Question:
Discuss about the Report for Advanced Management Accounting.
Answer:
Introduction
Background Information about the Research Paper:
In the present time of globalisation, tight competition, globalised economy and introduction of new technologies forcing today’s corporation or business firms to access their performance by using strategic tools in order to compete in the global market and attain competitive advantages over the competitors. Business firms and their top management are usingtheBalancedScorecard approach as an innovative tool to access and improve overall organisational performance. For example, a BalancedScorecard is utilized by the senior or top management as a strategic tool to bring innovation and accountability into alignment with the current organisations practices, processes and methods for the purpose to access and improve overall performance. In the same way, it is a tool that is used by the top management to improve current and future organisational performance. It means by using a Balanced Scorecard, the top management of a company can identify and access the business performance in the different business areas including financial, customer, internal business, and learning/growth. Overall, it can be said that, a Balanced Scorecard is an innovative, specific and dynamic tool or approach to access the performance of different business areas effectively.
Aims/Objectives/Purpose of the Study:
The main purpose of conducting this research paper is to analyse how a balance scorecard could be used as a strategic planning and management system by today’s organisations to align business activities to the vision and strategy of the organisation, improve internal and external communications, and monitor organisation performance against strategic goals. Moreover, this research paper reflects that, balanced scorecard is help the management not only in accomplish organisational tasks but also measuring and monitoring the progress towards strategic targets. At the same time, a balanced scorecard method allows the management of a company to view and access the performance of their company against the specific standards such as: Customer Perspective, Financial, Internal Business, and Innovation & Learning Perspective. In addition to this, it is also, the fundamental objectives of this research study is to access how a Balanced Scorecard can be used as a tool for senior management to assess the performance of an organisation. Apart from this, in this research paper, the concepts, application, roles and principles of the Balanced Scorecard would be discussed. Moreover, this research paper would also evaluate and analyse that how a balance scorecard is used by the top management as a tool to analyse overall performance of a company. At the same time, the applications of balanced scorecard in the business, industry, profit organisations, non-profit organisations and government will be analysed.
Balanced Scorecard (BSC) as a Senior Management Tools
In today’s more challenging and competitive business environment, a Balanced Scorecard is used by all the types of organisations to access their performance effectively. For example, different organisations including government organisation, profit organisation, service organisation, social organisation, business industry etc are using Balanced Scorecard as a strategic planning tool and management system in order to align business and operational activities to the corporate objectives, vision, and mission. In the words of Kaplan and Norton, Balanced Scorecard plays a key and fundamental role in improving organisational internal as well as external performance. Using the Balanced Scorecard as a strategic planning and management system provides a clear overview about the different aspects or areas of anorganisation(Coyle, Langley, Gibson, B., Novack,and Bardi, 2008). It means organisations can access their performance of the different areas effectively. For example, a Balanced Scorecard approach allows the organisations to set strategic goals to improve different areas such as: financial, customers, learning/growth and internal businesspractices. On the other hand, a Balanced Scorecard tool also help the organisations to monitoranorganisationsperformance against strategic goals and objectives in an effective and proper manner(Cormier, Nurius, and Osborn, 2009)
As explained by Kaplan and Norton, A BSC is creative and a vital management framework/toolfor the senior managementthat assists in achieving their central and key hierarchical destinations adequately. It offers vital bearings to the seniormanagement of an organisation about the present and future business execution. In addition, BSC helps the top management of an organisation on how to set, and achieve more confounded assignments and elements of the organisation in a successful and inventive way(Kumar, 2009). For instance, BSC enables the top management to investigate their inner and outside business conditions and distinguish negative variables thosethat are influencing the aggregate achievement of the organisation. In addition, a BSC controls the senior management of the organisation. For instance, BSC toolhelps the seniormanagement to get to and assess their hierarchical operations, capacities and accomplishment from the four noteworthy points of view, for example, Financial, Customer/Stakeholder, Internal Process and Organisational Capacity(Demirkan, Spohrer, and Krishna, 2011).TheBalanced scorecard is a standouttool amongst the most widely recognised and helpful approach for the senior management of the organisationthat is utilized to enhance business execution, diminish cost and compete in the market. Similarly, this tool helps the senior management to conquer the operational expenses by enhancing the execution of various business regions. For case, BSC likewise enables the management to enhance all the business ranges of an organisation and brings advancement and improvement inside the present business process and frameworks(Christensen, Kruijff, and Wyatt, 2010).
