Category: Balanced Scorecard

The Balanced Scorecard (BSC) approach is a tool used for measuring and managing the employees’ performance, as well as the organization’s overall efficiency (Mafini, Pooe, & Nqcobo, 2014, p. 1540). The implementation of the method requires substantial changes to the daily functioning and structure of an organization, which is why the application of the BSC is considered to be a challenging initiative. This paper aims to analyze the case study of BAE Systems’ attempt to implement the BSC approach by comparing the company’s introduction method to the traditional one and evaluating the efforts that contributed to the effectiveness of the process.

BSC Summary and Main Challenges

The BSC approach was developed in 1992 by Kaplan and Norton to “overcome the inadequacies of the traditional financial-based performance measurement tools” (Awadallah & Allam, 2015, p. 91). Molleman (2007) explains the three types of the BSC approach. Type I is the most basic form of the BSC, which contains a framework for measuring performance based on financial and non-financial measures (Molleman, 2007, p. 2). Type II has been expanded to include describing the strategy through cause-and-effect relationships, whereas type III adds the plan for implementing the strategy through defining objectives, action plans, and results specific to the BSC (Molleman, 2007, p. 2). The approach has gained many supporters worldwide and remains one of the most popular managing tools today (Madsen & Stenheim, 2014, 121). However, it has also received a lot of criticism because many attempts of implementation turned out to be unsuccessful (Awadallah & Allam, 2015, p. 91).

Mafini et al. (2014) examine the factors contributing to the weak implementation of the BSC to find more efficient ways of introducing and using the tool. They found that some of the main weaknesses of the companies that failed to introduce the BSC approach effectively were the lack of suitable qualification of the project team members, unclear objectives and planning of the project, poor communication of the BSC purpose and features, and problems with execution, such as lack of special software (Mafini et al., 2014, p. 1544-1547). Donovan (2008), on the other hand, explains that certain steps have to be taken to achieve success in any large-scale organizational change. For instance, it is needed to create a sense of urgency, a qualified project team, a clear plan, which is consistent with the company’s vision, communicate the features and implications of the project to all employees, generate opportunities for small wins, consolidate every implemented change, and evolve the organization’s culture in accordance with the new vision (Donovan, 2008). Therefore, addressing the risk factors and following the proposed steps would help to achieve a successful implementation of the BSC in many organizations.

BAE Systems’ Approach

In BAE Systems, the implementation of the BSC approach was carried out as part of a larger culture change process: “It supported the cultural change project by reinforcing its five fundamental values and encouraging behaviour that was consistent with the company’s goals and values” (Murby & Gould, 2005, p. 27). Other areas of change included replacing the 1979 conglomerate with interlocking businesses to achieve competitive benefit, as well as reducing the reliance on the managerial authority by narrowing work divisions (Murby & Gould, 2005, p. 27). The introduction of the BSC, therefore, became one of the central changes in the company’s structure that would promote the planned culture change. The change process to the BSC was thoroughly planned and divided into eight distinctive steps. Reviewing the competitive position of BAE Systems was the first step, followed by the involvement of senior employees in the process (Murby & Gould, 2005, p. 28).

The third step was to create a shared vision that would organize the efforts and describe the new direction in which the company would move (Murby & Gould, 2005, p. 28). The next step was concentrated on communicating the vision to the employees in the form of a values statement that addressed the company’s culture change. The statement became the basis on which the company’s use of the BSC approach would be built. The management also outlined the importance of value creation, strategy making, and human behavior in the introduction process. The second half of the plan started with creating short-term objectives and performance goals to avoid the loss of momentum. Due to the company’s specifics, it was determined that project reports and accounts would be used to measure performance rather than the traditional six-month accounts statements (Murby & Gould, 2005, p. 28). Step six was to embed cultural change by creating specialized value teams to implement the proposed changes. The final step was concentrated on justifying the need for cultural change and its link to competitive success.

Evaluation

As can be seen from the previous section, the implementation of the BSC approach in BAE Systems was tightly linked with a fundamental cultural change, which distinguishes BAE Systems’ method from the traditional way of implementation. According to Mafini et al. (2014), connecting the BSC approach to the company’s values and vision raises the chances of success (p. 1545). Moreover, this feature has also given BAE systems an opportunity to eliminate other risk factors with regards to the process. For instance, the involvement of senior management is a step that the majority of other companies’ approaches lack (Mafini et al., 2014, p. 1544). This was an important factor in achieving success with the BSC approach, as the incompetence of the project team members is one of the primary risk factors affecting such a large-scale change (Mafini et al., 2014, p. 1544). Another strength of BAE Systems’ approach that differed from the traditional method was communicating all the strengths, purposes, and implications of the BSC model to the employees. All of the above, coupled with a thorough plan of clear short-term objectives to define the milestones for progress has positively affected the introduction of the BSC into BAE Systems.

Nevertheless, there were some weaknesses in the plan that could be eliminated for a smoother implementation of the BSC approach. For example, the urgency of the change was not established, which is a huge gap in a large-scale change process, according to Donovan (2008, para. 1). Due to the lack of urgency, some unnecessary procedures were present: for instance, as Murby and Gould (2005) note, “Rather than identifying and examining non-financial value drivers, the company tended to measure what could be measured, rather than what should be measured” (p. 30).

Conclusion

Overall, the implementation of the BSC approach in BAE Systems was set up in accordance with the recommendations to avoid risk factors and encourage a successful outcome of a large-scale change process. The case of BAE Systems thus proves the impact of factors such as management involvement, the establishment of clear objectives, and employee empowerment in the process of substantial organizational change. The experience of BAE Systems can be used as a model for successful implementation of the BSC approach as it addresses the main weaknesses that undermine the success of the endeavor in the companies that use a more traditional method of application.

References

Awadallah, E. A., & Allam, A. (2015). A critique of the Balanced Scorecard as a performance measurement tool.International Journal of Business and Social Science, 6(7), 91-99. Web.

Donovan, M. (2008). The eight stages of successful large-scale change.Harvard Business Review. Web.

Madsen, D. O., & Stenheim, T. (2014). Perceived problems associated with the implementation of the balanced scorecard: evidence from Scandinavia. Problems and Perspectives in Management, 12(1), 121-131. Web.

Mafini, C., Pooe, D. R. I, & Nqcobo, H. (2014). Factors contributing to the unsuccessful implementation of the BSC in a South African Provincial Treasury Department. International Business & Economics Research Journal, 13(6), 1539-1550. Web.

Molleman, B. (2007). The challenge of implementing the Balanced Scorecard. Web.

