Question

Delictrends Ltd buys T-shirts in bulk, applies its own trendsetting silk-screen designs and then sells the T-shirts to a number of retailers. Delictrends wants to be known for its trendsetting designs, and it wants every teenager to be seen in a distinctive Delictrends T-shirt. Delictrends presents the following data for its first two years of operations, 2018 and 2019:

2018?1. Number of T-shirts purchased 215 000? 2. Number of T-shirts discarded 15 000 3. Number of T-shirts sold (row 1 - row 2) 200 000 4. Average selling price $30.00 5. Average cost per T-shirt $15.00 6. Administrative capacity (number of customers) 4 500 7. Administrative costs $1 633 500  8. Administrative cost per customer (row 7 , row 6) $363

2019?1. Number of T-shirts purchased 245000 2. Number of T-shirts discarded 20000 3. Number of T-shirts sold (row 1 - row 2)225000 4. Average selling price $31 5. Average cost per T-shirt $13 6. Administrative capacity (number of customers) 4250 7. Administrative costs 1593750 8. Administrative cost per customer (row 7 , row 6)375

Administrative costs depend on the number of customers that Delictrends has created capacity to support, not on the actual number of customers served. Delictrends had 3600 customers in 2018 and 3500 customers in 2019.

1. Identify the strategy that management at Delictrends has adopted and explain your answer briefly.

2. Describe briefly the key elements that management should include in its balanced scorecard for Delictrends, and give reasons for doing so.

Answer 1

Delictrends Ltd strategy is to buy T shirts in bulk, then applies their own trendsetting designs, and sells them to a number of retailers. Since, a T shirt which is designed by Delictrends Ltd is highly distinctive, it attracts the more number of teenagers. But Delictrends Ltd, does not involving in selling multiple products but only T shirts. Hence, Delictrends Ltd is following one the product differentiation strategies.

Possible key measures Delictrends Ltd should include in its balance scorecard.

Delictrends Ltd uses financial perspective and therefore, average cost per T shirt has been reduced to $13 from $15 and number of T shirts purchased and discarded has been increased in 2018. Delictrends Ltd is weak customer perspective as number of customers has been declined to 4,250 from 4,500.