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Chemical Bank Implementing the Balanced Scorecard Case Solution

Solution Id Length Case Author Case Publisher
2520 1244 Words (6 Pages) Robert S. Kaplan, Norman Klein Harvard Business School : 195210
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Though deposit collection and processing have been prioritized in retail banking, the bank's services were quite restricted. Customers' preferences and demands have evolved, necessitating banks to offer a broader range of products and services. As a result, Chemical's Retail Bank had to look for new methods to connect with its consumers. It had to reform its perception from an incumbent conventional bank to more progressive financial services and advice provider for specific consumer groups. Non-financial BSC metrics are more appropriate for Chemical's Retail Bank due to the challenging competitive environment. It could readily assist managers in tracking and motivating performance at all levels of the organization (Ittner, 2003). On the other hand, financials lacks defined objectives and, in the long term, cannot represent company strategy in this new competitive climate, and it is not an appropriate approach to drive and evaluate Chemical's Retail Bank's success. Hence, Chemical bank would be more efficient if it used non-financial measures to analyze and assess its performance because of specific objectives and organizational structure that support the bank in crafting a customer-centered strategy.

Following questions are answered in this case study solution

  1. Why did Chemical Bank need indicators that were not only financial? 

  2. What did Mike Hegarty do to meet the criteria of the scorecard?

  3. Discuss the implementation of the scorecard in the company.

  4. What are the strengths and weaknesses of the scorecard that the bank used?

  5. What aspects should be avoided for a successful implementation of the scorecard? 

Case Analysis for Chemical Bank Implementing the Balanced Scorecard Case Solution

2. What did Mike Hegarty do to meet the criteria of the scorecard?

Mike Hegarty, the head of the retail banking division, wanted to transform the business core strategy into consumer-centric. He listed three major strategic principles from previous strategies: altering the customer/profit mix, enhancing productivity, and enabling the organization. Shifting the client mix will result in a better profit mix, and this shift will be facilitated by employee training and a better understanding of customer categories. As a consequence of these efforts, time will be spent more productively due to increased efficiency through training. All of these things contribute to the organization's success. Mike Hegarty utilized the activity-based costing method to determine where the actual costs were coming from. The bank was aware that some accounts were more profitable than others. However, after completing the ABC analysis, they discovered that many accounts were not only unproductive but also costing the bank money. The BSC might be adjusted to favor aims that use this newly revealed truth by exploiting this newly learned information. This focuses on the internal perspective of identifying client categories, which leads to a more profitable and diverse customer mix.

3. Discuss the implementation of the scorecard in the company.

Since the firm partially implemented BCG, it jeopardized the intended impacts of the comprehensive implementation of the fresh new BSC's plan. Simultaneously, if the management couldn't get desired results, it would highlight the demand and factors to incorporate in BSC. The BSC implementation by managers outside the top level of the company is also an essential aspect of the BSC. During the construction of the original BSC, the Chemical Bank performed an excellent job consulting with management. This is critical to the early success of a BSC deployment. Unfortunately, Chemical Bank did not communicate its BSC to all of its workers directly, which is a necessary step for a BSC to be fully utilized.

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