Accroding to Kaplan and Norton, Balanced Scorecard is likewise utilised as a strategic planning tool by the senior management to enhance the present and future business execution. For instance, this tool gives particular and fundamental headings on how to enhance distinctive territories by utilising techniques, strategies and methodologies. A BSC gives vital course to the senior management keeping in mind the end goal to enhance the present and future business execution. For instance, it gives chances to the senior management to diminish elusive instabilities inside the organisation or association(Khosrowpour, 2006). BSC is acritical tool for the senior management with a specific end goal to achieve aggressive degree framein the more focused market. TheBSC is also utilised as a business system by senior management to enhance hierarchical execution as well as track and oversee diverse business and operational approaches, procedures and strategy. With the proper utilisation of the BSC, senior management can dissect and get to different inward capacities in an imaginative way that is imperative to enhance authoritative execution(Chai, 2009).
Roles of Balanced Scorecard:
Kaplan and Norton explained and defined that, a Balanced Scorecard is more successful, profitable andahuge instrument for the senior management to maintain focus on the end goal to bring advancement inside the interior condition of an organisation. With the assistance ofthe BSC, senior management can achievethe upper handas well as present different business methodologies, techniques and an imaginative working procedure. This tool additionally enables the senior management to screen hierarchical execution through the distinctive perspectives and present new goals by observing existing. For instance, every one of these measures gives a quick and extensive view to the senior management of the organisation about the association’s present execution (Enz, 2009). It likewise incorporates both outcomes and process.BSC helps senior management to concentrate on the key plan and bring advancement inside the present business process, techniques and operations. BSC is anadditionally more compelling instrument for the senior management since it shows general execution of every single specialty unit and office independently and effectively(Kanji, 2012). By gathering this data, the senior management of the organisation could create adjust among the long termand here and now activities and goals. In the meantime, through the Balanced Scorecard, the senior management can focus on development, responsibility, respectability, adaptability inside the business procedure and operational techniques. Consequently, BSC is more essential, successful anda huge tool for the senior management to achieve the vital vision, mission and destinations of an organisation(Cameron and Green, 2012).
Along with this, it is also accessed by Kaplan and Norton that, the Balanced Scorecard approach, is utilised as aplanning toolby the senior management so as to direct and perform different authoritative capacities. For instance, senior management of the organisation is utilising this as amanagement arranging instrument or technique keeping in mind the end goal to bolster distinctive management capacities, for example, Translating the Vision, Business Planning, Communicating and Linking and Feedback and Learning. For instance, with the assistance of BSC senior management can make and create business and development procedures and technique that could be accustomed to get advancement and upgrades the firm(Jones, and Clarke, 2002). In addition, senior management can be able to overcome serious business challenges by considering and utilising the utilisations of BSC. For instance, it enables the senior management to make diverse sorts of business and key arrangement according to the authoritative requirements for the aggregate achievement. For example, senior management can make arrangements for the future by getting to the diverse ranges of business. Similarly, it is additionally give diverse critical chances to senior management to use capital assets successfully and legitimately(Farris, Bendle, Pfeifer, and Reibstein, 2010).