Murby, L., & Gould, S. (2005). Effective performance management with the Balanced Scorecard: Technical report. Web.

Introduction

Strategy execution is the definitive practice for translating a great strategy into improved organizational performance. In strategy execution, cascading corporate goals and measures helps align the entire firm towards the selected strategic direction (Hoque et al. 529).

In the present article, the author’s purpose is to explain the latest techniques for designing an integrated strategy cascade tool – the balanced scorecard or BSC – that supports the realization of performance targets and indicators based on past research (Simons 1). The idea of connecting financial and non-financial measures/indicators to strategy through the BSC has been the focus of empirical studies over the past 20 years (Hoque 5). The article’s contributions to this field relate to the alignment of the BSC with “financial, customer, internal business process, and learning and growth” measures for performance tracking (Simons 17). The author is a distinguished Harvard Business School professor who teaches strategy execution to the MBA class.

Intended Audience

The article is a module reading for a business program. The intended audience is students undertaking programs such as MBA or executive business courses. It illustrates the techniques for building a strategy map and a BSC for effective monitoring of financial and nonfinancial targets – customer, internal process, and learning/growth goals – by future business managers (Simons 17). As the author explains, the teaching module (module 9) presented in this article is a part of a fifteen-module course on strategy execution. He cites “Module 2: Building a Successful Strategy” that focused on the deployment of intangible assets in the strategy execution framework when introducing the concept of the balanced scorecard (Simons 3). The BSC techniques for tracking strategy execution are developed in this module. The aim is to equip the learners with strategy execution skills as well as communication and assignment of accountability to managers.

The Author’s Purpose

As stated, the author’s purpose is to explicate how to build a strategy map and the BSC model through a synthesis of past research and case studies. His arguments build on the past research and the BSC framework by Kaplan and Norton and involve a consideration of previous modules. The aim is not to refute another author’s argument, but rather to survey research and firms that have implemented the BSC model to explicate the best practices in the choice of strategic goals and measures. To accomplish this objective, the author reviews multiple cases, including ABB Industrie AG, Barclay’s Bank, Boston Retail Company, and Blue Cross Shield.

Definition of Important Terms

The author gives the definitions of the terms used in previous modules and appearing in the article. The respective modules where each term first appeared are referenced in parenthesis. The author defines 27 important terms used in the article for the reader. The definitions express the concepts relevant to the design and deployment of BSC, as used in the article. They also help distinguish between related terms, such as accountability and accountability systems (Simons 18). All the terms defined are those used in modules 1-8. An example is the term ‘cash wheel,’ which is defined as “a model of the operating cash flow through a business” (Simons 18).

Fact or Opinion

It is clear from the article that the author is reporting on the facts. While the balanced scorecard is a common concept in literature, the author provides an integrated analysis of the model with illustrative examples and cases. The author supports his arguments with an impressive array of facts drawn from literature and case studies. However, the study relies only on a few past studies/articles to support the arguments.

In the background of the analysis, the author skillfully ties strategy execution to the accomplishment of business goals and targets. He begins by saying that an effective strategy execution supports the translation of a strategy into measurable goals/targets and the alignment of the entire firm with these goals (Simons 1). The concept of the balanced scorecard and the steps involved in building the BSC are adapted from Kaplan and Norton’s model.

The article contains verifiable information related to the implementation of the BSC. The four steps of this model, i.e., defining the business strategy, building a strategy map, selecting measures for tracking key initiatives, and assigning accountability to managers,” are well supported in the literature (Dechow 514). To support his claims, the author uses reports of real-life cases of companies implementing the BSC in press releases, financial journals, and previous modules. For example, the author uses the Boston Retail case reported introduced in module 1 to illustrate the four perspectives of a strategy map – financial, customer, internal business, and learning and growth – and related measures/goals (Simons 4). Thus, the author’s arguments are grounded in factual concepts and real-world cases.

Central Arguments/Conclusions

It is clear from the article that the central arguments relate to the utilization of the strategy map and the BSC as important frameworks for translating strategy into superior performance. As such, the author gives a detailed explanation of how to create a strategy map, a subset of the BSC, to track an organization’s performance goals and measures. The four perspectives give a cause-and-effect logic for harnessing organizational resources and staff skills to produce economic value for the firm (Simons 3). The author uses illustrations to elucidate cause-and-effect linkages (strategy maps) between the measures and goals of the four perspectives.

In addition, the article uses four case studies to illustrate the key components of the strategy selection process, including goals/measures alignment and best practices in BSC implementation. An example is the BSC implementation approach adopted by the Blue Cross Blue Shield of Alabama that made the healthcare organization to receive a four-star quality rating (Simons 13). Thus, the article’s arguments and conclusions are clearly supported by evidence and analysis. To such a complex concept, the author sums up the module by reiterating the four perspectives involved in developing a strategy map to align the organizational strategy to specified performance goals and measures.

Experiment or Study

Although the article does not report an experiment or study, it gives an in-depth analysis of the methodology followed by companies in developing a strategy map and BSC. Since it does not involve an empirical investigation, a study methodology and expected results are not given. Rather a theoretical analysis of previous studies and cases is given. An example is the Boston Retail’s strategy map. In this case, Boston Retail’s executives set the financial goal of raising its revenues by “150 percent over the next five years” (Simons 10). To achieve this goal, the firm expanded its store network and improved its supply chain efficiencies. The article further explains the approach followed by the company to develop customer goals. Boston Retail’s initial value proposition focused on female students through affordable fashion.

With regard to the internal perspective, Boston Retail reviewed its operations management processes, resulting in improved warehouse efficiencies (Simons 11). In setting up the learning and growth goals, the firm focused on employee training to bolster their capacity to offer quality customer experience. The article offers a clear methodology of how Boston Retail developed the goals for its strategy map.

Expected Information or Augmentation

The article gives detailed information on how to build a balanced scorecard as would be expected in any work on this topic. Cheng and Humphreys have also analyzed the balanced scorecard framework and the linkages between strategic goals and performance measures as a way of determining the suitability of a firm’s strategy (899). As would be expected, the article follows the four key steps of developing a BSC.

Additionally, the article creates linkages between goals and measures in all the four perspectives of a strategy map. The goal-measure linkages support the visualization of the performance of each unit or employee (Chen 68). The BSC developed in this article is based on Kaplan and Norton’s earlier formulation, which also contains the four core steps. Therefore, the article gives the expected augmentation of the key concepts of strategy execution and the balanced scorecard.

Organization of the Article

The article is organized in a logical manner. It begins with a brief background to the concept of strategy execution followed by a definition of the balanced scorecard and an explanation of an earlier BSC model by Kaplan and Norton. This academic style is particularly important since the target audience includes students. A brief list of the four key steps followed when implementing the balanced scorecard is given and later explained in detail in subsequent sections.

