ADI Case Study

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Q.1 How did ADI’s industry change between 1996 and 2001? During 1990’s, ADI wanted to adapt the scorecard that emphasized on the revenue growth in addition to quality and efficiency initiatives. Due to faster paced, more dynamic, and more complex market environment, ADI had to alter its scorecard accordingly in the late nineties.
The major changes faced by ADI in mid-90’s are:
• Because their products were at the heart of many Internet devices, such as PC modems and asynchronous digital subscriber line (ADSL) switches, the Internet boom drove much of ADI’s growth. Internet era let to a 78 % increase in top line growth
• ADI’s new market had very different demand characteristics.
• Disaggregation of the supply chain further increased operational
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What changes? Why?
The corporate scorecard control system of ADI analyzes the performance of the company on Financial, New products and QIP measures by comparing objective value with the measured result.
A Balanced scorecard approach must be undertaken by ADI by developing and maintaining it, the balanced scorecard is a management system (not only a measurement system) that enables organizations to clarify their vision and strategy and translate them into action.
It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise.
The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success.
These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and
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Ensure to attain few objectives at a time and not targeting all the objectives at a time.
• Metrics should be embedded in EIS & not on manual spreadsheets
• Metrics should be kept flexible based on changing business environment.

Q. 5 Does the metrics/scorecard system have flaws? Can employees “game” the system? What are the dangers of the EIS?
Scorecard system used by ADI has its own disadvantages like:
- The control system is made flexible in nature to take care of the dynamic environment of the business. At the same time this flexibility feature can be taken to advantage by each division /business unit to distort the actual facts and figures.

The employees must be flexible in order to work with the changing objectives of the company. Frequent updating of the scorecard may increase the stress levels of the employees and the organization must collaborate with the employees while implementing the scorecard.
New scorecard measures should be introduced keeping in mind the
• Dynamic nature of the semiconductor

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