The Introduction and Significance of the Balance Score Card Approach
With the ramified complexity of the business organization, use of balance score card approach has been gaining momentum throughout the time. It is observed that the BHP Billiton Company is an Aglo Australia Multinational mining metals and petroleum dual listed company which is indulged in providing the fisheries and promotion of the agriculture products in Australia.
It is fully owned conglomerate company which has been running its busienss in Australia.
The Balance score card method of the Kaplan and Norton emphasis upon the strategic approach and performance management system that enables organization to translate BHP Billiton Company vision’s mission into the implemented strategic program. It simply provides the road map to implementation of the strategic program to implement the strategic program to sales its services and products in market.
Source: https://www.sec.gov/Archives/edgar/data/811809/000119312510213954/d20f.htm
This graph reflects the statistical data and work program which have been taken by BHP Billiton company to implement the proper strategies and smooth running of its busienss.
Source: https://www.slideshare.net/ezendu/performance-of-knowledge-management
The increased numbers of cases which had negatively impacted the BHP Billiton Company resulted to increasing the benefits of the corporate social responsibilities program undertake by the company for the stakeholders. The Balance score card approach helps BHP Billiton Company to identify the issues and key problems which will eventually reduce the complexity and render more benefits to society.
However, the number of cases related damages arise to society due to the spill of the oil and gas has increased by 20% since last five years.
Source: https://www.valuewalk.com/2017/04/elliot-management-bhp-shareholder-value-unlock-plan/
The main issues which have been founded by the BHP Billiton Company is related to the less benefits rendered to society
BHP is the leading global resources company and by using the effective strategic work functions and proper balance score card approach it could easily set up direct and indirect link in its busienss functioning.
The above given graph reflects that in 2016, BHP Billiton has faced the increased number of oil spill cases which have put negative impact on the society and economic at large. Therefore, by using the Balance Score Card approach, Management and directors could use the systematic work plan and implemented work functions to mitigate the issues related to oil spill cases. The proper strategic program and implemented balance score card approach will assist in increasing effectiveness of the work program and implement the strategic approach (Al-Hader, and Rodzi, 2009).
It is the planned system which enables organization to plan, measure and control organization performance. It will eventually increase the overall ability of the strategic decision making and increase the outcomes available to society at large. The Strategic performance measurement system measures the financial and non-financial measures which eventually increases the overall output and efficiency of the business at large. It is observed that the Strategic performance measurement system will assist organization to implement the proper strategic program and evaluate how it could add value to society through its CSR activities. The CSR activities of the BHP focuses on setting the new eco system and implementing the strategic program which eventually increases the output to the environment and society at large (Al-Hader, and Rodzi, 2009).
The Use of the Balance Score Card Approach by BHP Billiton Company
It is the performance metric strategic tools which are used to set up a particular work program by using the lead and lagging indicators. The Balance score card method of the Kaplan and Norton emphasis upon the lead and lagging indicators which needs to be used by BHP Billiton Company to implement the proper strategic program and evaluating the four steps work program.
The strategic Map could be defined as graphical presentation of the Balance score card activities to achieve the set objectives and goals of BHP Billiton Company.
The balance Score Card Approach is used to set up four segments and evaluating the characteristics of the different departments of BHP Billiton Company.
It measures the capital requirement, cost of capital and return on capital employed of the BHP Billiton Company. It measures the expenditure required to implement the strategic program and implement the strategic approach to implement the developed financial plans (Al-Hader, and Rodzi, 2009).
- Customer perceptions
BHP Billiton Company needs to evaluate the needs and demand of the clients before investing capital and formulating the strategic plans to increase the overall effectiveness and total turnover of the business (Baporikar, 2017).
- Process perspective
It evaluates the implemented strategic program and implemented strategies which need to be implemented by the BHP Billiton Company s for implementing the supporting strategies and work program. It could use advance system and strategic policies to win over the market and implement the strategic program (Boscia, and McAfee, 2014).
It deals with the growth and learning factors of the employees and staff members. The management department of the BHP Billiton Company needs to use the strategic clients oriented work approach which needs to be assessed on the basis of the improvement made and supporting plans developed for clients (Ibrahim, 2015).
It is cumbersome to determine and analysis these factors as it is highly based on the future factors and analytical supporting program (Harden, & Upton, 2016).
There are several lead indicators of the BHP Billiton Company which needs to be undertaken for increasing the overall quality of the products and services offered in market.
- Use of the strategic plans prepared by the key performers.
