Category: Balanced Scorecard

Introduction

Business environments (internal and external) have been changing constantly especially in the 21^st century. The effects of these changes are being felt across various business sectors regardless of their size, location, and market or maturity level.

Apparently, the 21^st century has brought forth many challenges and opportunities and industries are starting to examine new strategies to enable them overcome these challenges as they embrace new opportunities (Nørreklit 2000, p. 65).

The management team at Rainbow Lighting Ltd is in a quagmire because the company seems to be attracting numerous challenges amidst the changing business environment.

The company is experiencing numerous problems across the various departments, which are threatening the business performance. To begin with, the production department is operating under capacity owing to the short production hours.

In addition, the department lacks the necessary mechanism to ensure that their products adhere to quality and safety standards before they are released into the market as evidenced by the latest incident with Everlasting Halogen Spotlight (EHS) bulb.

The marketing and sales department is a lagging behind in its mandate and even the rare promotional activities are executed without proper market information.

For instance, an attempt by the marketers to position domestic market bulbs through packaging modification and subsequent price increment lead to a huge sales decline.

Furthermore, customer satisfaction survey indicated that domestic bulb consumers were unsatisfied with the product quality and pricing, while industrial consumers were not confident about product quality though prices were reasonable.

Moreover, wholesalers are complaining of late deliveries and most of them opt for supplies from competitors. Employee satisfaction survey revealed that employee motivation was at its lowest leading to high staff turnover and poor product quality.

Consequently, the above problems have impacted negatively on the company’s financial performance leading to a reduction in operating profits and negative Return on Capital Employed.

Theory, aims and structure of the Balanced Scorecard

Following Rainbow Lighting Ltd poor performance, Eindnacht GmbH senior management has issued the management an ultimatum to turn around the company in the next two years or face dire consequences. During the management meeting, the managing director revealed that senior management advisor had recommended that they consider implementing the Balanced Scorecard concept into the company.

According to Figgie et al. (2002, p. 262), performance measurement has become a necessity because it enable managers to understand how a business is performing, and it also enables business to improve their performance.

Against this background, Robert Kaplan and David Norton developed the Balanced Scorecard in 1992 aimed at facilitating the performance measurement surveys within organizations (Nørreklit 2000, p. 67).

The theory behind the development of BSC was based on the fact that, following the implementation of a performance measurement system, an organization would be able to serve its customers, owners, employees, and stakeholders in a better way, thus leading to a promising financial performance (Figgie et al. 2002, p. 265).

Atkinson (2002, p. 1445) perceives BSC as a report card that provides business manages with information on the positive and negative aspects of their business. Moreover, Chia and Hoon (2000, p. 5) explain that a BSC aim is to enable organizations to plan, measure and control their performance based on a pre-defined strategy in order to achieve the desired results.

Traditionally, performance measurements have often focused on financial measures while ignoring the contribution of non-financial measures to the organizations performance.

On this note, the BSC model measures performance based on four different perspectives – a financial perspective (return on capital employed, economic value-added, operating income, etc) , an internal business process perspective (employee satisfaction, new product development ), a customer perspective (customer satisfaction, new customer acquisition, customer loyalty, customer profitability etc.), and a learning and growth perspective (skills improvement, IT system overhaul ) (Chia & Hoon 2000,p.2).

Accordingly, the BSC utilizes the various perspectives to achieve a balance between leading and lagging performance measures thereby the managers are able to grasp the negative and positive aspects of an organizations performance Atkinson (2002, p. 1445).

Literature review

Since its inception, the BSC system has gained tremendous popularity with most organizations adopting its tenets globally. Contrastingly, empirical evidence on the impact of BSC and performance systems in general is extremely rare (Atkinson 2006, p. 1442).

The latter author explains that a great number of extant literatures have tended to focus on exploring the shortcomings of traditional performance measurements systems as well as designing alternative measurement methods to overcome this drawbacks (Ahn 2001, p. 455).

As a result, whereas most researchers have carried out empirical studies on design and deployment of existing performance measurement systems, most have eschewed from investing the impact of these systems on the organizations (p. 456).

Benefits of BSC system

Chia and Hoon (2000) carried out a study on BSC procedures, BSC perspectives and implementation among major firms in Singapore. The results of this empirical study established that by adopting BSC systems, firms were able to clarify their vision and implement the necessary mechanisms to facilitate the practice of BSC performance measurement systems (p. 10).

Similarly, Hoque and James (2000) carried out an empirical study among 66 Australian manufacturing companies that had implemented BSC system.

The firms reported that organizational performance which was assessed based on ROI, capacity utilization, sales margin, customer satisfaction and product quality relative to competitors showed a positive improvement and the above parameters exhibited a positive causal-effect relationship (p.12).

Ahn (2001) research was designed as a case study of a strategic business unit which was carried out within a product supplier organization. The above study established that through the implementation of a BSC, firms were able to realize the targeted performance goals.

In addition, BSC was cited to be a comprehensive management tool that enabled the firm to achieve numerous management benefits such as successful strategic communication, effective planning and budgeting of firm’s strategic plans and improved company control (p. 458).

Olson and Slater (2002) administered over 200 questionnaires to senior managers in manufacturing and service firms to establish their recognition of BSC implementation. The respondents in this study affirmed that BSC implementation led to improved performance in financial, learning and growth, internal business process and to a greater extent the customer perspective (p. 15).

Similarly, Papalexandris et al. (2004) study also elicited similar results whereby the implementation of BSC in a Greek software firm had showed considerable progress of financial, customer, learning and growth and internal business perspectives (p. 363). This brief literature review indicates that BSC is a beneficial strategic management tool that enables firms to achieve their performance measurement goals.

It is important to note, BSC has been adopted in numerous business fields including e-business, small and medium size manufacturing firms, IT firms, airport management firms among others, thus the results of BSC benefits can be generalized across most industries (Papalexandris et al.2004, p. 394).

Limitations of BSC

Notwithstanding the numerous benefits associated with BSC measurements, various existing literatures have established great deficiencies associated with this concept. BSC has often been praised for its ability to capture causal-effect interrelations among the financial and non-financial elements and their effect on an organization’s performance.

However, Nørreklit (2000) claims that Kaplan and Norton did not discuss the causal relationships explicitly in their earlier publications (p. 70). In his criticism, Nørreklit (2000, p. 71) pointed out that the causal-effect relationship discussed by Kaplan and Norton does not take into account the aspect of time thus making the interrelations subjective than objective.

In addition, Nørreklit is doubtful about whether the causal interrelations between the various BSC perspectives are ever present in all business situations. For instance, Kaplan and Norton claimed that increased customer satisfaction and loyalty would translate to increased financial revenues.

However, Nørreklit (2000, pp.73-74) disagrees by expounding that such a connection is not always obvious especially in a situation whereby clients demand high quality but make insignificant purchases; thus the organizations end up generating little or not profit at all.

Secondly, BSC has been criticized for its inability to capture business external environment elements such as SWOT analysis, PEST analysis and Benchmarking which are considered vital to operation performance (Simons et al. 2002, p. 56).

Evidently, BSC only consider shareholders and clients, ignores the role of important interest groups such as competitors and their impact on business performance (p.57).

The latter author argues that the fact that BSC structure does not take into consideration important external environment elements is a great shortcoming because businesses do not operate in isolation of elements such as cooperation partners and suppliers (p.58).

On the same note, Kanji and Moura (2002) faulted the BSC top-down approach arguing that it is not ideal methodology mainly because hierarchical decision set-up does not encourage employee participation in decision making (p.20).

This perception can also be supported by Beardwell and Holden (2007), argument that firms that utilize hieratical decision making set-up are likely to experience employee motivational problems leading to reduced productivity (206).

Conditions for implementing BSC

Evidently, Kaplan and Norton have explicitly expounded on methodological execution of a BSC. Their description point out that effective implementation of BSC is only plausible in large companies due to the extensive demand for human resources.

Noticeably, Olson EM, Slater (2002) identifies this methodological demand as a grave shortcoming of BSC in that unstable organizations are unlikely to realize the perceived benefits of BSC (p. 12). However, Figgie et al. (2002) is of the opinion that since Kaplan and Norton did not describe the necessary conditions that organizations ought to fulfill prior to implementing BSC system, hence it must be universally applicable.