Embedded within the article are relevant case studies that illuminate valid concepts touching on strategy mapping and execution. The objective of any analysis is to improve clarity in the meaning of the concepts/ideas utilized in the BSC framework. The article not only explains the key concepts of the BSC model, but it also develops them with examples and real-world cases. The presentation of the concepts is systematic and easy to follow.

The Writer’s Style

As already stated, the author begins with a stilted brief background to the concept of the balanced scorecard before delving into the steps involved in building a strategy map, which is the basis for the BSC. It is obvious that his presentation style is formal and academic, hence, well suited for the target audience – MBA students. It does not involve a concise report or an executive summary for corporate use. Further, the author’s use of case studies gives the article an academic flair.

He states the expected learning outcomes for students, a key characteristic of MBA courses. The learning outcomes stated include “how to develop a strategy map, how to select and use strategy measures, and how to assign accountability to individual managers” (Simons 1). Further, the author suggests further case studies to help the learner gain more insights into the strategy execution process.

The Author’s Language

The author gives a balanced analysis of the concepts related to strategy execution through the balanced scorecard. A high level of objectivity is achieved with verbatim statements from managers of the case companies and citations from other studies. For example, when analyzing Barclay’s balanced scorecard, the author quotes its CEO, Andy Jenkins, who exudes confidence regarding better financial prospects for the bank (Simons 6). Inferences on the best practices in building the BSC are made based on the executives’ statements and reports.

The case studies also lend the article credence as an objective synthesis of strategy execution in an increasingly competitive environment. It includes exemplars of the actions taken by executives of the firms to realize financial, customer, or internal process goals. For example, CMO of the Boston Retail was able to “identify measures and targets for each objective” using the strategy map (Simons 14). Further, the article focuses on the views of executives of the case companies as opposed to the author’s own views or experiences. However, bias is seen in the choice of sources/references. The author relies heavily on past modules as the source of information for the article. The definitions of the terms used in the article all relate to concepts already used in past modules, i.e., Modules 1-8.

Illustrations or Charts

The article involved extensive use of charts to illustrate the strategy implementation steps. First, the author provides a chart showing the interrelationships among the four perspectives of a strategy map (Simons 4). The strategy map gives an effective visual representation of the goals and measures related to each perspective. He also explains the cause-and-effect relationships among the perspectives through a chart. A detailed strategy map for Boston is also given, showing the retailer’s approach to strategy execution. It effectively ties the measures to the targets to show how the company tracks performance.

Conclusion

Without a proper strategy execution approach, corporate strategies are nothing more than superfluous. This paper reviewed an article examining the balanced scorecard and its efficacy as a performance measurement tool. Overall, the author gives a clear and elaborate analysis of the BSC implementation process. He masterfully interprets the strategic concepts relevant to the balanced scorecard approach and supports his analysis with real-world examples. The findings suggest that measures, including non-financial ones, could be tied to a firm’s strategic vision using the BSC. Therefore, the BSC tool can be used to augment traditional performance tracking models that are grounded in financial measures alone.

Works Cited

Chen, Clara. “Discussion of: Testing Strategy with Multiple Performance Measures: Evidence from a Balanced Scorecard at Store 24.” Journal of Management Accounting Research, vol. 27, no. 2, 2015, pp. 67-73.

Cheng, Mandy, and Kerry A. Humphreys. “The Differential Improvement Effects of the Strategy Map and Scorecard Perspectives on Managers’ Strategic Judgments.” The Accounting Review, vol. 87, no. 3, 2012, pp. 899-924.

Dechow, Niels. “The Balanced Scorecard: Subjects, Concepts and Objects – a Commentary.” Journal of Accounting & Organizational Change, vol. 8, no. 4, 2012, pp. 511–527.

Hoque, Zahirul. “20 Years of Studies on the Balanced Scorecard: Trends, Accomplishments, Gaps and Opportunities for Future Research. The British Accounting Review, vol. 30, no. 1, 2014, pp. 1-27.

Hoque, Zahirul, et al. “The Causal Relationships Between Performance Drivers and Outcomes: Reinforcing Balanced Scorecards’ Implementation Through System Dynamics Models.” Journal of Accounting & Organizational Change, vol. 8, no. 4, 2012, pp. 528–538.

Simons, Robert. “Strategy Execution Module 9: Building a Balanced Scorecard.” Harvard Business School Module Note 117-109, 2016, pp. 1-20.

In this article, Kaplan and Norton (2007) discuss a strategic approach towards strategic management that they call the balanced scorecard. According to the authors, many companies neglect the problem of relations between short-term actions of the company and its long-term strategy, which adversely influences business and the enterprise (Kaplan & Norton, 2007). Unlike other approaches, the balanced scorecard does not rely on short-term financial measures; instead, it provides four processes of the managing strategy: translating the vision, communicating and linking, business planning, and feedback and learning. The first process focuses on making the company’s vision more clear and practical so that the enterprise’s employees can understand what actions will align with the company’s goal. It is crucial to clarify the meaning of the vision and provide specific actions related to employees, customers, or products. Only when the company’s executives agree on the necessary actions, translation of the vision becomes possible (Kaplan & Norton, 2007).

It is difficult to align the company’s strategy with employees’ duties and actions when a detailed plan and communication are lacking. Therefore, communicating and educating, setting goals, and linking rewards to performance measures are the essential parts of the balanced scorecard. Communicating the long-term strategy upwards and downwards is essential (Kaplan & Norton, 2007).

Another problem is the non-existent relationship between the budget and the company’s strategy. The balanced scorecard helps companies integrate their strategies and business processes and see if the budget can support strategic planning (Kaplan & Norton, 2007). Thus, the financial budget is linked to the strategic goals of the company; managers need to focus on the most critical issues linked to strategic success (Kaplan & Norton, 2007). Setting the long-term goals, allocating the resources, and establishing milestones are the processes of business planning.

However, no matter how well thought and detailed the previous processes are, they have to function in a rapidly changing world. Therefore, assessment and feedback are necessary to understand how the balanced scorecard is working and what needs to be changed. Strategic feedback will test the hypothesis of business planning and collect opinions. Furthermore, it will also provide information about cause-and-effect relationships between strategies and processes. Without feedback and strategic learning, and development and adjustment are impossible.

