecard analysis of Comp-XM financial performance and operations

Comp-XM Executive Summary

Round One

The overall summary of the balanced scorecard for the Comp-XM indicates approximately two thirds of the possible decision points. The financial evaluation indicates higher rates of the stock prices (6.4/7), slight above average profit levels (4.7/7), and two thirds of the leverage condition (4.0/6). The underlining factors under the stock price were the fundamental factors (earning base and valuation multiple), technical factors, and Market sentiment. The market sentiment (psychological factors) approaches the maximum level in relation to the products of the company. This indicates that the level of individual and collective sentiments or psychology of the market compares appropriately across the industry thus allowing the company to enjoy higher stock prices. The overall stock prices within the industry also prove to add to the higher levels of the company's prices. The profit levels of the company seems to be lower because of the overall costs of stock, prices of the stock within the industry, the quantity of the discounts in relation to sales of the products of the organization. The leverage level is higher in the round one of evaluation of the performance of the company. The underlining factor for the performance of the company in accordance with the leverage is the increase in the debts in comparison to the equity levels within the organization. The debts exceed equity levels hence higher leverage situation in round one evaluation process.

The contribution margin or profitability level of individual products is high in round one evaluation of performance. This indicates that variable costs of the products are relatively lower thus offering sufficient opportunity for increment of the prices of the product. The percentage rate of utilization of the plant is relatively lower in the first round of evaluation indicating that the firm has enough room to increase its production levels without incurring expansion costs. The rate at which the company converts its capital into revenues (days of working capital) is relatively lower in the first round of evaluation. This indicates that the systems of the firm are not effective and efficient in meeting the goals and objectives of the company. The economic consequences of failure to meet the internal and external expectation of the inventories (stock-out costs) are slightly above average. This indicates the existence of balance between the internal and external costs (labor delay, loss production, and loss of profits after tax contribute significantly to the increment of the stock-out costs). The company experiences or incurs maximum costs in carrying of the inventories. This is under the influence of space thus minimization of space available for expansion. Evaluation of the interaction with consumers indicates lower levels of customers' buying criteria, maximum consumer awareness, average customer accessibility and product count. This evaluation proves that the organization conduct effective and efficient advertisements and promotion to increase the market coverage of the products. This underlying factor leads to the realization of maximum consumer awareness of the products of the company.

The evaluation of learning and growth reveals that the employee turnover rate is relatively high (5.2/6), employee productivity is lower (0.4/6), and maximum reduction the material cost. The employee turnover rate is high because of the motivation management of the company and adoption of effective systems of operation. The productivity levels of the employees are low because of the minimal number of experts to execute relevant obligations and roles in relation to the mission and vision of the company. The Company adopts Total Quality Management systems and approaches to enable it achieve maximum reduction in material and administration costs. The adoption of TQM is also the underlying factor in achievement of maximum increase in the demands of commodities and services of the company.

Round Two

The second evaluation process of the performance of the company results into maximum stock price, profit levels, and the reduction in the leverage conditions. The achievement of maximum stock price reflects the effective and efficient balance among the fundamental, technical, and psychological factors within the market and the industry. These drive the performance of the company into achieving the maximum prices for the stock. The profit levels are on the increase because of maximization of the plant and minimization of total costs of production. This allows the firm to obtain competitive advantage above other firms within the industry. The reduction of debts in relation to the equity condition within the firm is crucial to the reduction of the leverage situation of the company. The second evaluation process indicates improvement on the financial performance of the company.

Evaluation of the internal business processes indicates that the reduction in the variable costs and increment in the price of the product contribute towards the achievement of the maximum contribution margin or the profitability of individual products within the firm. The firm also utilizes the plant to the maximum hence increase in the level of profits and revenues at the end of every financial year. The company incurs maximum inventory carrying costs because of the slow movement of the resource, security or warehouse costs, and accommodation of the stock within the operation of the organization. The company incurs minimal costs in relation to internal and external error. This indicates that there is no loss or production, loss of profits after sales, and delays in the process of service delivery. The company also has minimal rate of converting the capital into revenues.

Evaluation of the behavior of the consumers indicates improvements in the criteria of buying, awareness of the products, accessibility, product count, and SG & A Expense. The criteria of buying by the consumers are on the increase because of application of appropriate advertisement methods. Advertisement by the company allows the organization to achieve maximum consumer awareness of the services and products in the market and the industry. Products of the company have the capacity to increase the market coverage thus maximization of the consumer accessibility. There is also development in the product count because of effectiveness of the systems by the company.

Evaluation of learning and growth of the company illustrates maximization of turnover rate, productivity levels, reduction of material costs, decrease in the administration costs, and increment of the demand of the products of the company. The underlying factor relative to these achievements is the adoption of Total Quality Management system thus enhancement of standards and quality of products and services by the company.

Round Four

Evaluation of the financial status of the company indicates a reduction in the profit levels despite maximization of the stock prices and leverage situation. This reflects on the minimal usage of the available space or plant to increase the total revenues. Maximization of the usage of the plant would allow the company to reduce the cost of production through operation on a large scale or expansion of the production and distribution outlets. Evaluation of the internal business process shows that the systems of the company have the capacity to realize maximum contribution margin. There is also minimal utilization of the plant thus reduction in the total revenue contributing to decrease in the profit levels. There is a reduction in the level of costs in relation to delays in production, loss of profits after tax, and labor error costs. This depends on the corrective approaches by the company to reduce elements of error in production and distribution of the products. Evaluation of performance in relation consumers indicates a reduction in the accessibility of the products. This is due to reduction in the quality of products thus minimization of the criteria of buying by the consumers. Evaluation of learning and growth illustrates that the adoption of TQM facilitates the reduction in the material costs, administration costs, and increase, in the demand of the products within the market. Despite this development, the company still has room to improve the turnover rate in relation to the efforts and performance of the employees.