2. 1
Introduction
The balanced scorecard was created by Robert Kaplan and David Norton in the early
1990’s to assist managers with strategic non-financial performance based measurement tools.1
“The balanced scorecard is a strategic planning and management system that is used in business
and industry, government, and nonprofit organizations.”2 It purpose is to align business
activities with the vision and strategy of an organization, improve communication both internally
and externally, and monitor an organizations performance against its strategic goals.3
Originally named the Balanced Business Scorecard, in 1992 Kaplan and Norton
introduced the idea of combining financial and non-financial (customer, internal business, and
innovation and learning) perspectives in a single performance scorecard model.4 Later the word
“Business” was omitted from the model making it what it is now commonly known as, the
Balanced Scorecard.5 In 1996 their book, The Balanced Scorecard: Translating Strategy into
Action, they re-classified two of the four original perspectives from the 1992 article. The
Internal business perspective was re-labelled Internal business processes, with the addition of
the Innovation element, and the Innovation and learning perspective was re-labelled Learning
1 Balanced Scorecard Institute,a Stragety Management Group . 2014. Resources, About the Balanced Scorecard.
Accessed June 10, 2014.
https://balancedscorecard.org/bscresources/aboutthebalancedscorecard/tabid/55/default.aspx
2 Balanced Scorecard Institute,a Stragety Management Group . 2014. Resources, About the Balanced Scorecard.
Accessed June 10, 2014.
https://balancedscorecard.org/bscresources/aboutthebalancedscorecard/tabid/55/default.aspx
3 Balanced Scorecard Institute,a Stragety Management Group . 2014. Resources, About the Balanced Scorecard.
Accessed June 10, 2014.
https://balancedscorecard.org/bscresources/aboutthebalancedscorecard/tabid/55/default.aspx
4 Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
5 Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
3. 2
and growth, with the additional element of growth and removal of the innovation element.6
Their 1996 version of the balanced scorecard differed from the 1992 version by containing
outcome measures and the performance drivers of outcomes that were linked in a cause-and-
effect relationship, making the performance measurement system a feed-forward control system,
or a control method in which a correcting method is applied before information is disseminated
externally.7 This method outlined the causal relationships of:
1. Measures of organizational learning and growth
2. Measures of internal business processes
3. Measures of the customer perspective and,
4. Financial measures”.8
By 2001 Kaplan and Norton published another book, The Strategy-focused Organization:
How Balanced Scorecard Companies Thrive in the New Competitive Environment. This
publication introduced the concept of a strategy map for the purpose of translating a business’s
strategy into operational terms, creating strategic awareness, making strategy a continual
process: planning and budgeting, feedback and learning, and mobilizing change through
executive leadership.9
Three years later in 2004 the book, Strategy Maps: Converting Intangible Assets into
6 Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
7 Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
8
Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
9
Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
4. 3
Tangible Outcomes was published, and the creation of the visual map strategy was introduced in
this publication. With this diagram came a visual cause-and-effect explanation of what is
working, and what is not working in a business for everyone in an organization to understand,
and how to get the entire organization involved in a company strategy.10
Lastly, by 2006 one more book was published about the balanced scorecard called
Alignment: Using the Balanced Scorecard to Create Corporate Synergies.11 This book
completed their series of publications on the analysis and understanding of the balanced
scorecard. In this book the topics of alignment as a source of economic value, corporate strategy
and structure, aligning financial and customer strategies, aligning internal process and learning
and growth strategies: integrated strategic themes, cascading the process, aligning boards and
investors, aligning external partners, managing the alignment process and, total strategic
alignment were analyzed and put forth for reader interpretation and use.12
The balanced scorecard is a tool that many organizations rely upon to develop a strategy
creating objectives and goals to be understood by every member at all levels of the organization.
As an organization that was a pioneer in its industry, Vibram, a company that invented the rubber
sole for shoes, eventually became known as the company to create the “Five Finger” shoes,
gaining mass appeal and recognition for revolutionizing and changing the perception on how
shoes should be worn. Taking into account Vibram’s accomplishments, the balanced scorecard
10
Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,a
ccomplishments,gaps and opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59.
27p.
