Clotheshound is a local clothing store in New England. Clotheshound has been experiencing increased competition form the national clothing chains. In an effort to improve performance, management intends to create a Balanced Scorecard. In a meeting, several measures were suggested by various managers.
Management has identified a key problem. Customers are taking too long to pay their department store's charge card bills, and the company has an abnormal amount of bad debts. If this problem were solved, the company would have far more cash to invest in store improvements. Investigation has revealed that much of the problem with late payments and unpaid bills is apparently due to disputes about incorrect charges on the customer bills. Incorrect charges usually occur because sales clerks enter data incorrectly on the charge account slip.
The performance measures suggested by the managers are given below:
Required:

a.
Build an integrated Balanced Scorecard using only performance measures suggested by the managers. You do not have to use all the measures, but build a Balanced Scorecard that reveals a strategy for dealing with the problems with accounts receivable and unsold merchandise.
b.
Construct a testable strategy by showing the causal links (with arrows) between measures in the different perspectives, and show whether the performance measure should show an increase or decrease.
c.
Assume that the company adopts the Balanced Scorecard. After operating for a year, there are improvements in some performance measures but not in others. What should management do next?

A Competitive Advantage Has Been Established When

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