University of South Australia: Delta/Signal Corp Simulation Analysis

This project analyzes a strategy simulation for Delta/Signal Corporation, addressing challenges in market competitiveness, share price, and costs. The student employed a Balanced Scorecard approach to evaluate performance across financial, customer, internal process, and learning & growth perspectives. The simulation focused on the luxury segment and customer integration strategy. The analysis compares simulated financial results (income statement, balance sheet, ownership value) with historical data, revealing performance deterioration in certain areas. The student made some changes to the original initiatives to optimize financial resource allocation. The conclusion emphasizes the benefits of improving customer and internal processes. The project includes references to relevant academic literature.

Simulation for Delta/Signal Corporation 1
STRATEGY SIMULATION FOR DELTA/SIGNAL CORPORATION
By (Name)
The Name of the Class (Course)
Professor (Tutor)
The Name of the School (University)
The City and State where it is located
The Date

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Strategy Simulation for Delta/Signal Corporation
Challenges, Strategy Initiatives, and Balanced Scorecard
The issues/challenges were communicated to me via two avenues. First the chairperson of the board of
directors, Rachel Weber mentioned to me four critical issues with regard to market competitiveness, share
price performance, elevated raw material and production costs. Lastly, she mentioned that the current
year’s revenue figures were below what was observed in the past two years. The second avenues was a
through the comparative financial statements and market share analysis. The two sources of information
aided with the formulation of strategy initiatives that would allow Delta/Signal Corporation to realize
optimal performance as across all areas; production, product innovation, employee satisfaction/efficiency,
and competitive advantage in the market (Robert and Norton 2005). In order to effectively address all the
issues recognized in the competitive summary and comparative data a balance scorecard approach was
employed. The Balanced Scorecard was used because many of the problems associated with Delta/Signal
Corporation are related to intangible assets that cannot be effectively measured using financial means.
Therefore, a Balance Scorecard allows us to measure a given intangible asset i.e. customer loyalty to
ensure that it meets the expected performance standard. Moreover, a Balance Scorecard ensures that
improvements are made to all areas evenly. This equality in optimization ensures that improve to one
problem area does not come at the expense of any other business area/aspect (Kaplan 2011).
Simulation Analysis
During the simulation, the first thing that was evident was the two entries that were chosen for segment
and strategy. The simulation focused on the luxury segment and customer integration strategy. Therefore,
all financial, customer, internal process, and learning & growth incentives had to be sensitive to the
segment and strategy being dealt with. The next thing to recognize during the simulation process is the

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estimated value of each objective relative to its specific metric. As such, the estimate value for all the
objectives combined had to total the allotted budget of $25 million. Once all these provisions fell within
the permitted limits the next step was to plot a feasible strategy map that will act as the guiding force for
the strategy simulation for Delta/Signal Corporation. The Strategy map indicated below shows that the
number for objectives per incentive (e.g. financial) range between four and six in number. The crucial
aspects of the strategy map are the arrows and the direction in which they move from one objective to the
next and from one incentive to the next (e.g. financial to customer).

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After the simulation, we can look at each of the financial reports individually to check for improvements
and reduction in performance. Looking at the income statement we will compare the simulation results
with figures observed in the past two years. The sales and cost of goods sold figures in the simulation
output are lower compared to those records by Delta/Signal Corporation in the past two years. The
simulated gross margin was higher that the gross profit recorded in 2011 but lower than the figure
observed in 2012. Similarly, the simulated operating income is lower than the actual amount observed in
2012 but significantly higher than the figure observed in 2011. The case is same when it comes to the net
income figures for the three scenarios(Robert & Norton 2005). Therefore, from the income statement
comparison we can conclude that the performance of the company has actual deteriorate compared to
financial year 2012. The results for the balance sheet are indicated below we see that the operating assets
have reduced compared to 2012 but improved with regard to 2011. The simulated Net debt has reduced
when compared with the figure observed in 2012 and increased when compared with the figured in 2011.

Simulation for Delta/Signal Corporation 5
Lastly, we see that the simulated equity is an improvement when compared to the figure observed in 2011
and 2012. Overall the balance sheet indicates an improvement in business due to a reduction in debt and
increment in equity (Robert and Norton 2005).
Looking at the ownership value we can notice that a considerable improvement has been to share price in
comparison to the $40 and $30 figures recorded in 2012 and 2011 respectively. As a result, the
shareholders will realize better dividends under this simulation. The “Customer contracts with price
protection” graph indicates that all improvements were lost by the end of the simulation period. This
means that improvements were not made with regard to offering a competitive price to customers that
will ensure a high market share for Delta/Signal Corporation and secure customer loyalty. At the end the
business was sold at a diminished share price of $17.73 this was seen as the best decision given the
business was experiencing serious liquidity, solvency, and profitability issues.

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Changes to Initiatives and Creative solutions
Very few changes were made to the original initiatives in order to make improvements to proposed
solutions to the performance issues faced by Delta/Signal Corporation. These changes are mainly focused
at increasing the number objectives to ensure that all issues are effectively catered to. Other changes were
directed at optimal allocation of financial resources to ensure maximum results. For example, several
share price improvement objectives were added with the prospect to elevating share prices and
shareholders’ dividends (Kaplan and Norton 2000).
Conclusion Statement

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The simulation has shown that is more beneficial for a business to make improvements to areas associated
with customers and internal processes as opposed to focusing on the alignment of financial goals and
objectives e.g. a higher price per share.

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References
Education, B. (Director). 2011. Driving Corporate Performance: The Balanced Scorecard [Motion Picture].
Kaplan, R. , & Norton, P. 2000. Having trouble with your strategy? : then map it. Harvard business review. 78 (5),
pp 167-176.
Kaplan, R. , & Norton, P. 2005. Balanced scorecard : measures that drive performance. Harvard business review.
83 (7/8), pp 173-180.