Mobil USM&R

MOBIL USM&R CASE STUDY

By, Medha Saha Rajdeep Hira Raktim Sengupta Rohit Kumar Shaw

1.  What objectives and measures should the two customer teams (consumer sub-team, dealer sub-team) select for their core customer outcomes. How can these teams measure what the dealer and Mobil must do well to achieve the desired customer outcomes? (Ans) Customer Sub-Teams

Objectives

Measures

Customer Retention

Percentage of Customers Retained

 Attracting New Customers

Number of New Customers

Increase Market Share

Market Share in the Industry

Customer Satisfaction

Surveys

Dealer Sub-Teams

Objectives

Measures

Develop Profitable Dealers

Dealer Profitability

Dealer Satisfaction

Surveys

Increase in Sales

Dealer sales growth

The various ways to measure the desired outcome are as follows:



Gas/Membership Cards 

Record of customer purchases



Easier Purchasing



Dealer Assessments

Customer Surveys 

Quality of service measured



Estimation of retention rate

2.  What should be the objectives and measures for the internal  business processes at USM&R? Remember, these objectives and measures must drive the desired performance in the financial and customer objectives. (Ans)

Objectives

Measures

Process improvements

Production cycle time

Minimize product waste / defects

Number of wasted / defective products

Reduce delivery time

Order delivery time

The objectives and measures of Internal Business Process drive the desired performance in the financial and customer objectives in the following manner:

To improve internal business processes, Mobil would work towards cost reduction, profit increases, familiarizing NBU’s with BSC.



Mobil struggles with profitability, aided by these elements.



Cost reduction/profit increases – Reduce downtime by improving equipment and systems maintenance.



Improved cycle time –  Communicate brand to dealers, have them communicate it to customers



Improved brand image/potential sales –  Reduction of carrying inventory,  whilst keeping enough on hand to satisfy customers



Reduced costs and more efficient order processes



Gas cards contribute to profits also – 

Records of customer purchase data/return purchasers, to make purchasing easier thereby attracting new customers



To track location of customer purchases (dealer location), and assess  which dealers are most profitable



BSC familiarization for NBU’s

- BSC is used to assess manager

performance/make any adjustments/changes.



Strategy teachings, think for organization under new decentralized system



Understand overall organization/how it links



Training to accommodate BSC/org goals

3. Comment on the scorecard development process. Why did Bob McCool initiate yet another initiative, the Balanced Scorecard project? What elements seem critical to the success of a Balanced Scorecard project? (Ans) The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and non-profit organizations  worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation.

 We think that the Balanced Scorecard at Mobil was a very successful program for its intended purpose, it helped managers and employees assimilate into a major reorganization. We would recommend the Balanced Scorecard for any organization that is focused on measurable capabilities and are not financially focused.  Advantages (a) Managers do not choose between finance and operations. (b) One can recognize if good performance in one area is at the cost of another area. (c) Uses measurable goals (d) BSC requires senior level manager involvement because they have overall operation knowledge. (e) Strategy and Vision Driven i.

Company defines the goals

ii.

People develop their own paths to the goals

(f) BSC works well alongside other quality programs Disadvantages (a) It is difficult and time consuming to implement and keep going (b) There is an opportunity to i.

Poorly define the measures

ii.

Use the wrong measures

(c) Opportunity to poorly define what BSC will be used for i.

Operational Control

ii.

Reporting

iii.

Strategic Control

(d) Failure to update the BSC when goals have been achieved i.

Seen as done

ii.

Not used anymore

The Balanced Scorecard was a wise decision to field alongside the reorganization. The reason for the reorganization was that a climate survey stated that creativity and innovation were stifled by the current business environment, relationships with customers were adversarial, and people were enhancing their business unit results to make them look better. The reorganization decentralizes decision making to the managers and employees. The Balanced Scorecard is a tool that will help managers and employees make good decisions. It will help them to adapt to the new organization. The Balanced Scorecard was successful at Mobil. The case shows that it made  business managers take a look at the mission, develop goals, and flow these values down to the NBU’s and Servcos that are closer to the customer. Managers are able to see outside their functional areas when making important decisions. NBU’s were open to make changes like measuring C-store sales on revenues per month vice aggregate revenues per square foot. In 1995 there is an almost 12% rise in revenues,  which is over twice the amount in any year since 1991. There is a drop in debt-tocapital ratio. 1995 is also Mobil’s first  year on beating the industry average in return on assets, which is one of their Balanced Scorecard metrics There were several critical elements in the development process. There was the collection of management’s views on the strateg y, through interviews. Then the management developed of the Balanced Scorecard perspectives, top management  buy-in. They also recognized that there are two customer segments that need to be handled separately. Slowly, the development starts to incorporate more managers from lower levels. Then Mobil sent pilots out to dev elop the NBU’s on the West Coast and Midwest. We would have brought the NBU leads to Mobil headquarters for a couple of weeks while Mobil was developing the overall scorecard perspectives. Since these goals will flow down to them, they may have some goo d input.