(continuation of Exercise 13-16). An analysis of La Flamme’s operating income changes between 2015 and 2016 shows the following:
The industry market size for corrugated boxes did not grow in 2016, input prices did not change, and La Flamme reduced the price of its boxes in line with the market.
1. Was La Flamme’s gain in operating income in 2016 consistent with the strategy you identified in requirement 1 of Exercise 13-16?
2. Explain the productivity component. In general, does it represent savings in only variable costs, only fixed costs, or both variable and fixed costs?
La Flamme Corporation manufactures corrugated cardboard boxes. It competes and plans to grow by producing high-quality boxes at a low price that are delivered to customers in a timely manner. Many other manufacturers produce similar boxes. La Flamme believes that continuously improving its manufacturing processes and having satisfied employees are critical to implementing its strategy in 2015.
1. Is La Flamme’s 2015 strategy one of product differentiation or cost leadership? Explain briefly.
2. Portage Corporation, a competitor of La Flamme, manufactures corrugated boxes with more designs and colour combinations than La Flamme at a higher price. Portage’s boxes are of high quality but require more time to produce and so have longer delivery times. Draw a simple customer preference map for La Flamme and Portage using the attributes of price, delivery time, quality, and design.
3. Indicate two measures you would expect to see under each perspective in La Flamme’s balanced scorecard for 2015. Use a strategy map to explain your answer.
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