EVA is a superior financial measure compared to other financial measures, such as Return on Investment. We recommend Coors to use EVA in combination with the non-financial measures from the BSC project. Furthermore, we recommend the BSC to be drilled at functional unit level, to. ensure that the performance measures are understandable and controllable for each employee. However, we suggest that EVA should not be used at a lower functional level as employees might not understand the concept of economic profit. For example, a production line supervisor can be measured against the load scheduling and load accuracy performance measures. EVA can be used to analyze the success of higher level management. In summary, BSC if implemented correctly, translates Coors strategy into a comprehensive set of performance measures that provides the framework for implementing its strategy successfully throughout the company.
Exhibit 1: Benchmarking analysis
Exhibit 2: Key performance measures
Table 1: New performance measures and initiatives for effective & operational BSC for Coors
Table 2: EVA Adjustments EVA adjustments | | | | Capital | Income | Advertising Costs - 3 year life | 900 | 300 | LIFO reserve | 45 | 3 | Deferred income Tax liability | 65 | 10 | Capitalization of operating leases | 30 | 5 | Net interest expense | 0 | 12 |