JANE BELINDA SARANGA

1101002009

MANAGEMENT CONTROL SYSTEMS

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CASE 11-3 CUP Corporation

1. As an advisor to the project manager, Derrick Westmuller, what set of measures would

you advise they adopt?

Answer:

a. Financial Measures

Increase in revenues

Increased profitability

Lower cost

Return on assets

Service cost to revenue ratio

Cost per incident

Cost per exception

b. Customer Oriented Measures

Policy lapses

Policies recovered

Increasing the number of customers with multiple policies

Policies cancelled by a customer/ increase in policies by an existing customer

Recommendation by existing clients to other non-clients about the center

Bad claims processing should decrease

c. Internal Business Measures

Error reduced

New car insurance

Issues resolved on other calls but without taking in views of specialized group

Issues resolved on first call

Speed of processing

Enquiries for agents and brokers

Enquiries generated on cancellation of contracts

New clients

Issues that need specialized group

Cutting on process steps

Rating of answer then and there and to be mandatory to seek such ratings from

the caller

d. Innovation and learning related measures

New topics received for different product lines

Time spent by agents in generating new businesses

Knowledge reuse rate

o Currency

o Transparency

Identification of trends in business

2. Develop a balanced measurement system showing how the measures and measurement link

to what you believe are the key success factors of the CCC.

Answer:

According to the case, I have found that the key factors that bring CCC to success are

in many factors following:

Time Accessibility. CCC works on 24 hours and 7 days. This means that the centre

opens all the time and customers can call them at any time.

Immediate Solving Problem. They provide customers with fast respond. 90 percent,

they can handle and solve the problems within the first call.

Centralization and Stand alone centre service unit. CCC is Centralization which is

separated from the parent company. They also have their own mission to support their

own system and strategies. Because of this reasons, CCC can have faster decision making

and quick respond to customers.

Empowerment and Flexibility. Employees have full power to make their own decision

in responding and solving the problems. They have to know what they should do to

handle with the customers. And flexibility in the term of working hours and

compensation to employees. Giving compensation depends on how many hours that

employees work.

Quality Services and Customers satisfaction. CCC has high quality service with speed

of respond, fewer of error, accurate information and friendly with customers.

Therefore, to link the Balanced Scorecard with the key success factors of CCC, we have to

consider in 4 perspectives:

1. Financial Perspective. The company has to consider how the CCC is doing for

shareholders. According to this case, to increase a firm’s sale, income growth, and cash

flow and well as the profit margin, the centre has to improve agent channel. CCC has to

communicate with all agent channels to make the sale smoothly. The CCC has to update

the information to all agents, training them how to deal with customers and how to give

the good and current information to customers also for the time accessibility as well.

When customers can easily receive good and correct information from the agents, so they

can decide to make a contract with the firm, this way can improve the sale’s increasing

and financial to the firm. And also it can decrease defection rate and selling more

contracts.

2. Internal business process Perspective. Internal Business Process measures can be used

to measure the productivity, reducing time cycle, and quality measurement. From the

case, the CCC hires 70-80 percent of generalist employees with addition skills to avoid

an annoyed when they have to repeat same answer from the customers. And only 20-30

percent of employees who are expert and specialist to answer a specific team with

extended product knowledge. This approach also can make customers satisfy with CCC’s

services, when employees are friendlier and enable to answer the question well, so

customers will easily make contracts with firm and be a customer loyalty.

3. Learning and Growth Perspective. It can use to determine the firm technology,

leadership, products development and operation process improvement. From the case,

CCC can improve the operation system by increasing the service quality. This can be

done by increasing the speed of resolving, reducing error of the service, accurate and

currently information to customers, also to eliminate the process step for making

decision. CCC offers new system with one telephone number for all problems and also

the centre will open 24 hours and 7 days. So this method can finalize 90 percent of

customer inquiries and lead to increase in service quality and efficiency.

4. Customers. Using the customers to define the defect-level, product development support.

By applying this, CCC should training employees to be friendly, access information,

knowledgeable and multi skills. In addition managers should support and motivate

employees and give them a good compensation. In this way CCC can reduce the

defection rate and improve in customer retention and increasing customer’s loyalty

because CCC has more concern to customers.

More specifically, if the firm, CUP Corporation is using the Balanced Scorecard, it can

strategically improve its organizational effectiveness where all its strategies are aligned to the

goals of implementing CCC and becoming the service leader in insurance industry. Balanced

Scorecard can direct them on which measures should they focus to strategically improve their

performance. In some extent, if they want to enhance its strategic target that is to enhance

customer retention and increase the level of customer satisfaction, then, firm can strategically

focusing more on the internal business process and customers perspective.

Generally, the internal business process perspectives help firm to enhance its productivity

and quality performance whereas customer perspectives can help the firm to improve its

performance on service delivery and to increase the level of customers’ satisfaction in certain

ways. Therefore, Balanced Scorecard can help them to learn and better improve their

performance specifically in terms of technology and product development by having a

benchmark in comparison with other competitors thus driving them to be listed as one of the best

service leaders in insurance industry.