Nonetheless, BSC is mostly effective if implemented in organizations that operate in less volatile environments (p. 272). The latter author explains that organizations in highly volatile environment tend to alter their strategies frequently, thus they have to keep changing the BSC perspective measures.

This implies that the said companies are unable to ascertain the effects of BSC measures due the constraints of time. On this note, since Rainbow Lighting Ltd operates in a stable business environment, it is easier to conduct a performance measurement based on BSC perspectives.

Balanced Scorecard for Rainbow Lighting Ltd

From the case study, Rainbow Lighting Ltd senior management has insisted that the firm must record an 18% return on capital employed in the next two years. Consequently, in order to realize increased revenue and profit margins, the management must first focus on achieving high customer satisfaction levels.

Prior studies on customer satisfactions established a directed cause-effect relationship between customer satisfaction, customer loyalty and financial results. This existing literature indicated that whenever an organization cultivates good customer relationship with its clients, their sales are likely to increase leading to increase revenue and profits (Armstrong 2009, p. 122).

On the same note, both domestic and industrial customers are not confident about the quality of bulbs, thus improving product quality will reduce customer complains. Ahn (2001, p. 457) explains that reduced customer complains can be interpreted to mean that customers are satisfied with the product quality.

The relationship between customer satisfaction and customer loyalty has been studied widely, and studies results concur that customer satisfaction cultivates customer loyalty (Seal et al. 2009, p. 126).

In addition, satisfied customers’ acts as product referees through word of mouth advertising, in turn, market share for both domestic and industrial bulbs will expand leading to increased revenue and profit growth.

According to Porter et al. (2008, p. 186), most consumers are concerned about product quality. However, product quality seems to be a major setback at Rainbow Lighting Ltd. The recent survey indicated that both domestic and industrial consumers did not trust the effectiveness of the organization’s bulbs.

Low employee motivation level is partly to blame for the poor quality product and delays in process cycle. The learning and growth perspective in the designed BSC is concerned with improving employee satisfaction through training and open communication.

Similarly, Seal (2011, p. 104) underscores a trained workforce brings extra benefits to an organization because it strengthens professionalism. Consequently, professionalism reduces process cycle times leading to improved process, improved on time delivery and only a few defects reach the consumer (p.106).

From the case study, the proportion of rejected bulbs has increased tremendously over the last three years. Thereby by increasing hours dedicated to in-house training per employee, the cost of wastage due to the high number of rejected bulbs will be greatly reducing, thus increasing to increased revenue and profit growth.

Existing literature on BSC indicates that performance measures are inter-linked on a causal-effect model such that changes in one aspect will bring changes to other aspects along the BSC strategy map (Atkinson2006, p. 1450).

For this reason, Rainbow Lighting ought to recognize that most of its problems are caused by low employee motivation, thus they management should begin its process overhaul by ensuring employee motivation is increased to the maximum possible level.

Hoque 2000 (p. 4) highlights that if firms are to achieve impressive financial results, they ought to provide value to their customers by improving their internal process to match consumer demands. Evidence from the case study indicate that innovation is almost dormant at Rainbow Lighting Ltd, thus the firm should align its internal process towards promoting R &D of new bulb designs.

Behavioral considerations for implementing a new management system

In order to align its current financial perspective strategy to the identified performance measures, Rainbow Lighting Ltd out to carry out some behavioral changes to facilitate the implementation of BSC system.

Having realized that learning and growth perspective is the core of BSC system, human resources management must implement the necessary mechanisms that would encourage employee participation in decision making. To begin with, although BSC advocates for a hierarchical decision making model, managers at Rainbow must encourage open communication between management and employees.

This will ensure that the identified problems are solved promptly. For instance, one of the customer perspective measure is to reduce customer complaints and to ensure an on-spot solution for the received complaints. This can only be achieved if proper communication channels are established to ensure timely intervention of customer complains.

In addition, constant communication of organizational goals as well as the results of performance measurements is vital to promote employee satisfaction. Evidently, employees’ morale is likely to be improved if management recognizes their important contribution towards the achievement of organization’s vision and strategy.

Besides the production bonus that is currently issued to top performers, Rainbow can encourage innovations by introducing a new bonus for innovative employees.

Obviously, the identified goals are not achievable without effective team participation. As evidenced above, performance measures in the BSC are interlinked in causal-effect relationship; therefore, teamwork is necessary to ensure that all departments and employees are aligned towards the achievement of desired financial goals.

References

Ahn H (2001) Applying the balanced scorecards concept: an experience report. Long Range Plan, 3(44): 441-461.

Armstrong, M. 2009. Armstrong’s Handbook of Human Resource Management Practice (11th edn.). London: Kogan Page.

Atkinson, H. 2006. Strategy implementation: a role for the balanced scorecard?. Management Decision, 44(10):1441 – 1460.

Beardwell, I. & Holden, L. 2007. Human Resource Management (5th edn.), Torrington: Hall and Taylor

Chia A & Hoon HS (2000). Adopting and creating balanced scorecards in Singapore- based companies. Singap. Manage. Rev., 22 (2):1-15.

Figgie, F. et al. 2002. The sustainability balanced scorecard – linking sustainability management to business strategy. Business Strategy and the Environment, 11(1): 269-284.

Hoque Z. 2000. Linking balanced scorecard measures to size and market factors: impact on organizational performance. J. Manage. Account. Res., 12(1): 1-15.

Kanji, G.K. & Moura, P. S. 2002. Business Scorecard. Total Quality Management, 13(1):13-27.

Nørreklit, H. (2000). The balance on the balanced scorecard–a critical analysis of some of its assumptions. Management Accounting Research, 11 (1): 65-89.

Olson EM & Slater SF (2002). The balanced scorecard, competitive strategy, and performance. Bus. Horizons., 45(3):11-16.

Papalexandris A, Loannou G & Prastacos GP. 2004. Implementing the balanced scorecard in Greece: a software firm’s experience. Long Range Plan, 37(4): 351-366.

Porter C, Bingham C. & Simmonds, D. 2008. Exploring Human Resource Management. Berkshire: McGraw Hill.

Seal, W. 2011. Management Accounting for Business Decisions. Berkshire: McGraw Hill

Seal W., Garrison, R & Noreen, E. 2009. Management Accounting (3rd edn.). Berkshire: McGraw Hill

Simons, R. Dávila A. & Kaplan, RS. 2000. Performance Measurement and Control Systems for Implementing Strategy. New York: Prentice Hall.

Introduction

New businesses are established with a clear objective. It is the desire to achieve this goal that drives the company in performing its day-to-day activities. However, changes in market forces may make an organisation lose track.

That is why it is important to evaluate business performance on a regular basis. Balanced scorecard (BSC) is one of the strategies that can be used to carry out this assessment.

In this report, the author analyses an article addressing BSC among contemporary organisations. The article is by Nicholas Coe and Steve Letza. It is titled “Two Decades of the Balanced Scorecard: A Review of Developments”. A critical review of the article shows that BSC has undergone significant developments since inception.

The report is organised into four parts. In the first section, the author analyses the inception of BSC as discussed by Coe and Letza (65). The second section touches on the development of the concept over the decades.

The third part examines BSC in the context of modern organisations. The last section will be a review of a case study by 2GC, a consultancy firm. The case study will highlight the application of the third generation balanced scorecard.

Inception of the Balanced Scorecard

According to Kaplan and Norton, the BSC is a strategic planning and management system used by both profit and non-profit organisations. It is used to align business activities to goals and objectives. It is grouped into three generations. They include the first, second, and third generations.

The BSC was originally a study of performance measurements. Dr. Robert S. Kaplan and Nolan-Norton were the figures behind the development of the concept. In 1996, the two researchers published a book titled “The Balanced Scorecard”. The concept was refined and published in another book, “The Strategy Focused Organisation”.

Over the years, BSC has evolved from a simple performance measurement tool to a strategic planning and management system (Kaplan and Norton 170). In the article, Coe and Letza state that the first generation of BSC adopted a four perspective approach to keep track of the implementation process (70).

Financial approach is the first perspective. It involved identification of high level financial measures like sales growth, operating income, and cash flow (Lawrie and Cobbold 620). In addition, it was used to provide information on how the company presented itself to shareholders.