Critical Analysis

I believe that in many ways, this article supports the findings of previous materials; strategic management is impossible if there is no clear plan and preparation, if communication is lacking, and feedback is ignored, or the company does not know how to learn from its mistakes. It is a valuable lesson because many companies still rely on vague missions and visions and separate their budget and resources from their strategic goals. The article points out that a company is in many ways a living organism where all relations and mechanisms are interconnected and should not be ignored. In my opinion, it is a reasonable approach, because neglect of the cause-and-effect relationships might result in a catastrophe.

However, as the authors themselves point out, the balanced scorecard system can be expensive and time-consuming (Kaplan & Norton, 2007). All the processes will require attention and investment, and gathering feedback will last from months to years (Kaplan & Norton, 2007). Therefore, it is possible to assume that not all companies will be able to afford this approach, especially newer or smaller ones.

It also seems that the balanced scorecard pays more attention to strategies and communication, and very little to financial issues and details. Aligning budget and strategy is important, but the approach does not provide any additional strategies that could be used in financial management and planning.

Nevertheless, the balanced scorecard has the potential to bring success to a company if it is implemented with other strategic models or thoroughly designed and reviewed.

Main Takeaways

The scorecard can show managers how the company’s strategy can be updated and aligned with other areas, how the executives and managers can communicate the strategic mission throughout the company, how strategic objectives are linked to “long-term targets and annual budgets” (Kaplan & Norton, 2007, p. 161). Using this approach, one can evaluate the company’s actions and its influence on the strategy and mission. Furthermore, one can also see whether the company’s employees are ready to attend additional training and courses related to this strategy. Employees’ disinterest in the new approach can help managers identify the existing issues in the company and evaluate how they influence their overall functionality.

Although the balanced scorecard is more suitable for companies that have enough time and resources to implement it, smaller companies can also try to engage this strategy if they can. Many companies underestimate the importance of clear vision and long-term objectives; for a smaller company, this can be especially crucial and positively influence its competitiveness in the market. Furthermore, establishing milestones can also help determine what course the company wants to set and what goals it would like to achieve during its first two, three, or five years in the market. Thus, the balanced scorecard is an efficient strategic system if implemented carefully and correctly.

Introduction

Business excellence is desired by all organizations that want to gain a competitive edge on the market. The presented article is focused on two models, the EFQM Excellence Model and the Balanced Scorecard method. This paper will examine the information presented in the article and outline the similarities and differences between the two frameworks

Discussion

European Foundation for Quality Management excellence model was created in 1988 and has since become one of the most commonly used models of quality management (Suárez, Calvo-Mora, Roldán, & Periáñez-Cristóbal, 2017). The model is based on nine criteria that relate to management practices that are designed to facilitate performance excellence in the organization. The nine criteria are separated into two categories. The first is called “enablers, ” and it contains leadership, people management, policy, and strategy of the company, resources, and processes. The second category is called “results” and includes people’s satisfaction, customer satisfaction, impact on society, and business results (Schoten, Blok, Spreeuwenberg, Groenewegen, & Wagner, 2016).

The Balanced Scoreboard approach was developed in the early 1990s by the Nolan Norton Institute. This framework is designed to allow for better communication and implementation of the organizational strategy (Hoque, 2014). It contains financial and non-financial measures that help implement the key elements of the company’s vision. Non-financial aspects contain three additional categories to focus on the future performance of the company, while financial measurements are based on past performance.

Non-financial categories include customer satisfaction, internal business process, and learning and growth. This framework contains four perspectives: financial, customer, internal, and growth. However, the creators of the system incentivize each company to develop a unique scorecard of measurements that are most relevant to its stakeholders (Cooper, Ezzamel, & Qu, 2017; Hansen & Schaltegger, 2016). Performance is linked to the strategy of the business unit, and it includes four processes that create a strategic framework for action. They are: “clarify and translate vision and strategy,” “communicate and link strategic objectives and measures,” “plan, set targets and align strategic initiatives,” and “enhance strategic feedback and learning” (Wongrassamee, Simmons, & Gardiner, 2003, p. 17).

To compare the models, the article presents a series of questions and tries to answer them by using them. Neither of the models could fully answer the questions, but some similarities and differences could be seen. Both models were found to be based on specific objectives with the EFQM model focusing on the nine criteria and the scoreboard relying on four perspectives. EFQM model does not present a strategy for the implementation of the framework, while the scoreboard does. I most aspects the frameworks are similar, but the main difference lies in the way that the Balanced Scoreboard framework is based on the strategy of the company and is shown to be more flexible than others.

Conclusion

Business excellence frameworks play a significant role in business. The article examined the EFQM excellence model and the Balanced Scoreboard framework. They were found to be similar, except flexibility that the later framework has.

References

Cooper, D. J., Ezzamel, M., & Qu, S. Q. (2017). Popularizing a management accounting idea: The case of the Balanced Scorecard. Contemporary Accounting Research, 34(2), 991–1025. Web.

Hansen, E. G., & Schaltegger, S. (2016). The sustainability Balanced Scorecard: A systematic review of architectures. Journal of Business Ethics, 133(2), 193–221. Web.

Hoque, Z. (2014). 20 years of studies on the balanced scorecard: Trends, accomplishments, gaps and opportunities for future research. The British Accounting Review, 46(1), 33–59. Web.

Schoten, S., Blok, C., Spreeuwenberg, P., Groenewegen, P., & Wagner, C. (2016). The EFQM Model as a framework for total quality management in healthcare: Results of a longitudinal quantitative study. International Journal of Operations & Production Management, 36(8), 901–922. Web.

Suárez, E., Calvo-Mora, A., Roldán, J. L., & Periáñez-Cristóbal, R. (2017). Quantitative research on the EFQM excellence model: A systematic literature review (1991–2015). European Research on Management and Business Economics, 23(3), 147–156. Web.

Wongrassamee, S., Simmons, J. E. L., & Gardiner, P. D. (2003). Performance measurement tools: the Balanced Scorecard and the EFQM Excellence Model. Measuring Business Excellence, 7(1), 14–29. Web.

IBM as an Example of the Companies with Disproportionate Emphasis on the Financial Perspective

Many companies have suffered because of the act of placing uneven emphasis on various perspectives within the organization (Greenhalgh, 2004). IBM is one such company that is yet to recover from this disproportionate emphasis on the financial perspective, ignoring other perspectives. IBM was once the leading manufacturer of personal computers. It ignored the importance of keeping customers satisfied because after all the customers did not have any other choice but to buy its products.

The firm also laid less emphasis on internal business processes, a fact that saw the employees’ work uncoordinated at some point. This firm also failed to lay emphasis on the learning and growth perspective of the employees. There was no clear mechanism that would allow employees to develop their skills and enhance their productivity within the firm. The consequence of laying disproportionate emphasis weighed heavily on this firm. New firms arose and were able to overtake it in the market. IBM is yet to regain its top position as the world’s largest producer of personal computers due to this mistake.