11 Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments ,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
12 Hoque, Zahirul.March 2014."20 years of studies on the balanced scorecard:Trends,accomplishments,gaps and
opportunities for future research." British Accounting Review. Vol. 46 Issue1,p33-59. 27p.
5. 4
will be used as a tool to better understand the strategy behind Vibram’s creation of the “Five
Finger” shoes.
Advantages of the Balanced Scorecard
The balanced scorecard is a budgeting and performance tool for businesses to evaluate its
operational and financial performance measures and initiatives. It is just one of many ways
businesses monitor performance and manage budgets. The balanced scorecard along with a
strategic map is designed for managers to better communicate an organizations business strategy
and to make sure that every employee is on the same page as the company. It is meant to
balance long and short term objectives, financial and non-financial measures, and internal and
external factors that contribute to enhanced performance.13 This is done through measuring the
financial status and change of the organization, through measuring customer outcomes such as
market share, customer retention, customer acquisition, customer satisfaction, and customer
profitability, and through identifying important internal processes in the organization, and the
organization’s performance.14 Organizations utilize the balanced scorecard as a strategy to
improve upon the following:
Learning and growth -How to align intangible assets (people, systems, and culture) to
improve critical processes?
Internal processes -What processes are needed to excel at satisfying clients and
shareholders?
Customers- To reach the financial objectives, how to create value for customers?
13 Antonsen, Yngve. 2014. "The downside of the Balanced Scorecard:A casestudy from Norway." ScienceDirect,
August: 40-50
14 Antonsen, Yngve. 2014. "The downside of the Balanced Scorecard:A casestudy from Norway." ScienceDirect,
August: 40-50
6. 5
Financial- What are the shareholders’ expectations for financial performance?15
In order to better understand these measures several questions must be considered. “First, how
do customers see your company? Find out by measuring lead times, quality, performance and
service, and costs. Second, what must your company excel at? Determine the processes and
competencies that are most critical, and specify measures, such as cycle time, quality, employee
skills, and productivity, to track them. Third, can your company continue to improve and create
value? Monitor your ability to launch new products, create more value for customers, and
improve operating efficiencies. Fourth, how has your company done by its shareholders?
Measure cash flow, quarterly sales growth, operating income by division, and increased market
share by segment and return on equity.”16 As an organization, being able to answer these
questions will provide managers the tools to see if there was improvement in one area at the
expense of another.17 Doing so provides an additional option for companies to review their
performance and outcomes outside of the financial statements and operational budgets.
Disadvantages of the Balanced Scorecard
The primary focus of the balanced scorecard is to provide managers or executives with a
framework to translate a company’s strategic objectives into a coherent set of performance
measures.18 What the scorecard fails to address is the impact on a company’s employees with
15
KenOgata, Gary Spaakman.2013. "A BalancedScorecardfor Maple Leaf Consulting." Accounting
Perspectives 328.
16Robert S. Kaplan,David P.Norton. 2005."The Balanced Scorecard:Measures That Drive Performance." Harvard
Business Review. July. Accessed June 26, 2014. http://hbr.org/2005/07/the-balanced-scorecard-
measures-that-drive-performance/ar/1.
17 Robert S. Kaplan,David P.Norton. 2005."The Balanced Scorecard:Measures That Drive Performance." Harvard
Business Review. July. Accessed June 26, 2014. http://hbr.org/2005/07/the-balanced-scorecard-
measures-that-drive-performance/ar/1.
18Robert S. Kaplan,David P.Norton. 1993."Putting the Balanced Scorecard to Work." Harvard Business Review,
September: n/a.
7. 6
the implementation of this measurement tool and performance evaluator. This strategy is a top-
down process created for upper level managers, but fails to consider the influence it has on
employee’s performance.19 The article The downside of the Balanced Scorecard:
A case study from Norway in the Science Direct journal suggests that an employer that fosters
and environment of new ways of thinking and empowerment tend to be more stimulating and
interesting for employees. This is what is defined in the article as critically reflective behavior.
“Critically reflective behavior as a set of connected activities carried out individually or in
interaction with others, aimed at optimizing individual or collective practices, or critically
analyzing or trying to change organizational or individual values.” 20 “Critically reflective work
behavior involves examining the connection between actions and their consequences. Interaction
and reflection between managers and employees are especially vital because such
communication may increase the quality of performance at work.”21 This is the downside to the
balanced scorecard. As a performance based measurement tool, the balanced scorecard limits a
critically reflective work environment by influencing an employee’s behavior.
