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 NBUs 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 NBUs - 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 NBUs and Servcos that are closer to the customer. Managers are able to
see outside their functional areas when making important decisions. NBUs 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-to-
capital ratio. 1995 is also Mobils 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 managements views on the strategy, 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 develop the NBUs 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 good input.