Thomas Schmall faced significant challenges when becoming CEO of Volkswagen do Brasil, including losses, poor quality, and new competitors. He implemented a Balanced Scorecard strategy to improve performance by setting objectives, measuring targets, and aligning employees, suppliers, and dealers. The strategy map and Balanced Scorecard helped translate goals to operational tasks and provided metrics for each department. This improved communication and efficiency. However, the strategy failed to account for communication difficulties and market trends, leading to inventory issues. The Balanced Scorecard provided data-driven decision making to address challenges during an economic downturn, but the company still struggled with unsold inventory and reducing costs in a declining market.
Thomas Schmall faced significant challenges when becoming CEO of Volkswagen do Brasil, including losses, poor quality, and new competitors. He implemented a Balanced Scorecard strategy to improve performance by setting objectives, measuring targets, and aligning employees, suppliers, and dealers. The strategy map and Balanced Scorecard helped translate goals to operational tasks and provided metrics for each department. This improved communication and efficiency. However, the strategy failed to account for communication difficulties and market trends, leading to inventory issues. The Balanced Scorecard provided data-driven decision making to address challenges during an economic downturn, but the company still struggled with unsold inventory and reducing costs in a declining market.
Thomas Schmall faced significant challenges when becoming CEO of Volkswagen do Brasil, including losses, poor quality, and new competitors. He implemented a Balanced Scorecard strategy to improve performance by setting objectives, measuring targets, and aligning employees, suppliers, and dealers. The strategy map and Balanced Scorecard helped translate goals to operational tasks and provided metrics for each department. This improved communication and efficiency. However, the strategy failed to account for communication difficulties and market trends, leading to inventory issues. The Balanced Scorecard provided data-driven decision making to address challenges during an economic downturn, but the company still struggled with unsold inventory and reducing costs in a declining market.
Thomas Schmall faced significant challenges when becoming CEO of Volkswagen do Brasil, including losses, poor quality, and new competitors. He implemented a Balanced Scorecard strategy to improve performance by setting objectives, measuring targets, and aligning employees, suppliers, and dealers. The strategy map and Balanced Scorecard helped translate goals to operational tasks and provided metrics for each department. This improved communication and efficiency. However, the strategy failed to account for communication difficulties and market trends, leading to inventory issues. The Balanced Scorecard provided data-driven decision making to address challenges during an economic downturn, but the company still struggled with unsold inventory and reducing costs in a declining market.
1. What challenges does Thomas Schmall face upon becoming the CEO of Volkswagen do Brasil (VWB)?
Ans: When Schmall became the CEO of VWB, he faced significant challenges, such as losses for eight consecutive years, poor quality and customer satisfaction, and the emergence of new low-end competitors. These challenges are compounded by a slow-moving management team with bureaucratic decision-making processes and an adversarial workforce who feel alienated due to recent plant closures and downsizing. These issues highlight the need for the company to implement strategic changes to address its shortcomings and remain competitive in an evolving market.
2. Describe VWB's new strategy?
Ans: Schmall recognized the need for a new strategy to help VWB regain its South African automotive industry leadership position. His vision was to develop a high-performance team that would introduce high- quality products, innovation, profitability, sustainable growth, and increased sales to make VWB the market leader. To achieve this, he implemented the Balanced Scorecard (BSC) strategy, which proved to be comprehensive, enabling setting objectives, targets, and performance measurement. It also helped with quality control, alignment of suppliers, dealers, and employees, and improved communication between employees and management. Following the implementation of this strategy, VWB's revenue increased significantly, from $6 billion to $10 billion, which was remarkable growth for the company.
3. How do the strategy map (Exhibit 4) and Balanced Scorecard (Exhibit 5) help Schmall and Senn implement the new strategy? What are the strengths and weaknesses of the scorecard and its implementation?
Ans: The strategy map proved invaluable in providing a clear and consistent strategy for the company. It effectively demonstrated the cause-and-effect relationship and showcased how intangible assets, such as employees, could be converted into tangible financial results. The map was also instrumental in translating high-level objectives into smaller, more manageable operational goals, mobilizing employees to perform their assigned tasks more efficiently. Schmall used the strategy map to collect data and set duties and responsibilities for the employees. Overall, the strategy map proved a versatile tool that enabled Schmall to achieve his goals effectively.
Implementing the balanced scorecard by Schmall and Senn proved to be a highly effective strategy for Volkswagen Brazil. The scorecard outlined the company's overall goals and clearly defined each department's individual roles and responsibilities, thereby improving workplace communication. With access to the balanced scorecard, employees could easily identify which tasks fell under each department, improving overall workplace efficiency. Adopting the balanced scorecard also allowed Volkswagen Brazil to shift away from relying solely on financial measures to determine success. As a result, the company saw significant improvements in various areas, such as employee engagement, employee suggestions, absenteeism, and work accidents. Moreover, supplier and dealer quality scores were on the rise, demonstrating the success of the new strategy Strength & Weakness: The balanced scorecard introduced at Volkswagen Brazil provided a clear metric for the entire company, allowing employees to focus on specific tasks and their role in benefiting the company. However, the scorecard's simplistic causality relationship and failure to account for communication difficulties led to management breakdown and unsold inventory due to disregard for market trends.
4. How can Schmall and his team use the scorecard to deal with the challenges faced by the company in January 2009?
Ans: The balanced scorecard helps identify goals and growth opportunities, but declining sales during the 2009 global financial crisis caused difficulties for VWB. Schmall had to rely on data to make short-term decisions and reduce spending. Employee input was encouraged, and cultural issues were resolved, but they needed to figure out how to sell unsold stock in the struggling Brazilian economy while reducing wasteful spending. The established system allowed workers to provide input and determine areas for improvement.