The research and information from this case study was conducted by interviews,
observations, and focus groups. Used in at least 60% of major organizations in the United States
and Europe, the research about the balanced scorecard discusses how the management system
may decrease employee’s levels of individual and interactive reflection and their commitment to
19
Antonsen,Yngve.2014. "The downside of the BalancedScorecard:A case studyfromNorway."
ScienceDirect, August:40-50.
20
Antonsen,Yngve.2014. "The downside of the BalancedScorecard:A case studyfromNorway."
ScienceDirect, August:40-50.
21
Antonsen,Yngve.2014. "The downside of the BalancedScorecard:A case studyfromNorway."
ScienceDirect, August:40-50.
8. 7
their organization if used as a tool of formal control.22 This assumption is the result of the use of
the balanced scorecard as a tool to encourage employees to cooperate by means of pay and bonus
incentives.23 These incentives are performance based, and research on performance management
systems has demonstrated that complete focus on financial success prevents organizational
growth. If organizations implement performance based incentive systems, employees will not, in
practice, be motivated to provide critical reflections to senior management or to change their
own practices until new instructions with new indicators and target figures are provided. 24
Since the balanced scorecard measures cause and effect simultaneously as a strategy for
development and growth, it provides businesses to view a snapshot representation of its current
market status and provides the potential to map out its future goals and status. “Because a
strategy is the hypothetical representation of cause and effect regarding the capability of an
organization to correspond to market changes to achieve a goal, such a strategic causal
relationship can form a set of causes and effects. If cause-and-effect relationships are not
adequately reflected on a balanced scorecard, the scorecard will not translate to a company’s
vision and strategy.”25
22 Antonsen, Yngve. 2014. "The downside of the Balanced Scorecard:A casestudy from Norway." ScienceDirect,
August: 40-50.
23 Antonsen, Yngve. 2014. "The downside of the Balanced Scorecard:A casestudy from Norway." ScienceDirect,
August: 40-50.
24 Antonsen, Yngve. 2014. "The downside of the Balanced Scorecard:A casestudy from Norway." ScienceDirect,
August: 40-50.
25 SangjaeLee, Sung Bum Park,Gyoo Gun Lim. 2013."Using balanced scorecardsfor the evaluation of ‘‘Software-
as-a-service’’."Science Direct: Information & Management, 553-561.
9. 8
Vibram
Vibram, a company that has been around for over 75 years has established itself as the
world leader in high performance rubber soles, targeted to the outdoor, work, recreation, fashion,
repair and orthopedic markets.26 Known for quality, performance, safety, innovation and design
since revolutionizing the sport of mountain climbing in the ‘30s with the creation of the first
rubber sole, Vibram has positioned itself as the market standard.27
Vibram was created when Vitale Bramani, an Academic of the Italian Alpine Club,
returned from a tragic alpine climb.28 He had the idea to create rubber hiking boot soles. These
rubber soles would be produced using the same technique for the production of tires resulting in
the world’s first Carramato designed rubber sole.29 This design revolutionized the footwear
apparel industry forever.
Not only has Vibram changed the footwear industry, but it has also expanded it brand
rapidly within the last decade. In 2005 Vibram went from making rubber soles on other brand
named shoes like Prada, Tods, Ferragamo, Magli, Rockport, Sergio Rossi, Allen&Edmonds,
Fornari, Hugo Boss, Armani, Dolce & Gabbana, Harrys of London, and the United States
Military, to introducing its own successful shoe line into the market, Five Fingers. Prior to the
introduction of the “FiveFingers”, in 2003 Vibram launched a rubber sole flip flop for women,
26 vibram.com. 2012. Vibram: History. Accessed 06 07, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-History.
27
vibram.com. 2012. Vibram: History. Accessed 06 07, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-History.
28 vibram.com. 2012. Vibram: History. Accessed 06 07, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-History.
29vibram.com. 2012. Vibram: History. Accessed 06 07, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-History.