According to Kaplan and Norton, there are a lot of strategies, procedures and methodologies are utilised by the senior management to embrace and actualise the Balanced Scorecard apparatus inside the organisation. Additionally, it is likewise dissected that, actualising a BSC is all the more difficult errand for top management since they need to consider a few figures before the execution the organisation. Be that as it may, so as to adequately and effectively utilise and actualise BSC as an instrument, the top management of the organisation considers a few stages. For instance, to start with, the senior management evaluates the mission, vision, targets and objective of the association. According to this progression, the senior management characterises and clarifies authoritative vision, mission, objectives, and goals(Hugos, 2011). In the progression, senior management makes and builds up a business methodology for the BSC. This procedure enables the top management to address the significant difficulties connected with the BSC and give conceivable techniques to address such issues all the more adequately. For instance, senior management locates the present issues of the organisation that have had an effect on the achievement of the organisation. In addition, the management is able to distinguish the real causes behind the business challenges(Friedrichs, 2011).
The management is able to focus on thecustomers’ needs and according to this; the senior management utilises a particular system with a specific end goal to break down the issues according to the necessities of clients. It helps the senior management in making the strategic policies and business strategies. In addition, the top management likewise concentrates on interior business procedure to change the objectives/goals and errands with the vital arrangement of the organisation. Moreover, the senior management additionally concentrate on mapping of business methodology to assess that how the vital arrangement would help the organisation in achieving hierarchical destinations(Holweg, 2007). The management makes procedure, makes arrangement and create particular technique to achieve the authoritative destinations. Alongside this, Top management could handle and manage complicated business activities effectively with the use of a balanced scorecard. For instance, the senior management gives key rules to their hierarchical individuals or representatives about their assignments, capacities, parts and obligations. It implies the seniormanagement builds up a reasonable comprehension about the workings and significance ofthe BSC. This helps the senior management to make the procedure more powerful and fruitful(Burney and Paul, 2008)
Along with this, Kaplan and Norton investigated that, the senior management adopts and uses different strategies, tools and procedures towards the organisational objectives to access internal and external environment and attain the key objectives. Finally, senior management evaluates the scorecard and the process to measure and tract the performance of the organisations(Hitt, Black, and Porter, 2009). This allows the top management to identify the major factors that were affecting the success of the company in the market. Overall, it can be said that, different types of steps are used and followed by the senior management in order to usetheBalanced Scorecard as a planning tool. All these strategies allow the senior management to access the performance of the a company in an effective and innovative manner (Lake, and Paine, 2008).
Balanced Scorecard in business and industry, government, and non-profit organisations
On the other hand, it is also analysed by the Kaplan and Norton that, when the senior management of the business organisations, industry, government, and non-profit organisations implement and execute the Balanced Scorecard within the company, different types of problems and issues are faced that have adverse impact on the success and performance of the business firms. For example, when the senior management executes and implements a Balanced Scorecard approach within the organisation, several types of implementation and other issues are faced by them that negatively affect the success of the company in the current and future(Henry, 2008). For instance, taking choice with respect to the utilisation of BSC is testing and confused choice for the senior management of the association since it might influence the workers and organisation’s execution straightforwardly or by implication. Execution of a BSC additionally requires incredible endeavors, more time and high investment cost that can negatively affect the productivity and marketability of the organisation. For instance, if the senior management had chosen to execute BSC at the working environment, they need to make arrangement to put a considerable amount of financial backing in to the desire and usage of BSC. Thus, it would be all the more exorbitant and tedious choice for the senior management (Boonstra, 2008).
Issues for the Senior Management:
Senior management may likewise confront the issues identified with absence of Efficient Data Collection and Reporting, security, digital wrongdoing and others. Representative Resistance and Incomplete Information related issues are the significant issues confronted by the senior management. For instance, the new framework may bring an immediate change in the business procedure and techniques as well as change in the state of mind and conduct of workers. This may make perplexity, miscommunication and de-inspiration among the diverse level of chiefs or representatives(Grembergen, 2004). In the meantime, a few issues may likewise be experienced by the senior management because of the execution of BSC, for example, absence of correspondence, arranging, coordination, appropriate support, absence of IT group, and absence of information and so on(Blokdijk, 2008).