Examples of Organizations That Do Not Have Relevant “Customers” To Take Into Consideration

There are some organizations that do not have clearly defined relevant customers (Niven, 2010). One such organization is the Greenbelt Movement. This is an organization that is keen to ensure that the world is made free of any form of environmental pollutants. Its main role is to ensure that various firms around the globe act in a manner that will not jeopardize the environment in any way. This organization has no relevant customers that it serves.

This organization is dedicated to serving the natural environment. It may be said that the direct customer of this organization is the environment itself because it is under its protection. However, the main beneficiary and the ultimate customers of this organization is the future generation. They stand to benefit from this protection. They will live in a less polluted environment because of the actions of this firm.

In the Greenbelt Movement, the firm does not have direct customers that have to be impressed for the continuity and success of the firm to existing. On the other hand, firms that have relevant customers such as Coca-Cola Company can only succeed if they have the capacity to satisfy the needs of their customers. Firms with relevant customers will, therefore, act in a way that would satisfy the needs of their customers as a way of ensuring success.

An example of a business process where the interests of stakeholders are in opposition

Organizations are made up of complex systems with various stakeholders. Within the operational activities within the firm, it is common to find out that the interests of some of the stakeholders are in conflict (Kaplan, 2005). For instance, the interest of shareholders and that of the managers are always in conflict. Whereas the shareholders will always expect to earn maximum dividends from their investments, managers would always aim at reinvesting the profits of the firm.

This would always lead to serious conflict within the organization. While the shareholders would be expecting to earn most of the profits, the management will always insist on expanding the business through reinvestment. Another serious conflict may also arise among the departments. The finance department within the organization will always expect quick profitability hence high liquidity within the firm. It will always restrict most expenditure that does not generate direct income to the firm. This may put this department in conflict with the marketing department.

The marketing department believes that the best way to enhance the profitability of the firm is to ensure that it spends a lot on product promotion. Product promotion is a very costly venture. At times it may not result in instant profitability to the firm. As a result of this, the finance department may fail to see the importance of spending on product promotion. The finance department may, therefore, allocate the marketing department, a budget that cannot enable it to undertake its duties with expected efficiency.

To eliminate conflict between the management and the shareholders, there should be a clearly defined formula that stipulates how profits should be shared. The shareholders should know how much they should expect, and how much will be invested. To solve the dispute between the marketing department and the finance department, the heads of both units should agree on what the business should focus on in each financial year, and determine the amount that will be needed for each activity.

An example of a measure of learning and growth that could be critical to an organization, but difficult to measure

Learning and growth perspective has various measures. One of the most important measures within an organization is the ability of a firm to create more value for the customers (Niven, 2010). The market is increasingly getting competitive. New firms are introduced to the market, making products to flood the market. It is the responsibility of each department to ensure that customers get more value for their products in the market.

Although this is a clear measure that should be improved within the firm, it is not very easy to quantify the improved value for the customers. A number of factors make it difficult to quantify this value. In the current competitive market, there is a need to ensure that there is the constant improvement of value on products. It is, therefore, a continuous process that cannot easily be quantified.

Another reason is that this process involves value, and not amount. It is difficult to state the value quantitatively. This makes this learning measure difficult to quantify. Despite the difficulty to quantify the process, it is prudent to come up with a metric to help determine how to quantify this measure. The best approach would be to state the percentage increase in the use of the product and the increased level of satisfaction it offers customers compared to the previous state.

The most difficult aspects of simultaneously balancing the four perspectives in the balanced scorecard

The act of balancing the four aspects in a balanced scorecard simultaneously can be very challenging (Silverthorne, 2008). For instance, balancing the Learning and Growth perspective and the financial perspective simultaneously can be a big challenge. On one hand, the management will be trying to balance its finance to meet the needs of various stakeholders, including the shareholders. This would mean that the management will have a tight budget.

On the other hand, the learning and growth perspective will demand that the management embraces the need to subject all employees and other relevant stakeholders to a learning process as a way of improving their performance. This would mean that the management will have to spend more on the employees in a process that will not have an instant proportionate impact on the financial status of the firm. Balancing the two measures may, therefore, be very challenging.

References

Greenhalgh, C. (2004). Building a Strategic Balanced Scorecard: Saatchi & Saatchi Complementary Case Study. Business Intelligence Company. Web.

Kaplan, R. (2005). A Balanced Scorecard Approach To Measure Customer Profitability. Working Knowledge. Harvard Business School. Web.

Niven, P. (2010). Financial perspective. EPM Review. Web.

Niven, P. (2010). Learning and Growth perspective. EPM Review. Web.

Silverthorne, S. (2008). Executing Strategy with the Balanced Scorecard. Web.

Introduction

A balanced scorecard (BSC) is a performance management framework developed in the early 1990s (Bible, Kerr & Zanini 2006). It is used to monitor staff activities and the effects of their deeds. A BSC plan includes financial and non-financial data used to monitor performance. In addition, it focuses on the primary agenda of the corporation. Since its development, BSC has undergone various developments.

In this paper, the author will provide a report on an article about BSC. The article is written by Coe and Letza (2014). In the report, an analysis of the performance measurement tool and its development over the years will be provided. In addition, the pros and cons of BSC design and implementation will be discussed.

Two Decades of the Balanced Scorecard: A Critical Analysis

Inception and Development of the Scorecard

In the article, Coe and Letza (2014) state that the BSC was developed primarily because the existing financial measures did not produce the results sought by most companies at the time. Kaplan and Norton, the scholars behind the tool, realized that organizational value was no longer influenced by tangible assets. Intangible resources were the major drivers. In addition, they noted that most managers were not familiar with the impact of measurements on business strategy. To come up with a clear performance target, administrators needed a balanced presentation of both financial and operational measures (Lawrie & Cobbold 2004). Consequently, the scorecard was developed. The management tool entailed four viewpoints that brought together the performance of all employees. They included financial, customer, internal business, and innovation standpoints.

When the scorecard was first developed, most managers found it was effective. In spite of this, the tool had various defects. Initially, it entailed inserting 4-5 measures into four boxes (Bible et al. 2006). The major problem emerged when deciding the measures to place in each box and order of placement. According to Coe and Letza (2014), the entire process was vague. In addition, it was unclear how the strategy was connected to inserting measures in boxes. As a result, managers ended up setting incoherent measures and goals (Haksever et al. 1999).