10. 9
which did not gain as much attention as the “FiveFingers” shoes. Vibram “FiveFingers” shoes
are minimalist shoes that were originally marketed as a natural alternative for different outdoors
activities such as sailing, kayaking, canoeing, and as a camp or after-hike shoe.30 The purpose of
the design was to have a shoe that mimics the movements of the foot that was lightweight,
durable, and innovative.31 This concept of shoe making is what distinguished Vibram Five
Finger shoes from other in market minimalist shoes.
“The biggest difference is the five toes which make the foot move like in nature and you
have much more body-smartness. You can move and feel better, and have more power. With the
five-fingers every toe can spread out and work independently from the others, grasp the ground,
feel the ground.”32
After the expansive growth of Vibram’s “FiveFinger” shoes, the company decided to
open the first Vibram flagship store in Milan, Italy and it’s second in Boston, Massachusetts in
2012 located on Newbury Street. Prior to the opening of these stores, Vibram was an online only
business to consumer, or business to business company.
Unfortunately, for Vibram the stated health benefits of the “Five Finger” shoes did not
come without consequence. In 2012 Vibram USA was sued in a class action consumer fraud
lawsuit filed under the U.S. District Court in Massachusetts, for its claims that the “Five finger”
shoes improve the health of runners. The lawsuit was a result of complaints by runners who had
30 Martin,Michael,interview by The LivingBarefoot Show. 2009. The Living Barefoot Show episode #3: Interview to
Michael Martin, National Sales Manager for Vibram FiveFingers" (July 30).
31
Martin, Michael,interviewbyThe LivingBarefootShow.2009. The Living BarefootShow episode#3:
Interviewto MichaelMartin,NationalSales ManagerforVibramFiveFingers" (July30).
32
Fliri,Robert,interviewbyJader ToljaNelleke Don.2006. The Story of the Five Fingers,A ‘revealing’
interview withRobert Fliri in Milan,2006
11. 10
experienced increase injury instead of gained health benefits from using the shoes. The shoes
were advertised as a way for consumers to improve posture, prevent injury, and promote spine
alignment. In this case the plaintiff sought damages for violations of the Consumer Legal
Remedies Act, unfair competition, and breach of express warranty. 33 By May of 2014 Vibram
USA reached a settlement agreement and was ordered to pay a total of $3.75 million to people
who bought the shoes and said it would stop making health claims in its advertisements.34
The problem was that Vibram was able to charge nearly $100 a pair for the shoes on the basis of
unsubstantiated claims that they strengthen muscles and prevent injury.35 Vibram shoes that were
purchased as far back as March of 2009 could be eligible for a refund of as much as $94 for
every pair they purchased, according to the court filing. More than two dozen models of
Vibram shoes would qualify. Even though Vibram USA decided to settle the lawsuit to avoid
“costs of prolonged litigation”, Vibram USA Chief Executive Mike Giofriddo continues to deny
the allegations in the suit.36
Vibram and the Balanced Scorecard
Vibram’s mission statement is “Looking to the future while respecting the past”.37 On its
web site, Vibram elaborates on its mission statement by stating its purpose is: “To develop the
brand through continuous innovation, originality, and quality of the products, while remaining
33 (Blooomberg Businessweek: Textiles, Apparel and Luxury Goods 2012)
34 Germano, Sara.2014. "The Wall Street Journal." Corporate News: Vibram to Drop Health Claims, May 8: B.6.
35 Germano, Sara.2014. "The Wall Street Journal." Corporate News: Vibram to Drop Health Claims, May 8: B.6.
36 Germano, Sara.2014. "The Wall Street Journal." Corporate News: Vibram to Drop Health Claims, May 8: B.6.
37 vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.
12. 11
faithful to the tradition of the brand.”38 Its mission statement is the perfect summary of Vibram’s
business goals and objectives. Vibram’s strategy is to develop the brand by innovating and
creating, but making sure that in the process of development and marketing, it does not lose sight
of the principles the company was founded on. Once a company or organization clearly outlines
is business strategy and establishes objectives relating to performance, it is able to define
measurements and initiatives in:
Finance
Customer Relations
Internal Controls
Learning and growth
For Vibram creating a balanced scorecard based off of this proposed strategy will enable the
vision statement to be met and attained. Vibram’s vision is to, “To maintain and strengthen our
leadership in the active lifestyle market with reliable, high quality, high performance products.”39
Finance
In order to measure Vibram’s financial performance Vibram must ask what its
shareholders expectations for financial performance?40 In 2010 sales of the “Five Finger” shoes
doubled to $100 million, however as a result of the lawsuit settlement in May of 2014,
information has surfaced that the sales of the minimalist “Five Finger” shoes have fallen
tremendously. “The sales peak and the shoes were popular around the turn of the decade amid
38
vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.