The next perspective involves customer approach. In this case, the firm can access information on how customers perceive its products (Coe and Letza 65). Examples include rankings by customers. Third is internal business processes. Every organisation wants to excel in its business.

The major question that managers have to address is how to achieve this success. The approach is used to solve the puzzle (Lawrie and Cobbold 615). Finally, there is learning and growth. After growth, the organisation needs to improve and innovate. The management applies the last strategy to develop new products.

The four approaches can be summarised by evaluating financial performance, satisfaction, efficiency, and knowledge.

Development of the Balanced Scorecard

Organisations follow different paths in building a BSC (Kaplan and Norton 169). As Coe and Letza put it, the first generation BSC was widely accepted (70). It was used by over 50% of firms in the USA.

The second generation was designed to tackle the practical difficulties associated with the first version. Consequently, Coe and Letza observe that the second generation BSC evolved from a measurement to a management system. It accurately reflected organisational goals.

More effective measures were put in place to improve the tool. The undertakings led the third generation of BSC (Lawrie and Cobbold 615). The flaws in the second version were addressed through the introduction of destination statement. The statement is a design process used to check for objectives, visions, and missions.

It highlights the major issues that have been addressed at a given time. For the statement to be efficient, it has to be simple and easy.

Modernisation of the Scorecard

A successful project needs to be expanded to give room for innovation (Kaplan and Norton 174). The BSC was developed around twenty years ago. Since then, there have been advancements in technological, political, and environmental fronts. Coe and Letza state that it is important to modernise the tool to tackle these concerns (65).

Examples of modernisation approaches include making BSC part of social responsibility undertakings. Another reason to modernise is that non-profit organisations continue to play a major role in the modern society. The goals of these entities are different from those of other establishments. As such, BSC needs to be tailored to their needs.

A Case Study of 2GC and Modernisation of the Balanced Scorecard

Founded in 1999, 2GC is a firm dealing with performance measurement issues encountered by modern organisations (Coe and Letza 65). The solutions provided by this entity include implementation of the third generation BSC. The major goal of the organisation is to help entities meet their strategic goals.

Technology has enabled 2GC to develop software to achieve its objectives. Methods of data collection and analysis are simplified. In addition, storage is unlimited. The software is also customisable.

The approach used in 2GC involves three stages or workshops. They include destination statement, strategic planning, and objective planning. After this is accomplished, the plan is validated, measured, and implemented.

Conclusion

The article by Coe and Letza shows that BSC has become one of the most influential management ideas used by modern organisations (66). It has evolved significantly over the years. The evolution shows that it is an effective strategy used to achieve the objectives of a firm.

The third generation BSC is customised to cope with technology, social and political changes. 2GC illustrates modernisation of the tool. The company takes advantage of the time consuming process of strategic planning. They consult with clients for strategic alignment and goal setting.

The aim is to make sure the plans are effectively implemented.

Works Cited

Coe, Nicholas, and Steve Letza. “Two Decades of the Balanced Scorecard: A Review of Developments.” Poznan University of Economics Review 14.1 (2014): 63-75. Print.

Kaplan, Robert, and David Norton. “Having Trouble with Your Strategy? Then Map It.” Harvard Business Review 78.5 (2000): 167-174. Print.

Lawrie, Gavin, and Ian Cobbold. “Third-Generation Balanced Scorecard: Evolution of an Effective Strategic Control Tool.” International Journal of Productivity and Performance Management 53.7 (2004): 611-623. Print.

This paper reviews developments in the balanced scorecard (BSC) since its inception in the year 1992. The BSC has become one of the most popular performance measurement tools and mechanisms for executing business strategies among senior executives and managers globally.

The BSC was developed by Kaplan & Norton to solve the industry-wide challenge of performance measurement. It incorporated four diverse elements to create overall performance tool. These were mainly financial measures, operational measures, internal processes and innovations.

These perspectives focused on areas that an organisation could improve, create value on, excel at and shareholders and customers’ views.

Although the original BSC was widely accepted, it was never perfect. Its measures, for instance, could not accommodate all measures as demonstrated by Rexam Custom Europe in 1996. In addition, Kaplan and Norton had stated that vision and strategy was the core of the BSC.

However, it was difficult to relate the measures with overall strategy of a company. Hence, results from the BSC were always segregated.

In 1996, Kaplan and Norton showed that the BSC introduced four management processes that enhanced the relations to long-term strategic objectives with short-term actions. Between 1996 and 2000, Kaplan and Norton started to address some challenges identified in the existing model.

The initial stage involved explaining the vision to assist executives to create agreement and comprehend institutional vision, strategy and corporate goals. Consequently, they could communicate such long-term strategic goals to all employees.

Employees could see their individual performance and contributions against their organisational strategies. Second, the business planning strived to establish milestone and targets and then it aimed to align strategic incentives with targets.

Lastly, managers could monitor and evaluate employee performance through feedback and learning perspectives of the BSC.

In 2000, Kaplan and Norton released an article that showed a clear link between strategy and perspectives based on mapping. Through mapping, the strategy map linked various items of organisational BSC into a cause-and-effect relationship to show preferred outcomes alongside their drivers.

Given the constant improvements, the BSC has become easier to implement and is equally astute. Mapping, for instance, ensures creation of logical links to demonstrate relations between measures.

For instance, employee training affects customer satisfaction, which in turn improves customer loyalty and increases the overall financial performance.

Although notable improvements have been noted, the BSC has continued to be rigid with regard to design. On this note, Kaplan and Norton had clarified that organisations have unique attributes and thus could follow their own methods to create BSC.

Currently, the four elements of the BSC are widely used, but with greater flexibility and slight changes in names. Some organisations, for instance, refer to ‘Internal Business’ as ‘Internal Process’. In addition, the issue of shareholders has raised new questions as public sector organisations have started to adopt the BSC.

A study conducted in 1996 in three companies in Europe showed marked variations in designs of the BSC. It is imperative to note that these developments show changes in the BSC as a simple, detached performance measurement tool to a superior model for critical managerial processes, which account for the entire firm.

Earlier implementation challenges have been addressed while allowing users to have flexibility in their designs.

Some researchers have categorised the BSC modernisation into three distinct generations. The first generation of the BSC was noted during its inception in 1992 and subsequent implementation. The second generation included articles and books that focused on addressing challenges noted during the implementation of the BSC.

The final generation aimed to refine and improve upon the second generation with additional new components to enhance functionality and strategic importance.

The BSC has realised some notable developments by the year 2000. For instance, it has been widely adopted in both not-for-profit and public sector organisations. Meanwhile, the BSC has also improved in terms of design, specifically the destination statement.

Destination statements appeal to executives to review consequences of strategic objectives on a firm. Another significant development was marked when BSC moved away from its four strict perspective elements to accommodate new organisations from not-for-profit and public sectors.

These organisations require careful choices of headings for different categories because they do not focus on financial results or shareholders’ returns. Instead, they require headings such as ‘activity’ and ‘outcome’ objectives that relate to relevant perspectives to account for other perspectives.

Activity perspectives substituted learning and growth and internal process perspectives, whereas outcome perspective substituted financial and customer perspectives.

The fundamental principles of the BSC have always remained notwithstanding new developments for the last two decades.

The witnessed developments in the BSC have also happened at the same time with the rise in technologies. For the last two decades, these developments have coincided and as a result, the BSC has acquired new dimension in software.

Analytical software can be customised and programmed to gather, summarise and present data that relate to the BSC. IBM Cognos Business Intelligence software, for instance, has customised BSC analytics that can generate BSC reports, perform analysis and send information to all workers.

Consequently, managers can respond immediately to alerts because delays that resulted from financial perspectives were reviewed.

It would be interesting to understand the future of BSC. Although there are four types of scorecards, currently, organisations use just one type. They all have performance measures and outcomes and implementation of scorecards could result in variations and specialisation in subsequent years.

In conclusion, since the development of the BSC in 1992, it has received global acceptance.

However, during the development of the BSC, which has reached both not-for-profit and public sector organisations, the BSC has experienced some challenges because of its rigid model, which was designed for profit-making organisations.

Nevertheless, the BSC has been revised to accommodate such challenges and has become extremely popular with senior executives in all types of institutions in the last two decades. Analytics software has improved the robustness and performance of the tool.