Improvements and modifications of the original scorecard started in 1996 (Coe & Letza 2014). The revised version allowed administrators to associate long term premeditated goals with short term accomplishments (Lawrie & Cobbold 2004). The news aspects of the tool also enabled employees to view the company’s plans. In addition, they could see how their efforts influenced the attainment of organizational goals. Consequently, the scorecard evolved from a simple to a complex tool.

Modernization of the Scorecard

The BSC has undergone through three generations. The switch from the first to the second generation positioned the tool as a device for supporting premeditated control (Coe & Letza 2014). The third generation included new features to provide improved functionality and planned significance.

The major enhancement in the card was the feature of the destination statement. The declarations were made at the end of the design procedure. Their main purpose was to encourage managers to examine the effects of the selected strategic goals on the organization (Bogetoft 2013). As a result, administrators could identify possible discrepancies in the profile of set objectives. Another key modification involved getting rid of the four inflexible perspective labels that were initially used. They were replaced with two new ones (Fitzsimmons & Fitzsimmons 2007). The two are activity and outcome. In spite of the changes, the primary principles of the scorecard were retained.

A Modern Case Study of the Balanced Scorecard

Currently, the third generation BSCs are designed and implemented by 2GC. The firm majors in premeditated performance assessment affecting modern businesses. It separates the scorecard into three components (Lawrie & Cobbold 2004). They include destination statement, strategic linkage model, and measures and targets (Coe & Letza 2014). The destination statement explains future goals. The period set for achieving the objectives is usually 3-5 years. The component provides details on how the company will look like after this period (Johnston & Clark 2005).

The strategic linkage model is next. It entails dispersing the selected goals into four categories. The two lower perspectives contain goals linked to the most important activities, such as productivity. The upper perceptions include objectives associated with the expected results of the activities carried out. Measures and targets monitor the initially set goals. The targets act as unique projects with a set start and end dates (Coe & Letza 2014).

The Future of the Balanced Scorecard

In their article, Coe and Letza (2014) state that changes on the scorecard are in line with technological innovations. The modifications allow for customization and computerisation (Bogetoft 2013). Currently, there are four performance measurement cards. Each has its unique design and mode of implementation. However, the strategic performance management scorecard is most preferred.

Pros and Cons of the Balanced Scorecard

Pros

The primary aspects of a BSC allow managers to have a precise picture of the entire company’s performance (Lawrie & Cobbold 2004). Compared to the traditional approaches, the management tool provides the administrator with a full picture of whether the set goals are being met or not. It helps managers to look at the immediate future objectives. When setbacks arise, the suggestions made only target the current problems. However, with the use of scorecards, managers can evaluate short, medium, and long term goals at a glimpse (Coe & Letza 2014).

Cons

The use of a scorecard as a strategic planning tool can be costly and time-consuming. Its correct use requires a complete understanding of the processes (Bogetoft 2013). At times, organizations hire an external consultant. In addition, costs are incurred in purchasing software and maintenance. The effectiveness of a scorecard is determined by the value of information inserted in the specific zones. The tool can only work if the correct elements are selected. Incomplete information results in undesired outcomes (Coe & Letza 2014).

Conclusion

The article by Coe and Letza (2014) provides information on BSC and its development over the years. Modifications have been made to various aspects of the tool. The major improvements can be attributed to the weaknesses of the earlier designs. Today’s scorecards are highly advanced compared to the original ones. However, more improvements are needed.

References

Bible, L, Kerr, S & Zanini, M 2006, ‘The balanced scorecard: here and back’, Management Accounting Quarterly, vol. 7 no. 4, pp.18-23.

Bogetoft, P 2013, Performance benchmarking: measuring and managing performance, Springer, New York.

Coe, N & Letza, S 2014, ‘Two decades of the balanced scorecard: a review of developments’, Poznan University of Economics Review, vol. 14 no. 1, pp. 63-75.

Fitzsimmons, J & Fitzsimmons, M 2007, Service management: operations, strategy, information technology, 6th edn, McGraw-Hill, New York.

Haksever, C, Render, B, Russell, R & Murdick, R 1999, Service management and operations, 2nd edn, Prentice Hall, New Jersey.

Johnston, R & Clark, G 2005, Service operations management: improving service delivery, 2nd edn, Prentice Hall, New York.

Lawrie, G & Cobbold, I 2004, ‘Third-generation balanced scorecard: evolution of an effective control tool’, International Journal of Productivity & Performance Management, vol. 53 no. 7, pp. 611-623.

The balanced scorecard (BSC) approach was developed and published by Kaplan and Norton in 1992 in the Harvard Business Review, and it became an immediate success in the fields of business and accounting (Madsen & Slåtten 2015, p. 90; Pitcher 2015, p. 5). Pitcher (2015) defines BSC as a system that is meant to measure the performance of a company in relation to strategic management and ensure the alignment of business activities with the strategic vision, which ultimately leads to improved control (p. 17).

The four critical BSC areas include the learning and growth, processes, customers, and finance, and the relationship between the areas is not linear. Janeš (2014) describes it as a set of cause-and-effect relationships, all of which are aimed at achieving the strategic goals by assuming what could help accomplish them and thus setting the key performance indicators (KPIs). KPIs are used to measure and control the performance in the areas.

According to Janeš (2014) and Pitcher (2015), the key advantage of BSC consists in the integration of various views on an organization including the financial and non-financial together with internal and external ones. For example, in the case study by Janeš (2014) that is devoted to a manufacturing company in Slovenia, internal financial KPIs included the return on assets while external nonfinancial customer perspective KPIs involved reputation. Apart from that, Nikolaou and Tsalis (2013) insist that BSC is especially good at fostering the environment for the recording of financial and nonfinancial information (p. 77). Also, BSC is a flexible system (Nikolaou & Tsalis 2013). For instance, Nikolaou and Tsalis (2013) describe the possible model of integrating BSC with sustainability reporting. Besides, as shown by the study reported by Pitcher (2015), accountants can end up using BSC to an extent, skipping the formalities of the method but utilizing its elements (p. 10). Madsen and Slåtten (2015) prefer to insist that this flexibility is the result of the system’s vagueness, but it does not change the fact that BSC is likely to develop to fit the needs of companies better. To sum up, the advantages o BSC are most appealing.

According to Janeš (2014), up to 90% of companies cannot successfully carry out their strategy because they fail to define the means of describing, measuring, and controlling them (p. 206). BSC provides these means and makes them customizable. As a result, BSC use is hardly limited to a particular type of business. Though the majority of studies in the field are concerned with the models used by for-profits, non-profit and public organizations can also utilize it to ensure the alignment of the areas with their strategy.