39 vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.
40 Ken Ogata,Gary Spaakman.2013. "A Balanced Scorecard for MapleLeaf Consulting." Accounting Perspectives
328.
13. 12
claims that running barefoot was better for the body.”41 “Minimalist shoes were the only
segment in the $7 billion running-shoe industry to post a decline in 2013, with sales falling by
one-third, according to data tracker SportsOneSource.” 42
Internal Processes
The next part of the balanced scorecard that requires consideration is measuring the
strength of Vibram’s intangible assets to improve critical processes. To better understand
Vibram’s internal processes, consideration of the supply chain method in getting one of their
“Five Finger” shoes to the end user or customer is important. Also, ensuring that there is brand
consistency will help with brand perception of Vibram amongst its employees. Having a strong
image and foundation in which the organization stands upon will help with defining the cultural
environment at Vibram.
The factors that help Vibram excel at satisfying clients and shareholders are its
continuous efforts on research and development. “Each new Vibram product is designed using
only the latest designs and the best compounds for its specific use. New soles are always
produced with three objectives:
to guarantee the best performance,
the maximum level of comfort, and
the maximum level of quality over time.
These objectives are realized by the stringent tests that are executed in the laboratory and in the
field by the Vibram Tester Team.”43
41 Germano, Sara.2014. "The Wall Street Journal." Corporate News: Vibram to Drop Health Claims, May 8: B.6.
42
Germano, Sara.2014. "The Wall Street Journal." Corporate News: Vibram to Drop Health Claims, May 8: B.6.
43
—. 2008.Vibram: History. Accessed 06 07, 2014. http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-
History.
14. 13
Customers
Customer relationships are crucial for the point of being able to reach the financial
objectives set in the balanced scorecard. It is important to create value for customers. Doing so,
assists with measuring market share, customer retention, customer acquisition, customer
satisfaction and customer profitability. 44
When Vibram’s “Five Finger” shoes were in high demand, the company encountered
problems with counterfeiting and replicas. The case study, “When Vibram couldn’t meet
demand for its hot new shoes, counterfeiters stepped in. How to fight back?” opens with a story
of a customer demanding a refund of the “Five Finger” shoes because the shoes were marred by
split seems and separating soles, but what the customer did not know is they were fakes.45 “The
counterfeits copied Vibram’s colors, styles, and logos along with Vibram boxes.”46 After some
investigating it was revealed that more than 100 websites were actively selling fake Vibram
“Five Finger” shoes47. The black market for these shoes was a result of Vibram supply not being
able to keep up with the customer demand. Customers saw value in the product and Vibram
faced the risk of losing customer satisfaction due to the increased rise of counterfeit products
causing damage to its reputation.
Vibram was fortunate to have such loyal customers, because after attempting to stop the
counterfeiting by alerting the United State Customs and Border Protection, notifying Facebook
44 Ken Ogata,Gary Spaakman.2013. "A Balanced Scorecard for MapleLeaf Consulting." Accounting Perspectives
328.
45 Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
46 Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
47 Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
15. 14
and Google to stop showing advertisements of fake “Five Finger” shoes, and after expanding
from one to six factories and hiring 50 people to manage production and quality control in China,
websites were still popping up selling fake Vibram “Five Finger” shoes.
Vibram reached out to customers who had been scammed offering 50% discounts on real
“Five Fingers” shoes while launching an aggressive online campaign providing lists of
authorized “Five Finger” dealers including warning tips and information on how to spot the
fakes. 48 This was part of Vibram’s strategy to regain any lost customer loyalty, even though
providing the 50% discounts was not cost beneficial for the organization.49 The damage
management strategy was successful because by 2010 sales of the “Five Finger” shoes doubled
to $100 million, and Advertising Age named Vibram one of America’s hottest brands. 50
Vibram’s balanced scorecard customer relation strategy increased Vibram’s customer
loyalty, increase their market share and sales, and made Vibram’s customer its allies in the fight
against counterfeiter “Five Finger shoes”.