These developments have changed the BSC into a robust performance measurement tool, which is effective for all types of organisations globally.

Introduction

First developed by Robert Kaplan and David Norton at Harvard University, the Balanced Scorecard BSC approach has become a major method for corporations to improve their performance, with studies indicating that more than 66% of the companies that implemented the approach realized a significant increase in profitability (Kaplan & Norton, 2011).

In addition, a number of local governments, military and national civil organizations have been using a BSC approach to improve their performances. In the UAE, Emirates National Oil Company (ENOC) is one of the best examples of corporations that are applying the BSC to set its goals and achieve the desired objectives.

The company has rolled out several programs to apply BSC in line with its goals and objectives with an aim of promoting human capital development by focusing on the young UAE nationals with their careers for the better future. The company started adopting the concept of BSC in 2009 on a number of levels, with about 35 scorecards implemented in all business units.

According to analysts, the company has attained some impressive milestones with BSC. For instance, customer satisfaction, enhancing efficiency in operations and promoting Emiratization is some of the significant outcomes of the approach.

Nevertheless, a comprehensive understanding of the outcomes of using BSC need be studied every year to determine the progress. There is a need for additional studies show how the company has achieved the desired goals using the BSC.

The results of the study are applicable not only in academics, but also in management and policy making in order to provide analysts, policy makers and corporate leaders utilize the information to enhance the quality of their professional decisions.

Aims and objectives

The purpose of this study is to develop a comprehensive analysis of BSC application and use at ENOC. The research uses a qualitative approach to describe the level of outcomes of BSC at the company since the approach was adopted in 2009. The research aims to interview some professionals and executive individuals at the company in order to determine the level of BSC as well as the outcomes of the approach.

Key Research questions

• What strategies has ENOC employed in applying and using BSC?
• What are the corporate expectations of using the BSC
• At what levels are BSC approach applied at ENOC?
• What are the outcomes of using ENOC in terms of corporate performance?

Review of literature

Although it is a recent approach, balanced scorecard has become popular with most organizational leaders in the modern context. By definition, the BSC is a methodological tool composed of a set of both financial and non-financial measures regarding to the success factors of a given company or organization (Kaplan & Norton, 2011). It reflects that need for strong and effective organizational activities used to create value.

Since its development, BSC has widely been studied from a practical perspective where case studies are used to examine its effectiveness as well as differences in corporate performance between the organizations that adopt and those that fail to adopt the concepts of BSC (Akkermans & von Oorschot, 2002).

In addition, it has been studied by examining the differences in performance or outcomes between the departments that adopt and those that fail to adopt the concepts. From these studies, a number of observations have been made, most of which provide a clear indication that BSC is an important tool in measuring and enhancing performance in organizations.

According to Ashurst and Doherty (2013), it has been shown that BSC ensures that strategic initiatives that follow best practices are cascaded throughout the entire organization, which helps in increasing creativity and other ideas that are not expected prior to the adoption of the concept.

The author further indicates that BSC helps organizational leaders to overcome three foundational problems that cause challenges in the work of management- performance measurement, strategic implementation and rise of intangible assets.

According to Kaplan and Norton (2010), the traditional methods of measuring financial performance fail to reflect critical aspects of the modern business environment and fails to encourage thinking on a long-term basis.

Thus, BSC is set to deal with this problem. Secondly, it has been shown that intangible assets have the capacity to create more than 75% of the value that organizations achieve per given time (Kaplan & Norton, 2010). With the traditional methods, it was not possible to measure and use these assets.

On the other hand, the concept of BSC is effective in providing the metrics required to measure and use these assets effectively (Abushaia & Zainuddin, 2012).

Moreover, BSC deals with the problem of successfully implementing strategies by working with vision, people and management of resources and barriers to development. In this context, BSC helps in measuring the strategy and the process of executing the strategy. It describes the strategy in s consistent manner throughout the company (Kaplan, Norton & Horvбth, 2006).

According to Inamdar, Kaplan and Bower (2012), BSC articulates how an organization creates value for its owners or shareholders by displaying the key priorities as well as relationships between the outcomes and the factors that enable performance. In other words, it displays the relationships between cause and effects in an organization in order to measure performance and create value for the shareholders (Frost, 2012).

Methodology

Study design

A qualitative study was developed to examine the effects of balanced scorecard BSC at ENOC. In this case, ENOC was used as a case study in order to examine how organizations adopt the concept of BSC and the benefits that come along with the idea.

The idea was to interview leading corporate managers and leaders at the company in order to draw information from their experiences with the company and the concept of BSC used therein.

Study sample

The study focused on interviewing two managers at ENOC. The managers were chosen because they have been involved in the implementation and maintenance of the BSC concept since it was adopted in 2009.

Secondly, six employees were interviewed to determine their perceptions and experience with the idea of BSC at their workplace. The idea is to determine the outcomes of the BSC concept at the workplaces. The inclusion criterion was to interview individuals who had been at the company for at least 5 years since 2009.

Data collection

Interviews were used to collect information from the target corporate leaders and employees. Each interview took a maximum period of 15 minutes. Structured interview questions were used, with the interviewers playing the role of directing the mood of the discussion.

Results

Saeed Khoory, the CEO of ENOC, said that the company used the BSC to help it uphold the highest values across all the aspects of the organization.

In addition, the CEO said that using BSC was aimed at promoting excellence across all the entities by focusing on continuous improvement and adopting BSC as one of the best international tools for management. He further notes that the tool is a gold standard against which benchmarking of the company’s growth goals id done.

Salah Galadari, the director of business planning and performance management at the company, reported that adopting the BSC concept was aimed at streamlining the company’s strategic growth.

The six employees reported that they were satisfied with the new methodology because it encouraged them to work for the good of the organization as well as personal development as an employee. It provides them with an opportunity to be part of the organization process.

Conclusion

From the interview, it was found that ENOC uses several initiatives to implement BSC. The idea of Emiratisation program is developed and implemented through five levels that are supported by BSC- Mahaweb, Tadreeb, Ajyaa, Imtiaz and Tatweer. They focus on developing behavioral, managerial, professional and leadership skills for the national workforce.

The results indicate that BSC has huge benefits for the organization because it aids in aligning people, processes and resources towards enhancing production and performance. BSC has helped the company integrate employees, processes and customers in the vital focus on development and growth. Therefore, the company has attained some impressive milestones with BSC.

For instance, customer satisfaction, enhancing efficiency in operations and promoting Emiratization is some of the significant outcomes of the approach. The company uses balanced scorecard to articulate how it creates value for the government and the public by displaying some key priorities as well as relationships between the outcomes and the factors that enable performance.

References

Abushaia, J. A., & Zainuddin, I. (2012). Performance measurement system design, competitive capability, and performance consequences – A conceptual like. International Journal of Business and Social Sciences, 3(11), 184-193.

Akkermans, H., & von Oorschot, K. (2002). Developing a Balanced Scorecard with System Dynamics. Journal of the Operational Research Society, 12(2), 349-352.

Ashurst, C., & Doherty, N. F. (2013). Towards the formulation of “a best practice” framework for benefits realization in IT projects. Electronic Journal of Information Systems Evaluation, 6(3), 1-10

Frost, B. (2012). Measuring performance: Seven good reasons to use a scorecard. Performance perspective series, 3(2), 214-251.

Inamdar, N., Kaplan, R. S., & Bower, M. (2012). Applying the balanced scorecard in healthcare provider organizations. Journal of healthcare management/American College of Healthcare Executives, 47(3), 179-95.

Kaplan, R. S., & Norton, D. P. (2010). The balanced scorecard: translating strategy into action. Boston, MA: Harvard Business Press.

Kaplan, R. S., & Norton, D. P. (2011). Transforming the balanced scorecard from performance measurement to strategic management. Accounting horizons, 15(1), 87-104.

Kaplan, R. S., Norton, D. P., & Horvбth, P. (2006). The balanced scorecard. Boston, MA: Harvard Business School Press.

The current report presents a balanced scorecard for Spinner Pet Sitters. Based on the balanced scorecard and the company’s performance, the report also provides recommendations for Shelly to improve its performance in the coming years.

