dm_csstd_dmk8_2

Copyright 2004 mit sloan school of management

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Unformatted text preview: . Copyright © 2004 MIT Sloan School of Management. Investment in several key technologies such as ERP and collaboration tools that will serve high value customer better, while bringing operation costs down. The implementation will require costs in tangible assets, project trials, new recruits and training of people. Figure 1: Splitting the Profit and Loss Statement of a Division in Terms of Operational and Strategic Expenses Conventional Statement Operational Expenses 100 100 50 10 15 45 7 5 Gross Margin Less: Marketing expneses Admin. Expenses Training expenses 25 33 2 8 3 1.5 6 2 Division margin Operating margin Total strategic expenses 12 Sales Revenue Less: Labor Variable Costs Fixed Costs Strategic Expenses 5 3 10 0.5 2 1 23.5 11.5 Figure 2: Strategic Funds Programming and Operational Budgets Historical and Projected P/L Sales Revenue Operating COGS Gross Operating Margin Operating SG&A Operating Margin Strategic Expenses EBITA Taxes Net Income 2001 13.00 8.61 4.39 3.69 0.70 0.20 0.50 0.10 0.40 Growth Ratio Sales Revenue Operating COGS Gross Operating Margin Operating SG&A Operating Margin Strategic Expenses EBITA Taxes Net Income 2001 (Million $) History 2002 16.00 10.15 5.85 4.35 1.50 0. 25 1.25 0.25 1.00 2003 18.00 10.50 7.50 4.50 3.00 0.50 2.50 0.50 2.00 Current 2004 20.00 10.33 9.68 4.43 5.25 0. 88 4.38 0.88 3.50 2005 23.00 11.20 11.80 4.80 7.00 2.00 5.00 1.00 4.00 Projections 2006 26.00 11.90 14.10 5.10 9.00 3.38 5.63 1.13 4.50 2007 30.00 12.60 17.40 5.40 12.00 5.50 6.50 1.30 5.20 History 2002 +0.23 +0.18 +0.33 +0.18 +1.14 +0.25 +1.50 +1.50 +1.50 2003 +0.13 +0.03 +0.28 +0.03 +1.00 +1.00 +1.00 +1.00 +1.00 Current 2004 +0.11 -0.02 +0.29 -0.02 +0.75 +0.75 +0.75 +0.75 +0.75 2005 +0.15 +0.08 +0.22 +0.08 +0.33 +1.29 +0.14 +0.14 +0.14 Projections 2006 +0.13 +0.06 +0.19 +0.06 +0.29 +0.69 +0.13 +0.13 +0.13 2007 +0.15 +0.06 +0.23 +0.06 +0.33 +0.63 +0.16 +0.16 +0.16 Aggregate Metrics and the Balanced Score Card We identified the balanced score card dimensions for the entire firm and for each customer segment tier. The balanced score card...
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