Question

1. After a successful career in the retailing industry, you have been transferred to the head of the strategy department in a national food business. You attended the board meeting held on Monday for the first time and found that the strategy monitoring report submitted to the senior management did not contain any data other than sales amount and profitability information. The right time to tell them about Balanced Scorecard-BSC:
• Explain why it is necessary to use BSC and not classical control methods in strategy management?
• Explain what the dimensions of BSC are and what they mean?
• Describe how these dimensions relate to each other and to the company's top goals?
• Create a weighted BSC scorecard by writing three examples to the performance indicators in the dimensions of the BSC to present it as a suggestion to the board of directors?

Answer 1

Answer :

The Balanced Scorecard provides an important structure for strategic building and communication. The business model is visualized in a strategy map that helps executives think about causation-and-effect interactions between the various strategic goals. The process of creating a Strategy Map ensures consensus is achieved over a set of interrelated strategic objectives. It means performance outcomes are identified, as well as key enablers or drivers of future performance, to create a complete picture of the strategy. The Balanced Scorecard can be used to direct performance monitoring and dashboard design. It means that management analysis focuses on the most relevant strategic issues and lets businesses track their plan's implementation. The Balanced Scorecard lets organizations map their projects and initiatives against specific strategic targets, which in turn means that the projects and initiatives are closely centred on achieving the most strategic goals. The strength of the BSC is that it will serve as the organizational structure for all other management systems and help workers around the business see and contextualize the relation between their departmental approaches. Carefully designed plans do not automatically lead you astray, but they will almost always alter and develop over their normal three- to five-year implementation. Classical strategic management methods allow you to quickly adjust course if planned plans trigger unwanted or unforeseen consequences. It will help to build an organization which is genuinely based on strategy. The Balanced Scorecard allows firms to align their organizational structure better with the strategic goals. Organizations need to ensure that all business divisions and support roles operate for the same goals to execute a program effectively. Cascading the Balanced Scorecard into certain units can help accomplish this, and connecting strategy to operations.

The Balanced Scorecard is a compilation of performance expectations and metrics linked to four performance dimensions-economy, consumer, internal process, and creativity. This acknowledges that companies are accountable to different categories of stakeholders, such as staff, vendors, consumers, community members and shareholders.

1.Financial perspective:
The balanced scorecard uses metrics of financial success such as net profits and returns on investment, as they are used by all for-profit organisations. A popular language for the study and evaluation of businesses is provided by financial performance measures. Any main goal relating to the financial health and efficiency of the business may be included in this perspective. Revenue and benefit are obvious goals which are described in this context by most organisations.

2.The customers perspective
This analysis focuses on the consumer- and market-related success objectives. In other words, if you want to meet your financial targets, what exactly do you need to offer concerning your clients and market(s)? The key outcome metrics include consumer loyalty, consumer retention, new customer growth, business productivity, and targeted product market share. Yet the consumer viewpoint will also provide clear measures of the valuable ideas that the business must offer in targeted market segments to consumers.

3.Internal-Business-Process Perspective:
From an internal-business-process viewpoint, managers define the essential internal processes in which the company will succeed. The secret to the success of any company is the management of its processes of order to deliver effective and consistent goods and services. Carrying out the right procedures in the right way results in consistent product and service quality standards.

4 The Learning and Growth Perspective:
The learning and development viewpoint is based on people 's capacities for motivation purposes. Managers will be responsible for improving the skills of the employees. Key metrics to determine the performance of managers will be employee satisfaction, retention of employees and productivity of the employees.

Customer satisfaction metrics, internal market results, and creativity and development are extracted from the specific world view of the enterprise and its viewpoint on key success factors. But that interpretation is not always right. Only an outstanding set of balanced steps on the scorecard does not guarantee a winning strategy. The balanced scorecard will only turn the plan of a business into concrete tangible targets. Senior managers are irritated by the discrepancy between increased organizational results and poor financial indicators. Often insufficient financial results emerge when businesses will not follow up on their organizational progress with a new round of actions. Improvements to quality and cycle-time can generate overcapacity. Managers will either be prepared to put the excess power to use or get rid of it. On the other hand, the balanced scorecard is well-tailored to the organization style that many organizations are striving to become. The scorecard positions plan and vision at the heart, not power. It sets goals but assumes that people are going to follow whatever habits and take whatever actions are required to attain those goals.

Weighted BSC – How will a balanced scorecard use weighted metrics? To many professionals, this seems to be a certain point of contention. You can see why. Balanced Scorecard 's essence is balance. That is to say, real thinking needs to go into the structure and make-up of the elements, both goals and metrics, to ensure that the correct 'balance' is achieved in the business. Let's provide suggestions to senior management in the dimension of the balanced scorecard.

1.We need to show to the consumer that our goods are of better quality compared with the competition. Comapny need to carry out customer satisfaction surveys and know the consumers well.

2.We must preserve our capacity to adapt and improve by intensifying the training and certification of employees. We can assess this by reviewing the amount of hours spent in training and the amount of qualifications earned by employees in outsourced training.

3. We can envisage the operations of the company as a map. The cardinal directions are priorities, policies , and programs. Without these tools it will be much more tricky to get to the company destination. Team leaders will have deeper discussions with them about the company's strategic strategy, and how they're involved.

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