Balanced Scorecard for Spinner Pet Sitters

A balanced scorecard is a strategic management tool, which is used to align a business’ performance and activities with its mission, vision, and objectives. Based on the information provided in the case study, the following balanced scorecard is developed for Spinner Pet Sitters:

Recommendations for Spinner Pet Sitters

Keeping in view the planned and actual performance of Spinner Pet Sitters and the gaps identified in the balanced scorecard presented above, following recommendations have been put forward for Spinner Pet Sitters to improving its performance.

• The quarterly profits were reported to be above the targeted level, which is a positive sign for the company. However, in order to maintain the continuous growth in profits, the company needs to achieve higher efficiency in its operations. On the other hand, the return on capital employed was considerably lower than expected. In the coming periods, this could be improved by investing additional capital resources for enhancing the operational efficiency of the business.
• As far as the customer satisfaction rate and customer recommendation rate are concerned, the actual results show that all expectations were met during the quarter. However, it is recommended that the business should keep its focus on delivering high quality and practicing effective customer care to ensure sustainability.
• The efficiency level in the company’s processes should be improved in order to reduce the duplication of activities.
• Jobs should be enriched and job designs should be reconsidered to improve the overall job satisfaction level of employees.

Reference List

Balanced Scorecard Institute. (2013). Balanced Scorecard Basics. Retrieved from https://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard

Kaplan, R. S., & Norton, D. P. (1992). The balanced scorecard-Measures that drive performance. Harvard Business Review, 70(1), 71-79.

Appendicies

Balanced Scorecard

The balanced scorecard refers to the strategic planning and management system that is deployed widely in business institutions, as well as governments with the aim of aligning business operations to the vision as well as strategy of the organization, enhance internal and external communications, and examine organization performance in terms of attainment of strategic goals. (Halbleib, Wormington, Cieslak & Street, 1993).

Rich Picture

A rich picture refers to the process of finding out how to solve a problem situation and depict it through cartoon-like diagrams which are the initial mental representation of the situation.

The mnemonic “CATWOE” is effective in helping one remember with ease the elements of the rich picture: customers, actors, transformation, worldview, owner, and environment. The rich picture is characteristically developed before the analysis stage (Mingers, 2001; Dinesh & Palmer, 1998).

Below is a simple example of a rich picture, exhibiting CATWOE essentials for the process of making coffee:

Swot Analysis

SWOT analysis refers to a strategic planning method used to evaluate the strengths, weaknesses/limitations, opportunities, and threats involved in a project or in a business venture. It entails explicitly specifying the objective of the business venture or project and determining the internal and external factors that are favorable and unfavorable to achieve that objective (Ranch, 51 1979; Stubbs &Diaz 16, 1994).

Swot Analysis For Dairy Crest

Strength

By virtue of Dairy Crest being among the leaders in the field of dairy products, it can only mean that its reputation in the market place is a good one. This can be considered to be one of the strengths of the firm. When customers hold the products of a company in high regard, it can only mean that the company’s products are of a high quality hence the resultant reputation (Travis & Venable, 45 2002; Holt, 56 1999).

When customers like ones products because they are of a better quality, it implies that this particular organization will enjoy the lion’s share of the market provided it maintains the high standards of its products. Its competitors will have a hard time trying to eat into their market share as the firm will have established itself firmly (Howard, 1993; Turoff, 1975).

The other benefit that a firm can derive from having a good reputation is that its expenditure on advertising its products will be on the lower side since its products are well known in the market (Kelly, p.87 1955; Holt, 2000; Von Baeyer, p 88 2002).

This will be beneficial to the firm in that the resources that would have been deployed towards advertising the firm’s products would be channeled elsewhere like in research and development thereby enhancing the quality of its products while at the same time saving on costs (Checkland, p.669 1983; Machol, 1980).

Technological factors

Dairy Crest offers a wide range of dairy products to its customers. This can be considered as strength for the firm since the performance its performance will not be determined by the sale or lack thereof of a single or just a few products.

In case a single product is not performing well in the market in terms of sales, the stakeholders can rest easy with the knowledge that other products will cover for those that are not performing well in the market (McKenzie & Shilling, 1998; Pidd, 1999; Mangelsdorff et al, 1996).

The company manages a couple of robust brands in the UK dairy industry. They include: Clover, Butterfly, Cathedral city and Davidstow. Such strong brands enable the firm to maintain a reasonable level of sales without much effort (Liebl, 2002; Horn, 2001). Strengths:

• The demand profile for Dairy Crest’s products is not only fairly optimistic but keeps increasing with every passing day. This can be considered as strength since the firm will always find a market for its products.
• The firm offers a wide range of products to its customers. This flexibility of product mix allows customers to have access to a variety of products from which to choose from. This ensures that they stay loyal to the firm.
• The firm has deployed state of the art equipment to carry out the various processes involved in manufacturing or processing their end products. In addition to this, they have at their disposal highly skilled staff running the various departments within the firm. This will go a long way to ensure that the firm keeps innovating new products hence it can keep on adding to their product line.
• The fact that Dairy Crest can easily raw material in this case milk puts it in a better position relative to its competitors who do not have the same privilege. The firm will always be able to meet the demands of its customers due to this fact.

Opportunities

The opportunities that exist for Dairy Crest include a well established position with a well defined market niche. The operations of Dairy Crest are not limited to its local market in the United Kingdom only (Schalkwyk, 1998; Erikksdon & McFadden, 450 1993).

It operates in other countries such as Ireland and France. This provides the company an opportunity to access a wider market and subsequently the company will have a chance to increase its sales as well as its profits (Mason & Mitroff, 1981; Sullivan, 1983; Weber, 2001).

The firm can capitalize on nutritional as well as health related benefits of certain dairy products. Organic dairy products are highly nutritional in addition to being on demand. The firm can tap this line to increase its sales.

Value addition

There is a phenomenal opportunity for innovations in product development, packaging as well as presentation. Below are potential areas of value addition:

Measures should be put in place to introduce value-added products into the firm’s product portfolio. This will result to a greater presence as well as flexibility in the market place together with opportunities in the field of brand building.

If the firm adds cultured products such as yoghurt and cheese into its product portfolio, the firm stands to derive additional benefits in terms of efficient utilization of resources as well as increased presence in the market place.

Export potential

Efforts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT treaty, opportunities will increase tremendously for the export of agricultural produce.

Threats

Dairy Crest has to contend with the increasing number of competitors in the dairy industry. Fierce competition from an ever increasing number of competitors within the dairy industry arm twists the company to price its products competitively in order for it to compete on an equal footing with its rivals.

The disadvantage with competitive pricing is that it will lead to drop in the profit levels or worse still, may force the company to compromise on the quality of its products in order for their prices to be fair (Perusich & McNeese, 1998; Canadian Defense Force, 1999; Holt, 1999).

The increasing popularity of private labels poses a threat to Dairy Crest. This development implies that the dominance of Dairy Crest in the dairy industry will be challenged and in order to retain it, the firm has to use a lot more resources than it did initially.

Environmental legislations pose a major threat to the firm. Firms are required by the law to carry out their day to day operations in compliance to stringent environmental laws. This is no mean feat as firms need to dig deeper into their coffers in order to comply with these laws.

There is also the threat of regulatory bodies controlling the industry in which the firm is operating in. Regulatory bodies eat into the control that a firm has over its affairs. This reduction in the level of control on the part of the firm results into the firm struggling to comply with the directives of these regulatory bodies despite some being not in sync with the firm’s goals and objectives.

Climate change also poses a major threat to Dairy Crest as a firm. This is because almost all the products that are manufactured by the firm are by-products of milk. The phenomenon of global warming that has been witnessed the world over is not conducive for the breeding of dairy cows that produce milk ((Levis, & Wagenhals, 112 2000; Sullivan, 89 1988).

Weakness

One weakness that Dairy Crest has to contend with is high inventory. The nature of products that the company produces do not allow for low inventory levels. High levels of inventory are very costly to manage (Munro, & Mingers, 2002; Textor, 1979; Daellenbach, 2002).

This implies that the company will incur additional costs that will go towards inventory management rather than the resources being deployed to add value to the company’s products had they been channeled in research and development.

All of Dairy Crest’s products are dairy products. This overdependence on a single product area increases the culpability of the firm’s growth trends to be disrupted should there be any drastic developments in the dairy sector. Considerable amounts of investments are necessary to improve the firm’s dairy divisions in order to enhance the firm’s profitability in future (Tan, Xie & Chia, 56 1998; Sanger, 19 1998; Roest, 87 1997).

