Chadwick Inc. Balanced Scorecard
Chadwick, Inc.: The Balanced Scorecard (Abridged), Harvard Business School Case (HBS Case 9-104-073).
Substantive Issues Raised
Division managers at Chadwick had complained to the Controller about the continual pressure to meet short-term financial objectives. As a producer of consumer products and pharmaceuticals, divisions at Chadwick engaged in long-term projects with uncertain payoffs. Managers did not believe that using a single target, return on capital employed, linked current actions and efforts to longer term value creation.
The corporate controller has recently learned about the Balanced Scorecard. He presented the concept to the president and chief operating officer who then issued a call to all Chadwick division managers to develop a scorecard for their divisions. The divisional controller at the Norwalk division was given the task of heading the effort to formulate scorecard measures for the division.
Pedagogical Objectives
A discussion of the Balanced Scorecard concept can focus on three objectives. First, the discussion should address questions about why financial measures are insufficient when they are used alone. Second, the discussion should question and review the concept of the Balanced Scorecard and its perspectives. Third, students should practice exploring linkages between objectives and measures on scorecard perspectives so that they can see how performance on one perspective supports or encourages achievement on others.
[For part (a), see the “Suggestions for Classroom Use” section. Also see textbook questions 2-1, 2-2, 2-3, 2-4, 2-7, 2-8 and 2-12, and exercises 2-36, 2-39, and 2-46.]
[(b) and (c)]
Opportunities for Student Analysis
Although the case is short, it provides a remarkable amount of information about Chadwick, Inc. and the Norwalk Division. Using this information, students are able to relate objectives and measures to scorecard perspectives. They can construct a scorecard by associating objectives and
Substantive Issues Raised
Division managers at Chadwick had complained to the Controller about the continual pressure to meet short-term financial objectives. As a producer of consumer products and pharmaceuticals, divisions at Chadwick engaged in long-term projects with uncertain payoffs. Managers did not believe that using a single target, return on capital employed, linked current actions and efforts to longer term value creation.
The corporate controller has recently learned about the Balanced Scorecard. He presented the concept to the president and chief operating officer who then issued a call to all Chadwick division managers to develop a scorecard for their divisions. The divisional controller at the Norwalk division was given the task of heading the effort to formulate scorecard measures for the division.
Pedagogical Objectives
A discussion of the Balanced Scorecard concept can focus on three objectives. First, the discussion should address questions about why financial measures are insufficient when they are used alone. Second, the discussion should question and review the concept of the Balanced Scorecard and its perspectives. Third, students should practice exploring linkages between objectives and measures on scorecard perspectives so that they can see how performance on one perspective supports or encourages achievement on others.
[For part (a), see the “Suggestions for Classroom Use” section. Also see textbook questions 2-1, 2-2, 2-3, 2-4, 2-7, 2-8 and 2-12, and exercises 2-36, 2-39, and 2-46.]
[(b) and (c)]
Opportunities for Student Analysis
Although the case is short, it provides a remarkable amount of information about Chadwick, Inc. and the Norwalk Division. Using this information, students are able to relate objectives and measures to scorecard perspectives. They can construct a scorecard by associating objectives and