However, the popularity of BSC is a controversial issue. Madsen and Slåtten (2015) describe it as a fashionable tool that is being adopted in an increasing number of businesses. At the same time, according to Janeš (2014), few companies choose to test their models of BSC. It is important to remember that BSC needs proper implementation like any other tool, which means that if a company intends to benefit from its adoption, it should control this process as well.

Reference List

Janeš, A 2014, ‘Empirical verification of the balanced scorecard’, Management & Data Systems, vol. 114, no. 2, pp. 203-219.

Madsen, D.Ø & Slåtten, K 2015, ‘The balanced scorecard: Fashion or virus?’, Administrative Sciences, vol. 5, no. 2, pp. 90-124.

Nikolaou, I & Tsalis, T 2013, ‘Development of a sustainable balanced scorecard framework’, Ecological Indicators, vol. 34, pp. 76-86.

Pitcher, GS 2015, Management accounting in support of the strategic management process, Chartered Institute of Management Accountants.

Today, the balanced scorecard can be discussed as a rather innovative strategic and management tool, and the potential benefits of its implementation should be analyzed according to the characteristics of this new strategy and management system. If several years ago the balanced scorecard was used only as of the performance measurement tool, the modern versions of the balanced scorecard provide companies with the possibilities to regulate their business activities according to the company’s goals and strategies, to assess the performance, improve the communications at all the levels, and determine the strategies to overcome the problematic issues. That is why, the importance of the study is in examining the particular features of the balanced scorecard’s implementation in companies, the advantages of the system, and possible weaknesses because of the tendency to use the balanced scorecard to optimize the business processes.

In their study, Braam and Nijssen concentrate on the aspects of implementing the balanced scorecard in the company and determine the antecedents of experimentation and the factors of the actual implementation of the system. Depending on the experiences of some firms, the researchers state the factors which are significant for the effective experimentation and implementation of the balanced scorecard (Braam and Nijssen). The results are important for managers to guarantee the effectiveness of the experiment or the system’s implementation. Houck and the group of researchers focus on the main purpose of the balanced scorecard which is the measurement of performance and determining the connection between the usage of the system and the employees’ motivation. The researchers have found that the effectively developed goal action plans as the component of the balanced scorecard program can contribute to increasing motivation and improving performance (Houck et al.). Thus, the researchers provide the observation of the real benefits of using the system. The purpose of Pereira and Nuno’s research is to examine the possible benefits and challenges related to implementing the balanced scorecard. From this point, the paper’s results can be compared with Braam and Nijssen’s findings and Houck’s conclusions. However, it is important to pay attention to the fact that Pereira and Nuno’s research is based on the education system and the Portuguese context. It was found that there are more benefits than obstacles in implementing the system to manage the organization that is why the system’s usage is rather advantageous for the situation (Pereira and Nuno).

If the other researchers focus on studying the peculiarities of using the balanced scorecard and its advantages and disadvantages, Dechow concentrates on the aspects of the exploring process itself. Dechow uses the observations of seasoned managers who worked with the system and provides recommendations on what aspects should be examined in relation to the balanced scorecard in the future (Dechow). Houck and the group of researchers examined the employees’ factor and their motivation in relation to the balanced scorecard, and Modell also focused only on one political aspect to examine the peculiarities of the system. Nevertheless, the purpose of the research is to review the literature on the problem and provide the implications for further empirical research, and the correlation between the political aspect and balanced scorecard was analyzed from many perspectives (Modell).

The process of implementing the balanced scorecard is rather complex, and it is necessary to continue research in order to examine all the aspects of the system. However, it is possible to state that the program’s advantages are obvious, and different elements of the program can be successfully used to improve the performance of the employees based on their motivation and other factors and to regulate the company’s progress in relation to the definite strategy.

References

Braam, Geert, and Ed Nijssen, 2011, Exploring Antecedents of Experimentation and Implementation of the Balanced Scorecard, Journal of Management and Organization 17.6: 714-728. Web.

Dechow, Niels, 2012, The Balanced Scorecard: Subjects, Concept and Objects – a Commentary, Journal of Accounting & Organizational Change 8.4: 511-527. Web.

Houck, Max, Paul Speaker, Arron Fleming, and Richard Riley, 2012, The Balanced Scorecard: Sustainable Performance Assessment for Forensic Laboratories, Science & Justice 52.4: 209-216. Web.

Modell, Sven, 2012, The Politics of the Balanced Scorecard, Journal of Accounting & Organizational Change 8.4: 475-489. Web.

Pereira, Maria, and Filipe Nuno, 2012, The Implementation of the Balanced Scorecard in a School District, International Journal of Productivity and Performance Management 61.8: 919-939. Web.

Bizcom Limited is a medium-sized firm that specializes in clearing and forwarding services and has a number of strategically located offices with a head office carrying out administrative and management responsibilities. The firm’s local offices are dispersed across the nation with an international office abroad. Customers place orders at the various local branches, which are forwarded to the main office for onward dispatch to their international office.

The customers pay a fee for this particular process. Bizcom’s management is employing the balanced scorecard to assess the financial, customer, internal processes, and innovative and learning perspectives, which are typical components of the balanced scorecard to assess the viability of an internet-based application that will allow customers to scrutinize their order status.

The financial perspective

The financial perspective relates to the financial objectives and obligations of a company (Kaplan & Norton, 1992). In this particular case, the financial perspective will involve Bizcom Limited. Measurement techniques such as net present value, return on investment, economic value added (EVA), and investment rate of return can be used to assess the financial perspective of Bizcom. A cost-benefit analysis of the internet-based application will enable the management to make the right decisions in relation to the operations and processes at Bizcom. Bizcom Limited is sourcing part of the project cost internally, whereas the other part is covered by a bank loan.

The interest rates currently stand at 16%, and Bizcom has a repayment period of twenty-four months. While employing the EVA, the management has a positive EVA, an indicator that wealth has been created by the implementation of this internet-based application.

The internal process perspective

The internal processes perspective covers Bizcom’s Limited goal, which is in part to provide satisfactory clearing and forwarding services at the most competitive price. An important question to ask concerning this perspective in relation to the internet-based application may be how the adoption of the internet-based application is going to improve the internal processes at Bizcom. It is very likely that the implementation of this system will improve the processes at Bizcom whereby employees’ productivity will be enhanced while the client service is greatly improved.

The customer perspective

Customer perspective is directly related to internal processes perspective (Bose & Thomas, 2007). The customer perspective affects the internal processing that must align it to meeting the customer expectation through expedient online order status inquiries at Bizcom, which is the desired feature of the internet-based application to be implemented. The application will enable the customer to run direct online order status inquiries, which is likely to positively contribute to customer satisfaction and increase profits for Bizcom through customer retention.

