Customer Relationship Management: Balance Score Card Essay

Question:

Discuss about the Balance score card of crocs and growth ratio of crocs using balance sheet?

Answer:

Introduction

The balanced scorecard is found to be a significant framework for strategic management and planning which is extensively utilized in the industry and business, nonprofit and governmental organizations worldwide so that the business activities can be aligned in accordance with the organizational vision and strategy. This can further facilitate in enhancing external and internal communication emulated by the monitoring of the organizational performance against the strategic goals of an organization. The balanced scorecard has four significant perspectives that are as below:

Internal business process

Financial/Stewardship

Customer/Stakeholder

Learning and Growth Perspective

The learning and growth perspective incorprates attitudes of the corporate culture and employee training that is further related to the corporate self improvement (Relevant development: Effective leadership training, 2012). In an organization having a technological change, it is quite imperative for the workers to adapt to such change and that can be attained through learning and growth perspective.

The financial perspective entails the financial performance of the company where the financial performance can be explored through different key performance indicators like return on equity, net profit margin, assets turnover etc (Jiang and Lee, n.d.).

The business process perspective is related to the approach as to how the business keeps on running and that the products and services conform to the requirements of the customer (Unnikrishnan, n.d.).

The customer perspective realizes the importance of customer saisfaction and customer focus in a business (DR.K.VANITHA, 2012). Therefore, if the customers are not satisfied then they would look for another brand or service.

Balanced Scorecard – Crocs Shoewear

The balanced Scorecard for Crocs Shoewear will also incorporate the above mentioned perspectives as below:

Internal business process: One of the signficant strengths of Crocs is related to the supply chain competitive capabilities. The supply chain of Crocs is considered to be quite flexible that is capable enough for filling the new orders in accordance with the rapid quality manufacturing emulated by the shipping of those newly manufactured products to the retail outlets. It has a fast shipping and manufacturing process emulated by the excess capacity and rapid replenishment framework that has allowed them for meeting an unanticipated increase in the market demand within a short period of time (Relevant development: Effective leadership training, 2012). Crocs has a significantly effective, efficient and a standardized process of production associated with molding and injection and that there is no excess inventory because of an epansion in an on demand production (Zellner, 2011). For the purpose of rapidly meeting an increasing demand during a season within a certain market, the Company Crocs has an ability for moving the equipment to their several operations related to manufacturing, mainly the closest location of the production of that particular market for capturing and meeting the local needs of the customer.

Financial Perspective: The financial perspective can be illusrated from numerous key performance indicators like gross profit which indicates the ability of the company to decrease the cost of goods sold and enhance the gross margin to cover up the fixed expenses. In the recent years the gross margin has enhanced significantly in comparison to its starting years. The gross profit in 2013 was $623 millions but in 2014 it was $590 million. Though, there is not so much difference but it can decrease further if the cost of goods sold keeps on increasing or the sales keep on diminishing. Furthermore, the financial strength of the company can be illustrated through three significant factors as below:

Debt burden

Debt to revenue ratio

Altman Z-score

The company Crocs has an interest expense of around $-0 million in September 2015. Apart from this, the operating income within the same time period was found to be $-21 million. Whereas, the long term debt was found to be $2 million. This indicates that Crocs did not have that much earnings for covering the interest expense.

The debt to revenue ratio was found to be 0.03 which indicates that the lower the debt to revenue ratio, the better is it for the company.

The Altman Z-score model is found to be a significant forecaster of the failure up till the two years of prior to distress. The crocs Z-score is calcuated using the following formula:

Z = 1.2 x X1 + 1.4 x X2 + 3.3 x X3 + 0.6 x X4 + 1.0 x X5

X1

Working Capital /Total Assets

0.48

X2

Retained Earnings/Total Assets

0.42

X3

EBIT/Total Assets

-0.1

X4

Market Value Of Equity/Book Value of Total Liabilities

1.7

X5

Revenue/Total Assets

1.5


After calculating the above Z score, it is found that the Altman Z score is 3.4 which indicates that it is within the safe zone. This also indicates that the company Crocs is not likely to fall into the distressed situations.

Customer Perspective: Crocs has two significant types of consumers. This incorporates retail and consumer customers. For consumer customers, it has designed an extensive and broad system of distribution and that the shoes have an availability within an assortment of the retail outlets to departmental stores from the speciality stores and store chains of the large shoes (DR.K.VANITHA, 2012). Moreover, for the retail customers, the company has made this more attractive for the segment by permitting the customers of this segment to make an order of as few as 24 pairs while stocking them in accordance with the matter of weeks and not even months.

Learning and Growth Perspective: The organizational structure of Crocs is decentralized. This permits the company for taking an advantage for the labor division and imparted decision making with the members (Unnikrishnan, n.d.). Furthermore, it allows the employees and laborers to enhance their performance by learning in accordance with their weak competency zones. Through this particular learning and growth at Crocs, the business managers can utilize the knowledge, experience and skills of the employees in an effective manner for optimizing the business performance.

Growth Ratios

The growth ratios for the Crocs Inc are as below:

The above ratios explain the the revenues have increased in 2009 and 2010 but then it kept on decreasing considerably. This could be due to the fact that in 2014, the company decided to convert or close approximately 100 retail locations that were company owned around the world. The company also initiated inventory planning, merchanding for the purpose of driving sales growth but the impact of closures was quite significant which resulted in the decline of annual sales. Operating income and net income witnessed significant fluctuations. This is because of the fact that the cost of goods sold have increased along with a sluggish increase in the sales. In the same way, this has impacted the net income as well.

References

DR.K.VANITHA, D. (2012). Customer Relationship Management on Customer Satisfaction. IJSR, 3(4), pp.1-3.

Jiang, X. and Lee, B. (n.d.). Financial Ratios, Expected Returns, and Fundamentals. SSRN Electronic Journal.

Relevant development: Effective leadership training. (2012). Development and Learning in Organizations, 26(5), pp.32-36.

Unnikrishnan, P. (n.d.). Decision Support, Business Process Improvement and Managing Data. SSRN Electronic Journal.

Zellner, G. (2011). A structured evaluation of business process improvement approaches. Business Process Mgmt Journal, 17(2), pp.203-237.

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