DSW (Designer Shoe Warehouse) has had an increase of 11.5% in sales during the 2012 fiscal year. This is due to an increase in customer sales, “conversion and average unit retail.” (www.dsw.com, 2013) However, in 2012 there was a decrease in the company’s merchandise margin rate due to poor sales. DSW’s has its strategic plan to ensure continual growth within the company such as: purchasing $72 million dollars worth of office space to utilize and almost $100 million dollars in capital ventures that consisted of opening 39 new shoe and accessory stores, a new and improved reconfiguration center and several store remodels. In February 2013, DSW maintained 364 stores throughout the United States and Puerto Rico, as well as serviced customers who live outside of the United States by conveniently providing online shopping through our website, DSW.com. In addition, we renamed our business division namely the “Affiliated Business Group” to attract interest of business partners. History
DSW was established on January 20, 1961, yet opened its first store in Dublin, Ohio in 1991. Years later, DSW was bought by another company, in 2008. In 2005, the company went public selling shares at $19.00 per share gaining $16.2 million dollars. In May 2011, DSW merged with RVI. The Scorecard
DSW’s balance scorecard is a performance management tool that is developed to strategically to improve and manage DSW’s retail stores and website of shoes and accessories through the following: · Pricing
· Customer sales
· Increase customer satisfaction while retaining loyal customers · Maintain or decrease operating expenses
· Increase top sales of three vendors
· Provide employee training
· Attract qualified employees
· Retain current qualified executives and employees.
With the shift of business moving from the industrial age to the information/technology age, the importance of a company’s viability is not necessarily just based on profits and revenues. The nonfinancial elements are vital such as, constant innovation of ideas and products, customer relationships and human resources. The balanced scorecard speaks to both the financial and nonfinancial elements of strategy. The scorecard addresses the cause-and-effect relationships between the financial perspective, the customer perspective, the business process perspective and the learning and growth perspective. Companies must ensure that they will try to increase profits and revenues, reframe from cutting back on customer service, their internal business processes (such as product quality) and employee relations. All of these perspectives balance each other and can have an effect on one another. For example, a company has employees, who may lack the necessary skills sets or are not properly trained, interacting with customers and decreasing the value of the company. Dissatisfied customers in turn stop patronizing the business. This then leads to a decrease in sales.
Financial perspective objectives for DSW, Inc. include improving pricing, maintaining short-term solvency and revenue growth. The target value for the metric of increasing sales revenue by 1% must be greater than 12%. This is based on the change in sales revenue for fiscal year 2012. The fiscal year 2012 had an increase of 11.5% from the 2011 fiscal year. The ability of a company to meet its long-term financial obligations is short-term solvency. Solvency is essential to staying in business, but a company also needs liquidity to thrive. Liquidity is a company's ability to meet its short-term obligations (investopedia.com). In order to determine DSW’s short-term solvency, the current ratio would be the metric used for the target value. In calculating DSW’s current ratio, their Total Current Assets are divided Total Current Liabilities (821,790/275,311 = 2.98) for fiscal year 2012. The current ratio for fiscal year...
References: DSW Inc, Investor Information. Retrieved September 6, 2013. http://investors.dswshoe.com/investor-information
Investopedia, Solvency. Retrieved September 8, 2013. http://www.investopedia.com/terms/s/solvency.asp
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