The firm has got poor quality training opportunities for the development of business skills. This means that the quality of staff it has is not the best thus their work will also not be top notch.

Perishability: The core product of the firm is perishable in nature although pasteurization has addressed this problem partially. However, a lot of new processes will have to be invented and deployed to enhance the quality of the firm’s core products and also elongate its shelf life.

Minimal control over yield: Hypothetically, there is minimal control over the quantity of milk yielded. Nonetheless, increased awareness of developments such as embryo transplant, artificial insemination and properly managed animal husbandry practices, together with higher income to remote milk producers should automatically result to improvement in milk yields.

Hectic distribution: Distribution of the firm’s products presents a new set of challenges to the firm. The firm has opted to distribute its products to supermarkets by virtue of the fact that they are larger retailers than the small retailers that the firm used to distribute its products too initially.

Pestel analysis

There are various factors in the environment that will influence the decisions of the managers of any organization. Tax alterations, new laws, trade barriers, demographic change and government policy changes are all examples of macro change. To assist analyze these factors managers can group them using the PESTEL model (Rosenhead, 1998; Carter & Price, 2001; Hudlicka et al, 2001).

Political factors

These refer to government policies such as the scale of intervention in the economy. The products and services a government wants to provide. The degree the government believes in subsidizing firms.

Its priorities in terms of business support. Political decisions can impact on many crucial areas for business such as the level of education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system (Saunders-Newton, 2002; Press, 1978; Weihrich, H. 1982)

Economic factors

These include interest rates, taxation changes, economic growth, inflation and exchange rates. As you will see throughout the “Foundations of Economics” book economic change can have a major impact on a firm’s behavior (Checkland, 1999; Yates, Burke, 2001; Turoff & Hiltz, 1999; Sparks, 1997; Rosenhead, 1980).

Social factors

Changes in social trends can impact on the demand for a firm’s products and the availability and willingness of individuals to work. In the UK, for example, the population has been ageing (Howard & Matheson, 1981; Omerod, 2001; Schwartz, 1996).

Technological factors

New technologies lead to the creation of new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology (Holt, 1988; Passig, 1998; Rosenhead, 1996).

Environmental factors

Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider (Rosenhead, 1992; Pyke, 1970; Silverman et al, 2002).

The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities ( Loh, 47 1998; Moreno-Luzon, and Peris, 45 1998; Sullivan, 130 1983).

Legal factors

These are related to the legal environment in which firms operate. In recent years in the UK there have been many significant legal changes that have affected firms’ behavior (Holt & Pickburn, 141 2001).

The introduction of age discrimination and disability discrimination legislation, an increase in the minimum wage and greater requirements for firms to recycle are examples of relatively recent laws that affect an organization’s actions. Legal changes can affect a firm’s costs (e.g. if new systems and procedures have to be developed) and demand (e.g. if the law affects the likelihood of customers buying the good or using the service).

Dairy Crest Group plc (Dairy Crest) is one of the leading dairy product providers in UK. The company engages in the production, manufacturing and trading of milk based food and dairy products. The company’s product range is categorized into foods division and milk division.

Dairy Crest offers cheese, spreads, ingredients, household and liquid products. It also involved in the distribution of these products through a devoted global sales team. The company’s products are marketed under various brands such as Cathedral City, Country Life, Clover and FRijj. The company through its subsidiaries operates in the UK, France and Ireland. Dairy Crest is based in Surrey, UK. (Lee, p.12 1998).

Problem and solution for balanced scorecard

Problem

Consumer demand for organic dairy products has surpassed industry expectations growth predictions that once seemed overly optimistic are lower than actual growth. Yet, despite the market potential, dairy companies are failing to cash in on the demand. There simply is not enough organic milk to keep meet the demand.

The problem appears to be in the transition period. Transitioning to organic production is an extremely costly process and farmers do not receive a higher premium until their milk is certified organic. Organic feed costs 40 to 50 percent more than usual feed.

The law requires that cows be fed organic feed for a year before their milk will be certified organic. In addition, farmers who save money by growing feed on their own land are subject to a longer certification process. If the farmers use prohibited substances such as herbicides or pesticides, the land will not be certified organic for three more years.

The cows must be fed the organic feed for an additional year. For many of the farmers, four years is too long to wait for a higher premium.

Unfortunately conventional farming has left so many in dire straits that they have a real hard time getting through transition. There are farmers that even though they made the transition it was too late. They could not hold any longer since they were debt ridden. Small farms may not be able to cash in on the organic market because they may not have the cash reserves or the option to take out a loan to pay for the transition period.

The challenge now is to persuade farmers that undertaking organic farming is a prudent business decision. The farmers who had an ideological motivation to produce organic milk have already transitioned.

Solution

Dairy Crest should consider launching a fund which provides financial assistance to farmers who transition to organic. This is done with the hope that offering assistance will convince dairy farmers that are unsure about organic to sign on.

Problem and solution for swot analysis

Problem

The dairy industry that Dairy Crest operates in has become very competitive. There are new entrants into market every other day offering the same kind of products as those of Dairy Crest.

This development has the implication that the more competitors there are in the market, the dominance of well established firms such as Dairy Crest is going to be challenged eventually. The market leaders will inevitably register reduced sales that will lead to a dip in profits.

As a manager in charge of a company such as Dairy Crest, one is expected to look for ways and means that would be deployed by the firm in an attempt to stay ahead of competition.

Solution

Electronic Commerce refers business transactions taking place by way of telecommunications networks, particularly the Internet. Electronic commerce entails doing business electronically. E-commerce, ecommerce, or electronic commerce is defined as the engaging in financial transaction through electronic means.

E-commerce can be deployed by firms to ensure that they stay ahead of or at least keeps up with competitors and industry leaders. Therefore, in order to address the challenge of an extremely competitive market, the managers of Dairy Crest should consider transacting their businesses online because of the potential benefits that they stand to enjoy.

Problem and solution for pestel

Problem

In the recent past the world has witnessed a drastic change in the weather patterns. The weather is no longer predictable with some parts of the earth experiencing unusually warm temperatures. There are accounts of melting glaciers, a phenomenon which is unprecedented.

The aforementioned climatic changes can be attributed to unsustainable practices by human beings that led to environmental pollution.

Practices such as deforestation have an extremely profound impact to the environment. Emission of toxic pollutants into the atmosphere by factories and motor vehicles into the atmosphere has also had a major impact on the climate.

The various forms of pollution occasioned by unsustainable human practices gradually corroded the ozone layer. As a result, the porous ozone layer allows harmful rays of the sun to reach the earth hence causing global warming.

An increasing number of people has is becoming aware of the implications of climate change. That is why there is a lot of lobbying nowadays concerning environmental conservation by adopting sustainable practices and using renewable sources of energy. The green initiative bug has also bitten governments of majority nations around the world.

This fact underlines the seriousness with which this state of affairs is being considered. There are governments which have been prompted to pass environmental legislations that serve as guidelines on how to exploit environmental resources as well as carrying out other activities while causing as little environmental damage as possible.

These legislations come with extremely severe punitive measures for those organizations or individuals who flout the environmental legislations.

As a manager for a manufacturing firm such as Dairy Crest these developments are external yet they profoundly affect the way the daily operations of the firm. The manager is charged with the arduous responsibility of ensuring that his firm complies with the rules and regulations laid down by the government while registering profits for his firm at the same time.

This may appear to be easy on face value but when one gets into the details, they will be astounded to realize how much of a laborious task it is. For starters, any firm that is in the business of manufacturing anything knows that it is extremely costly to adopt sustainable ways carrying out its operations.

The cost implications together with public perception with regard to environmental conservation are the reason why environmental conservation has practically become a priority for many firms.

With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider (Poolpatarachewin, p11 1980).

Pressure is being put on firms especially those involved in manufacturing products to do so in a way that does not harm the environment. Dairy Crest is also leading in the initiative of undertaking its operations while causing as little harm as possible to the environment (Eash, 14 2002).

Solution

Environmental conservation has become a priority for any organization or institution worth its salt. The reason is because the present generation owes it to the future generations to conserve the environment for them.