Learning and Growth
Learning and growth is another measurement tool in the balanced scorecard used by
many organizations. As the world’s largest maker of branded soles, Vibram designs,
manufactures, and tests soles for major shoe brands including Timberland, Prada, and the U.S.
military.
48 Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
49Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
50 Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
16. 15
Vibram has expanded as a business with Italian roots, to a business that now operates in
the United States and China. “The Vibram compound in Huadu, in southern China's Guangdong
province, sits on 42,000 square meters of land and includes offices, hospitality facilities,
dormitories and a technological center. With an investment of about $20 million in the 2-year-
old Huadu campus, the purpose of the facility is to create prototype Vibram “Five Fingers”
shoes. The shoes themselves are manufactured elsewhere in China.”51
“To test products in production one test involves romping around in a pit of mud before
climbing one of the many surfaces on ramps and hydraulic lifts, in order to determine how well a
sole cleans itself.”52 Even though Vibram has seen success and failure from the creation of its
“Five Finger” shoes its primary source of income is manufacturing soles for other shoe
retailers.53
The creation of the Vibram “Five Fingers” shoes testing facility in Huadu, China is a
strategy implemented by Vibram to ensure quality. This strategy fits within the learning and
growth measurement tool in the balanced scorecard. Creating this testing facility in China is just
one more way that Vibram chose to expand upon its research and development to fulfill its
mission of developing the brand through continuous innovation, originality, and quality of the
products, while remaining faithful to the tradition of the brand.54
51 Veach, Emily.2011. "VibramGains Foothold in China; Italian solemaker builds $20 million center for testing,
design; Will barefoot-runningtakeoff?" The Wall Street Journal, February 28: n/a.
52 Veach, Emily.2011. "VibramGains Foothold in China; Italian solemaker builds $20 million center for testing,
design; Will barefoot-runningtakeoff?" The Wall Street Journal, February 28: n/a.
53 Veach, Emily.2011. "VibramGains Foothold in China; Italian solemaker builds $20 million center for testing,
design; Will barefoot-runningtakeoff?" The Wall Street Journal, February 28: n/a.
54vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.
17. 16
Conclusion
The balanced scorecard was created by Robert Kaplan and David Norton in 1992 for the
purpose of aligning business activities with the vision and strategy of an organization, to improve
communication both internally and externally, and monitor an organizations performance against
its strategic goals. Organizations utilize the balanced scorecard as a strategy to improve upon
learning and growth, internal processes, customer relations, and financial objectives.55 The
advantage of and organization utilizing the balanced scorecard is the provided ability for
companies to review their performance and outcomes outside of the financial statements and
operational budgets. Companies that use the balanced scorecard should be mindful of its
potential pitfalls. By using an organizations strategic plan from the balanced scorecard and
integrating them directly into work related tasks, the balanced scorecard creates rules on how an
organization operates. Adding a more rigid approach in the control of work routines, limits the
employees options for participating in job related decisions. This potentially weakens the
relationship and commitment between and employee and an organization to which it is
employed.56
As a 75 year old company, Vibram has established itself as a global leader in high
performance rubber soles. It revolutionized the footwear apparel industry by creating rubber
soles for shoes. Vibram makes soles targeted to the outdoor, work, recreation, fashion, repair
and orthopedic markets.57 Vibram’s contract partners are well known shoe companies like
55
Ken Ogata, Gary Spaakman. 2013."A Balanced Scorecard for Maple Leaf Consulting." Accounting Perspectives
328.
56 Antonsen, Yngve. 2014. "The downside of the Balanced Scorecard:A casestudy from Norway." ScienceDirect,
August: 40-50.
57 vibram.com. 2012. Vibram: History. Accessed 06 07, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-History.
