Introduction/Summary
The given case is based on the company named Analog Devices Inc. (ADI), Founded in 1965 at Cambridge, Massachusetts. Founder Ray Stata and Matthew Lorber. Stata had a B.S.E.E. and an M.S.E.E., both from MIT.
It mainly talks about the management control and performance measurement process of the company in 2001 and it comparison with previous years.
In year 2000 with the advancement in internet had created remarkable growth for semiconductor industry. In 2001 ADI Performance Measurement Process was based on Executive Information System implemented by ADI. As per which divisional, departmental and individual score card can be used to evaluate performance. Managers can also divide the performance outcome at region, product, …show more content…
New product Introduction
4. Channel Management.
• ADI gained explosive top-line growth rate of 78% growing from $1.5 billion to $2.6 billion.
• ADI also planned to focus on improving demand for existing products.
• In 1996, sales of ADI are 132,000 million and it grows to 204,000 million in 2000.
• ADI reduced the product life cycle.
• Increasing need for collaborative and integrated product development
Question 2: How are targets set for the metrics on the scorecard? Who sets them? How rigorous does the method for setting goals need to be in order for the metric to be useful? Evaluate the goal setting process in light of the changing industry conditions as of 2001.
Answer:
(i) How are targets set for the metrics on the scorecard?
Many enterprise software companies developed customizable performance management solutions to support scorecard implementations. ADI, also installed an “Executive Information System” (EIS). The EIS supported the use of-
• Divisional Scorecard
• Departmental Scorecard
• Individual scorecards.
Targets Setting Process for Metrics on Scorecard: In 80s ADI used to have “The half-life Approach” to set the goals for many metrics on scorecard. This approach was effective for deficiency like manufacturing defects however it is not applicable to metrics like profit maximization. , such as revenue from new …show more content…
Question 3: Is ADI’s scorecard as useful today as it was in the 80s? What are the limitations to the scorecard? What can go wrong?
Answer: In 80’s ADI used to have scorecard metric and its target assigned with the help of Half-life approach which is useful for defect reduction, In 80s ADI scorecard have more influence as compare to today.
Limitations:
• Dynamic Business Environment
• Some metrics are measured through spreadsheet which requires manual effort and which are very much dynamic in nature
• So many metrics makes them no much effective and actionable
• No link between scorecard and compensation system
Question 4: Would you make any changes to the way ADI manages its scorecard? What changes? Why?
Answer: Yes, I will try to automate as much metric as possible and try to reduce manual effort and also try to achieve maximum flexibility in metric as possible.
The reason for doing this is first it gave accurate result and second as business environment is kept changing and so flexibility should be there.
Question 5: Does the metrics/scorecard system have flaws? Can employees “game” the system? What are the dangers of the
The given case is based on the company named Analog Devices Inc. (ADI), Founded in 1965 at Cambridge, Massachusetts. Founder Ray Stata and Matthew Lorber. Stata had a B.S.E.E. and an M.S.E.E., both from MIT.
It mainly talks about the management control and performance measurement process of the company in 2001 and it comparison with previous years.
In year 2000 with the advancement in internet had created remarkable growth for semiconductor industry. In 2001 ADI Performance Measurement Process was based on Executive Information System implemented by ADI. As per which divisional, departmental and individual score card can be used to evaluate performance. Managers can also divide the performance outcome at region, product, …show more content…
New product Introduction
4. Channel Management.
• ADI gained explosive top-line growth rate of 78% growing from $1.5 billion to $2.6 billion.
• ADI also planned to focus on improving demand for existing products.
• In 1996, sales of ADI are 132,000 million and it grows to 204,000 million in 2000.
• ADI reduced the product life cycle.
• Increasing need for collaborative and integrated product development
Question 2: How are targets set for the metrics on the scorecard? Who sets them? How rigorous does the method for setting goals need to be in order for the metric to be useful? Evaluate the goal setting process in light of the changing industry conditions as of 2001.
Answer:
(i) How are targets set for the metrics on the scorecard?
Many enterprise software companies developed customizable performance management solutions to support scorecard implementations. ADI, also installed an “Executive Information System” (EIS). The EIS supported the use of-
• Divisional Scorecard
• Departmental Scorecard
• Individual scorecards.
Targets Setting Process for Metrics on Scorecard: In 80s ADI used to have “The half-life Approach” to set the goals for many metrics on scorecard. This approach was effective for deficiency like manufacturing defects however it is not applicable to metrics like profit maximization. , such as revenue from new …show more content…
Question 3: Is ADI’s scorecard as useful today as it was in the 80s? What are the limitations to the scorecard? What can go wrong?
Answer: In 80’s ADI used to have scorecard metric and its target assigned with the help of Half-life approach which is useful for defect reduction, In 80s ADI scorecard have more influence as compare to today.
Limitations:
• Dynamic Business Environment
• Some metrics are measured through spreadsheet which requires manual effort and which are very much dynamic in nature
• So many metrics makes them no much effective and actionable
• No link between scorecard and compensation system
Question 4: Would you make any changes to the way ADI manages its scorecard? What changes? Why?
Answer: Yes, I will try to automate as much metric as possible and try to reduce manual effort and also try to achieve maximum flexibility in metric as possible.
The reason for doing this is first it gave accurate result and second as business environment is kept changing and so flexibility should be there.
Question 5: Does the metrics/scorecard system have flaws? Can employees “game” the system? What are the dangers of the