As a manager of a manufacturing firm like Dairy Crest one is obligated to ensure that the operations of their firm is in compliance with all laws and regulations in the environment that the firm is operating in. It is either one complies with these legislations or their firm is punished severely for being non-compliant.

These punitive measures may come in the form of hefty fines or in extreme cases the closure of the errant firm indefinitely (Pitman, Motwani, Kumar & Cheng, 47 1996).

Environmental conservation and, particularly, how it can be applied to business operations, can be overwhelming daunting. Dairy Crest should first of all try to understanding how their day-to-day operations impact the environment with the aim of creating a wide-spread change and facilitate environmental action.

Information is empowering, and can lead to idealistic decision-making. Dairy Crest should look for tools and information that are needed to mitigate negative impacts on the environment.

A clear understanding of what aspects of their day to day operations are causing the greatest Greenhouse Gas (GHG) emissions is of extreme necessity. They should go farther acquaint its staff and stakeholders with opportunities on how to lessen those impacts and set targets.

Benefits of e-commerce to organizations

International marketplace

What used to be a single physical marketplace located in a geographical area has now become a borderless marketplace including national and international markets. By becoming e-commerce enabled, Dairy Crest can have access to people all around the world. In effect all e-commerce businesses have become virtual multinational corporations (McAdam & O’Neill, 16 1999).

Operational cost savings

The cost of creating, processing, distributing, storing and retrieving paper-based information will reduce drastically.

Mass customization

E-commerce has transformed the way consumers buy products and services. The pull-type processing allows for products and services to be customized to the customer’s requirements. In the past when Ford first started making motor cars, customers could have any color so long as it was black. Now customers can configure a car according to their specifications within minutes on-line via the www.ford.com website.

It enables reduced inventories and overheads by facilitating ‘pull’-type supply chain management – this is based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing (Lee, Roberts, Lau & Bhattacharyya, 77 1998).

Lower telecommunications cost

The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organization and its authorized partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing.

No more 24-hour-time constraints

Businesses can be contacted by or contact customers or suppliers at any time. This means that time is no longer a factor when it comes to transacting business. Business continues to operate no matter what time of day it is. The business will register more sales as a result.

E-commerce enables more flexible working practices which enhances the quality of life for a whole host of people in society, enabling them to work from home.

Not only is this more convenient and provides happier and less stressful working environments, it also potentially reduces environmental pollution as fewer people have to travel to work regularly. Any client who purchases any product from Dairy Crest online and experiences the additional benefits that come with it will be won over and become loyal customers.

E-commerce enables people in developing countries as well as remote areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them. Through e-commerce, Dairy Crest is going to tap into a new market that did not exist before hence increase its sales.

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Introduction

Benchmarking is a managerial tool which enables business organizations to compare their current productivity with those of the others. Through benchmarking, the businesses can adopt improvement initiatives in line with the other prosperous organizations (Damelio, 1995). Benchmarking uses qualitative and quantitative techniques. Quantitative techniques provide numerical outcomes, while qualitative techniques generate the best practices (Bogan & Michael, 1994). Benchmarking seeks to identify, understand and embrace organizational practices and procedures that have successfully worked for other companies.

Why benchmarking has become popular with a lot of companies

Benchmarking is popular with business organizations because of its simplicity. Through benchmarking, a business aims at identifying standards to adopt in order to measure and improve its productivity. Benchmarking is a simple four-step procedure. According to Damelio (1995), the first step in benchmarking is to define the business operations to be benchmarked. Secondly, the business defines the level of improvement desired and the targeted results. These are then communicated to the involved stakeholders. Thirdly, the business measures the actual results. Finally, the actual performance is compared with the budgeted performance, and corrective actions are taken in case of variations (Bogan & Michael, 1994).

How benchmarking ties into the balanced scorecard measurements

Benchmarking is related to the balanced scorecard in the sense that both are involved as performance improvement efforts. The balanced score card (BSC) is a tool used in implementing organizational strategies (Hannabarger, et al, 2010). BSC analyses a business in four perspectives – customer, financial, internal processes, and learning (Kaplan & Norton, 2001). Customer perspective measures the ability of the business to satisfy its customers, while financial perspective is concerned with financial results. Internal processes show the internal operations and how they are measured. The learning and growth perspective focuses on organizational training and how the business harnesses knowledge to enhance its competitive ability (Kaplan & Norton, 2001).

Benchmarking is tied to the balanced scorecard measures. The measures of each perspective are usually benchmarked with information from outside the business. In line with the general organizational strategy, managers come up with the goals in relation to each of the above perspectives. The business then adopts specific measures in support of the set objectives (Kaplan & Norton, 2001). The measures are then translated into initiatives well understood by the employees. The rationale behind the BCS is that the business must have a balanced range of productivity measures in order to effectively run the organization.

The BSC focuses on such areas as time, performance, quality and price. These are sensitive areas to the customer (Kaplan & Norton, 2001). Organization is to design goals for these customer sensitive areas, and each area should have a specific measure. The business can determine some measures like sales, internal income. However, other measures, such as timely deliveries, are dependent on external customers. Thus, to align with and adapt such measures to the BSC, the business must rely on information gained from outside the company through benchmarking (Kaplan & Norton, 2006). To benchmark with the BSC, data must be collected from outside the business. This forces the business to examine itself from the customers’ viewpoint. This is a clear illustration that benchmarking is tied to the BSC measurements.

Concepts essential in successful business administration

Today’s business environment is very dynamic and highly competitive. To succeed in business administration, the manager requires certain essential concepts. The first concept is a well-prepared business plan (Gareth & George, 2011), which should be a foundation upon which success is built as the future of the company is clearly detailed. Second, the business should have a comprehensive marketing strategy. The business must have a clear idea of its potential and target markets since this will directly affect its sales revenues and consequently its profitability (Kotler & Keller, 2006). The business should also differentiate itself either through low pricing or through superior value in order to beat its competitors. Finally, the company should be willing to embrace and manage change.

Conclusion

This paper has established that benchmarking is a popular managerial tool in contemporary business management. Managers use benchmarking to compare how their companies perform, relative to the best organizations in the industry (Damelio, 1995). Businesses use benchmarking hand in hand with the balanced scorecard since the two approaches are very powerful tools in improving organizational performance. Benchmarking is connected with the BSC measurements since the business must rely on information from outside to measure some of the customer sensitive areas (Kaplan & Norton, 2006). In order to succeed, today’s manager should have in place a detailed business plan and a comprehensive marketing strategy. The company should equally differentiate itself apart from its competitors and be willing to manage change (Gareth & George, 2011). These are the most essential concepts in successful business administration.

References

Bogan, C. E., & Michael, J. E. (1994). Benchmarking for best practices: Winning through innovative adaptation. USA: McGraw-Hill.

Damelio, R. (1995). The basics of benchmarking. Portland, Oregon: Productivity Inc.

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Hannabarger, C., Buchman, R. & Economy, P. (2010). Balanced scorecard strategy. New York: Wiley Publishing, Inc.

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Kaplan, R. S., & Norton, D. P. (2001). The Strategy-focused organization: How balanced scorecard companies thrive in the new business environment.Boston, MA: Harvard Business School Press.

Kotler, P., & Keller, K. L. (2006). International Marketing Management. 12^th Ed. New Jersey: Prentice Hall.

The main vision and mission of the Coors Brewery Company lies in returning to the basis of carrying out successful business, identifying target consumers, and introducing efficient distribution, promotion and pricing strategies. The company’s goals also seek to address the consumer needs while increasing sales and gaining profits. Hence, the main strategy of the company is confined to development of advanced supply chain management through such fields as research and development, engineering, and purchasing. However, such an approach excludes the evaluation of employees’ work and fails to approach the efficient human resource management. Therefore, because the company chooses a person-centered approach, BSC project could be developed successfully as soon as employees’ environment is properly estimated. Another problem of Coors consists in introducing new brands of beers, which contradicts the company’s traditional commitment to one brand only. Later penetration to the international market hampers the development of domestic sales. All these inconsistencies should be eliminated to integrate new strategies and gain profitability. In order to expand internationally, the company should develop efficient corporate culture that can meet the requirements of a multi-cultural environment.