18. 17
Prada, Tods, Armani, Dolce & Gabbana, and even the United States Military. Known for
quality, performance, safety, innovation and design since revolutionizing the sport of mountain
climbing in the ‘30s with the creation of the first rubber sole, Vibram has positioned itself as the
market standard.58
Vibram’s mission statement and vision statement are what is used to create their balanced
scorecard. Vibram’s mission, “Looking to the future while respecting the past” states it purpose
is: “To develop the brand through continuous innovation, originality, and quality of the products,
while remaining faithful to the tradition of the brand.”59 Vibram’s vision statement is “To
maintain and strengthen our leadership in the active lifestyle market with reliable, high quality,
high performance products.”60 Its mission and vision statement are the perfect summary of
Vibram’s business goals and objectives for the balanced scorecard.
Under the four measurements of the balanced scorecard Finance, Customer Relations,
Internal Controls, and Learning and Growth, Vibram has positioned itself in the market to
continuously meet its performance objectives, and to improve upon the brand despite any
obstacles.
58
vibram.com. 2012. Vibram: History. Accessed 06 07, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-History.
59
vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.
60 vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.
19. 18
Vibram’s financial performance for the sales of the “Five Finger” shoes doubled to $100
million in 2010, but by 2014 as a result of the lawsuit, sales of the minimalist “Five Finger”
shoes fell tremendously by one-third, according to data tracker SportsOneSource.” 61
Vibram’s internal processes takes into consideration the supply chain method in getting
one of their “Five Finger” shoes to the end user or customer. Vibram excels at satisfying clients
and shareholders with continuous efforts on research and development and ensuring that each
new Vibram product is designed using only the latest designs and the best compounds for its
specific use. Every time a sole is produced there are always three objectives in mind; to
guarantee the best performance, the maximum level of comfort, and the maximum level of
quality over time. These objectives are realized by the stringent tests that are executed in the
laboratory and in the field by the Vibram Tester Team.”62
Having a good quality product is beneficial for strengthening customer relationships.
Customer relations and creating product value are crucial for an organization to reach the
financial objectives set in the balanced scorecard. When Vibram’s “Five Finger” shoes were in
high demand, the company encountered problems with counterfeiting and replicas. After some
investigating, it was revealed that more than 100 websites were actively selling fake Vibram
“Five Finger” shoes63. For customer satisfaction and damage management, Vibram reached out
to customers who had been scammed offering 50% discounts on real “Five Fingers” shoes while
launching an aggressive online campaign providing lists of authorized “Five Finger” dealers
including warning tips and information on how to spot the fakes.
61
Germano, Sara.2014. "The Wall Street Journal." Corporate News: Vibram to Drop Health Claims, May 8: B.6.
62
—. 2008.Vibram: History. Accessed 06 07, 2014. http://www.vibram.com/index.php/us/VIBRAM/About-Us/The-
History.
63 Alsever, Jennifer. Inc.. Mar2012."When Vibramcouldn'tmeet demand for its hot new shoes, counterfeiters
stepped in." Tactics. Trends. Best Practices. Strategy Vol. 34 Issue2, p87-89. 3p.
20. 19
Learning and growth is another measurement tool in the balanced scorecard used by
companies. Vibram has grown its business and expanded its operations into the United States
and China from Italy. Vibram created a compound in Huadu, in southern China's Guangdong
province, that sits on 42,000 square meters of land and includes offices, hospitality facilities,
dormitories and a technological center. The compound was created to test products in
production, and one test involves romping around in a pit of mud before climbing one of the
many surfaces on ramps and hydraulic lifts, in order to determine how well a sole cleans itself.”64
The balanced scorecard is a tool that many organizations rely upon to develop a strategy
creating objectives and goals. Vibram, a company that invented the rubber sole for shoes,
eventually became known as the company to create the “Five Finger” shoes, gaining mass appeal
and recognition for revolutionizing and changing the perception on how shoes should be worn.
Vibram successfully fulfilled its mission of developing the brand through continuous innovation,
originality, and quality of the products, while remaining faithful to the tradition of the brand, and
the balanced scorecard was just a tool to see it through.65
64 Veach, Emily.2011. "VibramGains Foothold in China; Italian solemaker builds $20 million center for testing,
design; Will barefoot-runningtakeoff?" The Wall Street Journal, February 28: n/a.
65vibram.com. 2008. Vibram, About Us, Vission and Mission. Accessed June 19, 2014.
http://www.vibram.com/index.php/us/VIBRAM/About-Us/Vision-Mission.