The learning and innovative perspective

The internet-based application will enhance all the processes and make Bizcom’s service more efficient. The employees and customers will gain alike from the deployment of the internet-based application, which will ensure efficient service delivery by the employees as well as a more efficient order inquiry status for the customer. The most updated customer order status will enable Bizcom to address each customer’s requirement effectively and efficiently. The system will also encourage customers to learn and handle some processes of the system.

Introduction

Material Flow Cost Accounting (MFCA) is a tool used in management to help organizations effectively understand the possible financial and environmental effects of their material activities. The tool also allows organizations to make necessary adjustments to improve company performance by mitigating unnecessary financial losses (Arise & Shewell, 2021). Through a well-designed MFCA, businesses can improve their material efficiency because the strategy focuses on the material losses usually incurred during production (Arise & Shewell, 2021). Whereas, Balanced Scorecard (BSC) is also a strategic management tool for evaluating performance metrics. A Balanced Scorecard measures and provides feedback to the organizations on the weaknesses that a company or business needs improvement. The metrics are used to identify and improve various intrinsic operations of a business and their results.

Relationship between Material Flow Cost Accounting and Balance Score Card

MFCA and BSC have a close relationship based on their roles and help the organization attain excellence. Most manufacturers and businesses are under tremendous pressure to achieve high productivity with minimal environmental impacts. For this to be achieved, MFCA is one of the important organizational environmental management accounting tools put forwards in meeting the organizational needs of higher production value with minimal environmental damage (Turshan & Karim, 2019). A balanced scorecard ensures that the company’s internal problems that prevent it from meeting its performance expectations are identified, improved, and controlled (Arise & Shewell, 2021). Moreover, just like material flow cost accounting, which measures financial and environmental factors, a balanced scorecard also measures finance, business process, learning, and company growth. By using a balanced scorecard, companies can pool information on one report and work on the areas requiring adjustments as a whole.

Integrating MFCA and BSC to Achieve Sustainability

Achieving sustainability in any organization needs an effective and proper performance measurement tool that integrates material flow cost accounting and a balanced scorecard. Therefore, developing a framework model that brings together the two-performance evaluation tool, a model has to be crafted that entails the following components: perspective, strategic target, and performance indicators evaluated weekly for one month. The evaluation may continue up to the second and third months so long as the performance goal of the company is achieved.

The strategic perspective targets financial, customer, operational, and intellectual capital. The financial target will focus on revenues and profitability growth, effective receivable management, effective cost management, and decreased inventory (Dekamin & Barmaki, 2019). They will be checked alongside sales, value stream profit, value stream ROS, material cost, and conversation cost (Dwivedi et al., 2021). The strategic perspective will mainly focus on minimizing wastage on the customers, increasing the company’s market share, boosting the acquisition of new customers, and increasing the satisfaction of the newly acquired and existing customers (Ferber et al., 2021). The strategic targets are then evaluated based on the percentage market share of the company, customer satisfaction (based on their rating forms), and the number of clients complaining about the quality of the products (Dekamin & Barmaki, 2019). The operational cost will mainly target reducing wastage, increasing organizational productivity, and leading to operational perfection. The operational and strategic targets shall be evaluated based on the productive and non-productive capacity, cycle time, and true first-time rate. An example of such a model for a manufacturing company that combines the integrative approach of MFCA and BSC is shown in Table 1.

Table 1. MFCA and BSC Framework Model

Making Integration Between MFCA and BSC To Achieve Sustainability

Sustainable development indicators are inexhaustible. Nonetheless, there is a pressing need to have framework models that can consistently organize the development indicators and put them together as management tools for integrating and enforcing policies within an organization (Ferber et al., 2021). BSC is a recently developed strategic management instrument that has been very significant in the internal performance evaluation for companies and businesses. Its unflinching potential in earthing internal problems such as finance and companies’ growth makes it more acceptable. On the other hand, MFCA assists the company in realizing the financial and environmental consequences of its activities (Mayndarto & Agustine, 2021). Therefore, integrating MFCA and BSC would mean a combined workforce strategic management tool for a company. To achieve the integration, they should be merged as a single policy integration tool for enforcing compliance in an organization.

How The Approaches Can Integrate and Their Benefits

MFCA and BSC can be integrated as a single policy enforcement document for a company. They should be integrated as one strategic management tool because of their close relationship with their objective and roles in organizational performance evaluation (Ferber et al., 2021). Combining the two approaches will ensure that performance evaluation goes beyond corporate or system indicators. It supports strategy development and consistent and continuous integration of various measures within the organization. Moreover, MFCA and BSC approaches will collectively provide rules for the systematic organization of the key indicators for evaluating progress towards sustainability.

Conclusion

Integrating MFCA and BSC as a single policy evaluation document will help the company minimize materials and finance. Moreover, MFCA and BSC will encourage higher transparency practices in material use by creating a material flow model and stock of material within the organization in monetary units. BSC provides information to the managers on four perspectives: from the customers’ perspectives, internal perspectives, financial perspectives, and the innovation perspective. Based on the four dimensions, integrating BSC with MFCA will reduce information overload by limiting the company’s measures. When a company has few measures, they can add useful suggestions from consultants to help business growth.

References

Arise, O. A., & Shewell, P. M. (2021). Material flow cost accounting (MFCA). Handbook of Research on Climate Change and the Sustainable Financial Sector, 286-303.

Dekamin, M., & Barmaki, M. (2019). Implementation of material flow cost accounting (MFCA) in soybean production.Journal of Cleaner Production, 210, 459-465.

Dwivedi, R., Prasad, K., Mandal, N., Singh, S., Vardhan, M., & Pamucar, D. (2021). Performance evaluation of an insurance company using an integrated balanced scorecard (BSC) and best-worst method (BWM). Decision Making: Applications in Management and Engineering, 4(1), 33-50.

Eko Cahyo Mayndarto, & Yvonne Agustine. (2021). The Efffect of environmental management accounting, environmental strategy on environmental performance and financial performance moderated by managerial commitment. International Journal of Science, Technology & Management, 2(1), 112-119.

Ferber Pineyrua, D. G., Redondo, A., Pascual, J. A., & Gento, Á. M. (2021). Knowledge management and sustainable balanced scorecard: Practical application to a service SME. Sustainability, 13(13), 7118.

Turshan, M. N., & Karim, N. A. (2019). The effect of adopting balanced scorecard (BSC) as strategic planning tool on financial performance of banks operating in Palestine. Asian Social Science, 16(1), 95.