Kaplan and Norton stated that, it is also vital and basic for the senior management of anorganisation to make and create particular strategies keeping in mind the end goal to viably and effectively execute the Balanced Scorecard inside the organisation. Moreover, the senior management ought to likewise interface BSC with the authoritative business operations and capacities. The senior management ought to organise the preparation and improvement programs so that the representatives might comprehend the upsides of BSC. In the meantime, it is also essential for the management to create connections, and trust with their workers so as to dodge future difficulties as consequences of adjusted score card usage (Hayes, 2008). Alongside this, it is also essential for the senior management to consider and include their workers and staff in the basic leadership process keeping in mind the end goal to enhance understanding about the new framework inside the organisation. Additionally, the management ought to consider every one of the variables identified with BSC before executing the new framework. For instance, senior management ought to consider the cost, time and effect of BSC. It implies the senior management ought to take thoughts regarding the execution cost of BSC(Hagelaar,and Vorst, 2002).
In addition to this, it is also analysed by Kaplan and Norton that, a balanced score card also helps the senior management in attaining their goals and objectives. For example, BSC tool suggests tothe management about how to formulate, implement and review organisational business strategies, policies and methods in an effective and proper manner. At the same time, the Balanced scorecard also allows the management effective and adequate communication to achieve results in the front of key stakeholders(Halinen, 2012). This indicates that, BSC approach or tool assists the senior management to improve organisational reputation, value and brand image in the front of public and stakeholders. Moreover, the management could also develop best and innovative strategies based on the BSC results in order to attain the competitive advantages. In addition to this, it is also important to know that, BSC tool also helps the management in order to effectively attain the corporate goals and long term objectives in a pre-determined time period(Hair, 2006).
On the other hand, it is also accessed and found by Kaplan and Norton that, through the effective use of the Balanced Scorecard , the senior management could also motivate and encourage their employees at all levelsto attain thecorporate vision and mission in an effective and appropriate manner. Furthermore, the senior management could also improve their own and employees performance with the help of BSC. Additionally, through the BSC, the management could also encourage their employee to take strategic decisions by participating in the organisational decision making process. In the same way, it can be said that, theBSC help the management not only improve organisational performance but also overcome several business challenges and issues in an effective and proper manner. Finally, it can be said that, through the help of BSC, the top management of a company could encourage their staff to come up with new ideas and innovation at the workplace (Biech, 2007). BSC enables the senior management to make diverse sorts of business and key arrangement according to the authoritative requirements for the aggregate achievement. For example, senior management can make arrangements for the future by getting to the diverse ranges of business. Similarly, it is additionally give diverse critical chances to senior management to use capital assets successfully and legitimately (Farris, Bendle, Pfeifer, and Reibstein, 2010).
Conclusion
On the basis ofthe above discussion, it can be concluded that, in the present time, the Balanced Scorecard is used and implemented within the company as a strategic planning tool that help the senior management of the company in improving organisational performance. On the other hand, BSC is also used an innovative approach that provide a lot of tangible and intangible benefits to the organisations and their management. BSC can be used by any organisation not only to improve business performance but alsotobring innovation, development, improvements, accountability and creditability within the business process and methods. At the same time, it can also be said that, in order to effectively and successfully implement a Balanced Scorecard as a strategic planning tool, the senior management of the company should follow and adopt effective techniques, procedures and steps. Along with this, it can also be concluded that, in implementationofa BSC, the management of a company could encounter several issues and problems. But, these could be managed and handled by using specific and innovative strategies and methods.
References
Biech, E. (2007). Thriving Through Change: A Leader’s Practical Guide to Change Mastery.
USA: American Society for Training and Development.
Blokdijk, G. (2008) Balanced Scorecard 100 Success Secrets, 100 Most Asked Questions on
Approach, Development, Management, Measures, Performance and Strategy. USA: Lulu.com.