With regard to the list of frequently asked questions, the BSC benchmarking targets should be related to several correction measures. To begin with, the company should introduce new training programs and innovation strategies that can reorganize the company’s procedures and allow its managers to quickly adjust to fast-changing demands of consumers. Second, usability of new shipment terms should also undergo testing procedures to define whether they contribute to productivity. Third, understanding the importance of subsequent stages implemented to the process provides new dimensions for development. However, the quality assurance manager Ken Rider should be more concerned with prioritization of specific tasks that should be accomplished before the next step is achieved. Continuous improvement, therefore, is possible only when consistent approach is chosen. Finally, rewarding system introduced by BSC should also be reevaluated to assess the degree to which employees can enhance their motivation. Therefore, main target of BSC relates to the development of performance measurement schemes. All these approaches and objectives should be rearranged to define which ones are to be completed at first. Shifts in production should also be corrected with regard to employees’ skills and experience.

In order to ensure successful implementation of BSC, Coors’s managers should consider the following FAQs:

1. How should the company implement expansion policy to compete at an international market?
2. What challenges will employee face when consumer base is expanded to various countries?
3. How do managers perform their testing procedures on the quality of the exported beer?
4. What training should the staff undergo to effectively use innovative technology?
5. What possible challenges will managers face while introducing new techniques and approaches to the production and supply chain processes?
6. How can efficient training programs contribute to the reduction of cost and waste during the manufacturing process?

In order to assess the performance measurement, the BSC should, first of all, focus on customer’s expectations that can stabilize the supply chain management and foster the development of change management strategies. As soon as the employees enter the training programs, the company can easily integrate new techniques and cycles contributing to flexibility and reliability of the project. Decision making process is also among the most crucial conditions that ensure the company’s successful transition to a supply chain management.

The business operations of Marie Stopes International, a UK-based non-profit organization, are oriented to developing and improving processes of assisting females in developing countries. The focus is on educating women regarding contraception and female health aspects (Marie Stopes International, 2015). In this part of a balanced scorecard for Marie Stopes International, it is necessary to present objectives, measures, targets, and actions for the internal business processes perspective while paying attention to the specifics of this non-profit organization.

In Table 1, the key objectives oriented to changing and improving internal processes are described in detail. It is possible to state that the objectives for this perspective, as well as previous objectives developed for the financial and customer perspectives, reflect the organization’s mission, vision, and strategy. Thus, the key focus is on creating conditions for serving more females who need support and education regarding their female health and birth control procedures. If objectives developed for the customer perspective were directed toward increasing clients’ satisfaction, these objectives are oriented to improving midwives and nurses’ performance, the quality of services, and the delivery of services.

Table 1. The Balanced Scorecard: The Internal Business Processes Perspective.

Table 1 provides the formulated objectives along with the information regarding the relationships between goals for the financial perspective, the customer perspective, and the internal business processes perspective. It is possible to state that the relationship is obvious, and those objectives and measures which are determined for this part of a balanced scorecard are logically connected with the goals formulated to address clients’ needs (Pramudita, 2016).

The necessity of increasing customers satisfaction leads to the formulation of specific goals for restructuring business processes and improving performance, as well as increasing quality and productivity. Therefore, no revisions are required for the objectives set for other perspectives (Mackay, 2004; Niven, 2014). The reason is that the Module 1 objectives were revised to address the formulated Module 2 objectives. In their turn, the Module 2 objectives are identified effectively, and the Module 3 objectives are presented in line with the previous changes.

As a result, it is possible to note that the development of more objectives for Marie Stopes International allows for creating a full picture of strategic changes in this organization. Also, the review of previous objectives is an effective practice to guarantee the correlation between all set goals. The expected result is the improvement of clients’ experiences.

References

Flynn, W. J., Mathis, R. L., Jackson, J. H., & Valentine, S. R. (2015). Healthcare human resource management (3rd ed.). New York, NY: Nelson Education.

Mackay, A. (2004). Research report: A practitioner’s guide to the balanced scorecard. Web.

Marie Stopes International. (2015). Financial statements and annual report 2015. Web.

Marie Stopes International. (2016). What we do. Web.

Niven, P. R. (2014). Balanced scorecard evolution: A dynamic approach to strategy execution. New York, NY: John Wiley & Sons.

Pramudita, C. D. (2016). The balanced scorecard as strategic controlling instrument. Hamburg, Germany: Anchor Academic Publishing.

Organizational strategic planning involves the development, evaluation, and modernization of strategies for organizations. This type of accounting activity may be performed by means of competitor analysis, analysis of customer profitability, and cost analysis.

An effective tool that allows for the integration of both non-financial and financial parameters into the measurement and management systems of strategic planning was designed by Kaplan and Norton (2001a, 2001b) and is focused on four primary strategies of the organization, namely, financial, customer, internal business processes and learning and growth. This tool, the Balanced Scorecard system, may be implemented both in private and public sectors of the economy as well as in non-profit organizations.

Since its development, the Balanced Scorecard system became known as an effective tool for successful strategy implementation (Kaplan & Norton, 2001b). Indeed, series of studies (Butler, Letza, & Neale 1997; Fernandes, Raja, & Whalley 2006; Kaplan & Norton 2001a, 2001b) show that those organizations which risked using balanced scorecards in their financial management benefited in the establishment of better relationships with customers, development of new business processes, professional training of their employees and the development of new methods and technologies. All these comprehensive transformations became possible because of the clear strategy definition and its relation to all leverages that affected organizational changes.

As beneficial and effective as it may be, the Balanced Scorecard system has its implementation difficulties. A series of research shows that the main implication of the Balanced Scorecard system is the stage of strategy definition (Butler, Letza, & Neale 1997; Kaplan & Norton 2001a). Butler, Letza, and Neale (1997) also state that the majority of organizations face difficulties in the search for measures of change leverages-strategy linkage.

Fernandes, Raja, and Whalley (2006) observed that Kaplan’s system lacks a practical approach and that its implementation by many small and medium-size companies results in problems with KPI analysis, project management, and developing support systems. Kaplan and Norton (2001a) claim that the implications in the Balanced Scorecard system implementation may arise when the organization is focused mainly on the improvement of the business process and not the innovation of customer relationships.

Considering the abovementioned, it is possible to conclude that the Balanced Scorecard system can hardly be considered as suitable for all organizations. In the majority of cases, organizations have to adapt their system to their specific features. Butler, Letza, and Neale (1997) studied the case of Rexam Custom Europe and found that the company had difficulties in the application and use of the balanced scorecards.

However, the Balanced Scorecard system helped RCE management to identify the important strategy for RCE. As a result, the company decided to focus on its employees. Nonetheless, some organizations such as American Rockwater and Intel and Apple computers as well as British Milliken, Abbey National and Leeds Permanent Building Society, the Nat West Group, and BP Chemicals found that the Balanced Scorecard system is a brilliant tool for strategic planning (Butler, Letza, & Neale 1997).

However, as in the case with RCE, several non-profit and government organizations such as United Way of Southeastern New England, May Institute, and New Profit Inc. found that the Balanced Scorecard system helps to define the most important strategies for organization and is effective only if it is adapted to needs of an organization (Kaplan & Norton 2001a). Having analyzed the cases in the refrigeration and air-conditioning industry, Fernandes, Raja, and Whalley (2006) found that the Balanced Scorecard system is more suitable for large organizations rather than small and medium-sized organizations. The brief analysis of literature makes it possible to conclude that the Balanced Scorecard system is suitable for bigger organizations and, in any case, requires the adaptation to the organizational features.

Reference List

Butler, A, Letza, SR & Neale, B 1997, ‘Linking the balanced scorecard to strategy,’ Long-range planning, vol. 30, no. 2, pp. 242-253.

Fernandes, KJ, Raja, V & Whalley, 2006, ‘Lessons from implementing the balanced scorecard in a small and medium-size manufacturing organization,’ Technovation, vol. 26, no. 5, pp. 623-634.

Kaplan, RS & Norton, DP 2001a, ‘Transforming the balanced scorecard from performance measurement to strategic management: Part I,’ Accounting Horizons, vol. 15, no. 1, pp. 87-104.

Kaplan, RS & Norton, DP 2001b, ‘Transforming the balanced scorecard from performance measurement to strategic management: Part II,’ Accounting Horizons, vol. 15, no. 2, pp. 147-160.