DAP Case Solution

Group 3
PGP22, IIMK
STRATEGY MAP AND BALANCED SCORECARD AT DOMESTIC AUTO PARTS (DAP)

The strategy to realizing the changes required at Domestic Auto Parts (DAP) will involve the followings:

i. The financial perspective

ii. Customer Perspective

iii. Process Perspective

iv. Learning and Growth Perspective

Q1. FINANCIAL PERSPECTIVE:

1. DAP is the subsidiary of a U.S. auto parts manufacturing company.

2. The shareholder's expectations are:

The goal of the leadership to change the financial situation at DAP is to increase its 9% return on capital
to achieve 12% within two years. The company will focus on two major factors here: productivity and
growth. To achieve productivity goal, the company will minimize total cost structure, improve on the
use of capital assets both the current and new and increase top-line (revenue) by 50%. There is no way
to improve growth without capitalizing on some of the financial issues that are hindering the profit-
making capabilities of the company. Growth increases revenue, to increase revenue at DAP, new
products need to be pushed out, equipment upgrades and new investments will are required.

Increase ROCE to 12%

Productivity Strategy: Maximize the utilization of existing assets and reduce cost without limiting
investment and increase top-line revenue by 50% through innovation.

Revenue Growth Strategy: Introduce new products, equipment upgrade, the introduction of new
partners, and understanding of customers need and become innovators. The growth is creating
opportunity for more investment and also focusing on improving the utilization of asset base capital
from operating on the 65% old assets to get to 90% utilization on an upgraded asset base.

Q2. CUSTOMER PERSPECTIVE:

1. DAP costumers are the various distributors carrying their products

2. The customer wants on-time delivery and on-spec products.

DAP need to understand what their customers want, which can be achieved through continuous
communications and seriously understanding the customers need. Customers want superior products,
technology –sophisticated products from DAP. Also DAP needs to convince their customers that they
 DAP Case Solution
Group 3
PGP22, IIMK
are innovators with superior reputations with an unbeatable image. Customers need to know how
consistent and reliable DAP products are and how they maintained their ranking in the industry. All
these are usually an added advantage for those that carry the supplier’s products.

DAP will create value for its numerous customers through intimacy. The company needs to create a
continuous relationship with the key customers that are within the 65% range that create the 90%
profits for the company. DAP will create customer’s proposition through timely delivery, on-spec
products, improved products, new products line, and customer service relationship with value rewards.
The more profit the company makes, the better it is for them to identify its loyal customers and build
good relationship to retain this customer or make them partners.

Q3. PROCESSES PERSPECTIVE:

1. Some of the most important processes for creating value for DAP’s shareholders and customers are

1. The proper coordination of Supplier management

2. Coordination of manufacturing management
3. Re-evaluating and re-organizing of the delivery management
4. Streamlining of distributions process to attract strong business partners to retain profitable
customers
5. Reevaluate the procedures for preventive maintenance to eradicate equipment breakdown
6. Management of supplier’s pipeline and raw materials
7. Products improvement as an essential part of the process
8. Capital assets utilization
2. Objectives and measure for process mentioned above:

Strategic Objective Strategic Measures

Product improvement Increase in ROCE

Manufacturing management Upgraded equipment and research process

Delivery management On-time delivery and customers comment’

Preventive maintenance Reduction of unscheduled downtime

Streamline of the distribution process Cutting cost and establishing key distributors

Supplier management Reduction in product storage

Raw material Proper utilization

Assets Upgrade and monitor the efficiency

 DAP Case Solution
Group 3
PGP22, IIMK

Q4. LEARNING AND GROWTH:

1. DAP requires improvement in the R&D department of the company which is important for
development of new products and improving the old ones. It’s essentially the heart of the company’s
innovation. The skill is to develop new products, do preventive maintenance, streamline distribution
process, and for the marketing department to work more with the manufacturing department to
understand that the new products are the most essential at DAP.

Secondly, the company should be able to coordinate the management processes to bring perfection into
the organization.

2. In the area of human resources, it is important for the DAP to know how to increase learning process
and facilitates training within the organization, no matter how geographically dispersed their employees
are. For such a huge company with various outlets, the foremost priority for the company to succeed in
the area of innovation. Information technology plays a crucial role in the manufacturing industry, for
DAP to retain its ranking there is need for strong technology background for manufacturing company in
automobile industry. Information technology should not be comprised of any reason in the company.
The just in time technology should be taking advantage of and use by the company. Alignment is
important especially in an organization where every sector is experiencing different changes. Employees
need to be oriented and trained for the new improvement and the series of changes going on in the
company.