Boonstra, J. (2008). Dynamics of Organizational Change and Learning. USA: John Wiley &
Sons.
Burke, W. W., Lake, D. G. and Paine, J. W. (2008). Organization Change: A Comprehensive
Reader. USA: John Wiley & Sons.
Burney, L. and Paul, A. (2008). Financial Services Corporation: Implementing an HR balanced
scorecard. IMA Educational Case Journal, 1(2), pp. 1-10.
Cameron, E. and Green, M. (2012). Making Sense of Change Management: A Complete Guide to
the Models Tools and Techniques of Organizational Change. UK: Kogan Page Publishers.
Chai, N. (2009). Sustainability Performance Evaluation System in Government: A Balanced
Scorecard Approach Towards Sustainable Development. USA: Springer.
Chrisensen, H.I., Kruijff, G.J.M. and Wyatt, J.L. (2010).Cognitive Systems. USA: Springer.
Cormier, L. S., Nurius, P. S. and Osborn, C. J. (2009). Interviewing and Change Strategies for
Helpers: Fundamental Skills and Cognitive Behavioral Interventions. USA: Cengage
Learning.
Coyle, J.J., Langley, C.J., Gibson, B., Novack, R.A and Bardi, E.J. (2008).Supply Chain
Management: A Logistics Perspective. USA: Cengage Learning.
Demirkan, H., Spohrer, J.C. and Krishna, V. (2011). Service Systems Implementation. USA:
Springer.
Enz, C. A. (2009). Hospitality Strategic Management: Concepts and Cases. USA: John Wiley
and Sons.
Farris, P.W., Bendle, N.T., Pfeifer, P.E. and Reibstein, D.J. (2010).Marketing Metrics: The
Definitive Guide to Measuring Marketing Performance (2nd ed.). USA: Pearson Education.
Friedrichs, C. (2011). An analysis how the Balanced Score Card approach could enhance the
personal contentedness considering the change in the society from a Work/Life balance to a
multi-duty-life of individuals in consulting companies in Germany. USA: Diplomarbeiten
Agentur.
Grembergen, W.V. (2004). Strategies for Information Technology Governance. UK: Idea Group
Inc (IGI).
Hagelaar, G.J.L.F. and Vorst, J.G.A. (2002). Environmental supply chain management: using life
cycle assessment to structure supply chain. International Food and Agribusiness, 4, pp. 399-412.
Hair, J.F. (2006).Marketing Research Within A Changing Information Environment. UK: Tata
McGraw-Hill.
Halinen, A. (2012).Relationship Marketing in Professional Services: A Study of Agency-Client
Dynamics in the Advertising Sector. UK: Routledge.
Hayes, B.E. (2008).Measuring Customer Satisfaction and Loyalty: Survey Design, Use, and
Statistical Analysis Methods. USA: ASQ Quality Press.
Henry, A. (2008).Understanding Strategic Management. UK: Oxford University Press.
Hitt, M.A., Black, J.C. and Porter, L.W. (2009).Management (2nd ed.). USA: Pearson Education
Inc.
Holweg, M. (2007).The genealogy of lean production. Journal of Operations Management, 25,
- 420–437.
Hugos, M.H. (2011).Essentials of Supply Chain Management. USA: John Wiley and Sons.
Jones, D.T. and Clarke, P. (2002). Creating a customer driven supply chain. ECR Journal, 2(2),
- 28-38.
Kanji, G.K. (2012). Measuring Business Excellence. UK: Routledge.
Khosrowpour, M. (2006) Emerging Trends and Challenges in Information Technology
Management: 2006 Information Resources Management Association International Conference,
Washington, DC, USA, May 21-24, 2006. UK: Idea Group Inc (IGI).
Kumar (2009).Customer Relationship Management: A Databased Approach. USA: John Wiley
& Sons.
Kumar, S. and Krob, W. (2005). Supply chain management challenges for aerospace control
technologies leader. Technovation, 25(1), pp. 53-58.
