Transworld

Auto Parts (A)

GROUP 08
Introduction

 Auto parts company

 $6.6 Billion subsidiary of a US diversified
manufacturing company
 Customers: Chrysler and General Motors
 Product lines: Electronics and interiors
 Customers-centered divisions: Luxury,
Economy, Mid-sized and trucks
 3 geographical markets: US, Europe and Asia
Contd….

 Luxury division is performing well financially

 Economy division has high future growth
prospects
 High future growth prospects in Asia in
economy division
 And in Europe in Luxury division
End User defined Luxury Economy
attributes
First most important Innovation Low cost
Second most performance Fuel economy
important
Third most important High quality Quality

Customer (OEM)
Defined attribute

First most important New product Price

innovation
Second most Product design Product quality
important
Third most important Technical expertise JIT/ lean
 What are the respective business
strategies of Transworld Auto Part’s
economy and luxury divisions?
 Luxury Division
 Innovative products
 Relationship with High end customers
 Tap into European markets

 Economy Division
 Reliable quality at low cost
 Low maintenance
 Tap into Asian markets
 Technological adaptation from luxury division
What must each division do well to
execute its strategy?

 Apply BSC terminology

Objectives Measure Targets Initiatives

 Objectives: What strategy must achieve and
what’s critical to success
 Measures: How to measure and track success in
achieving the strategy
 Targets: Level of performance or rate of
improvement needed
 Initiatives: Key action programs to achieve
objectives
BSC terminology for
Economic Division
 Objectives: Reduce costs and improve quality
 Measure: ROCE, Elimination of defects,
Increasing cash flows
 Targets: Achieve -7% ROCE, 5% market share,
50% of employees certified in TQM
 Initiatives: Align IT with TQM and JIT, Develop
forecasting model similar to the model or car
manufacturers
BSC terminology for
Luxury Division
 Objectives: Increase ROCE and revenue,
manage innovation, improve customer
satisfaction
 Measure: Market share, customer survey,
number of new products introduced
 Target: 50 new products per year, 85%
customer excellent review
 Initiatives: Innovation campaign, new product
launch, partnership initiatives
What is Transworld Auto Part’s
rationale for implementing a strategy
map and balanced scorecard
exercise?
 Structured process: Easy measure of
improvements
 Try to cover all the dimensions
 Produce low-cost & high quality proucts
 Achieve financial goals
 Improve internal processes and employee
competency level
 To minimize gaps in performance of different
divisions
 Which division manager developed a better
strategy map and balanced scorecard? What
changes would you propose to the strategy
maps and balanced scorecards
Luxury of the
Economy
two divisions?
Pros Pros
SM: Easy to read and structured SM: In depth and clear vision
BSC: More precise and short BSC : Focus on core competency
and Customers view
Cons Cons
SM: No cause/effect followed and SM: Clustered and overwhelming
unclear priorities BSC: Failed to obtain competitive
BSC: over simplification and some advantage
misalignment with strategy
Changes Changes
SM: show direction and make SM: Make simplification
priorities BSC: ensure internal alignment to
BSC; More matrices and more make more effective in strategy
detailed strategy