- Analysis the revenue, future plans and return on capital employed
- Determine the main Pre-emptive action which assists in implementing the strategic work program (Fitzgerald, and Thornton, 2016).
- Focusing on the short term and long term objectives (Lueg, 2015).
The lag indicators assists in formulating the future plans based on the last present data for increasing the quality of the oil and gas offered by BHP Billiton Company for its clients
- Evaluation of the supporting implemented strategies.
- Setting strategies to accomplish the long term lead indicators.
These below given are the performance indicators of BHP Billiton Company which are assessed on the basis of its desirability and uses in forming the strategies (Alani, Khan, and Manuel, 2018).
Implementing the Balance Score Card Approach for Better Performance: Performance Indicators
Indicator-Lag
- Preparing the budget (Increase the cash flow for the supporting activities by 20%).
- Implementation of the advance technologies
- Setting nexus for the stakeholder’s welfare and organizational development
Clients
- Increasing the quality of the products offering
- Increasing the supporting program
- Implement the proper strategic program (Kaplan, & Norton, 2016).
Finance
- Reducing the cost of the capital
- Increasing the productivity
- Setting goals and objective for the increasing the overall output (Coe, & Letza, 2014).
Norms
Setting norms and program for promoting clients need and demand in market.
Reduce the cost of capital and increase the overall return on capital employed
This performance indicator of the BHP Billiton Company has shown that if company wants to increase the overall outcomes of its work then it will first have to set up the steps and work program in determined approach. These different performance indicators assist in achieving the set objectives and goals in determined approach (Kerai, & Saleh, 2017).
- It helps employees to implement the strategic program and effective work functions to strengthen the facility available to clients.
- It assists in maintaining the flow of the cash in the internal work functions and stakeholders supporting program.
- Setting a proper supporting program to mitigate the issues faced by the clients.
- It evaluates and implements the strategic work program to identify the problem areas and where BHP Billiton Company needs to make improvement for the better work functions (Alani, Khan, and Manuel, 2018).
- This shows that if BHP Billiton Company wants to reduce the negative impact of the it’s busienss on society then it will have to infuse the proper work program and effective work functions.
- It will assists in implementing the strategic work program and implemented strategies to render the best suitable services for the society at large (Kang, Chiang, Huangthanapan, & Downing, 2015).
Conclusion
It is observed BHP Billiton Company needs to make supporting program for increasing the quality of its products and services to clients by using the proper strategic program and strategic work program structure. The balance score card approach will divide the work in four different segments to achieve the set objectives and goals in determined approach. Now in the end, it could be inferred that by making the proper department work Program Company needs to implement proper strategies. It plays major role and requires proper work efforts or strategic plans. If the balance score card approach is used in effective manner then it will increase the overall outcomes and efficiency of the work program in determined approach.
References
Al-Hader, M., and Rodzi, A. 2009. The smart city infrastructure development and monitoring. Theoretical and Empirical Researches in Urban Management, 4(2 (11), 87-94.
Baporikar, N. 2017. Adopting Balance Score Card in Higher Education. Decision Management: Concepts, Methodologies, Tools, and Applications: Concepts, Methodologies, Tools, and Applications, 348.
Boscia, M. W., and McAfee, R. B. 2014. Using the balance scorecard approach: A group exercise. Developments in Business Simulation and Experiential Learning, 35.
Ibrahim, M. 2015. Investigating the use of the four perspectives of balanced score card (BSC) as technique for assessing performance by Nigerian banks. Journal of accounting and taxation, 7(4), 62.
Harden, J. W., & Upton, D. R. (2016). An Introduction to the use of the Balanced Scorecard for performance evaluation by financial professionals. Journal of financial service professionals, 70(2), 81-88.
Lueg, R. (2015). Strategy maps: the essential link between the balanced scorecard and action. Journal of Business Strategy, 36(2), 34-40.
Alani, F.S., Khan, M.F.R. and Manuel, D.F., 2018. University performance evaluation and strategic mapping using balanced scorecard (BSC): case study-Sohar University, Oman. International Journal of Educational Management, (just-accepted), pp.00-00.
Kaplan, R. S., & Norton, D. P. (2016). The balanced scorecard: an excerpt from the CGMA book’Essential Tools for Management Accountants’. Journal of Accountancy, 221(5), 39-42.
Coe, N., & Letza, S. (2014). Two decades of the balanced scorecard: A review of developments. The Poznan University of Economics Review, 14(1), 63.
Kerai, S., & Saleh, A. (2017). Applying the Balanced Scorecard to Improve Student Satisfaction, Market Share and Profitability. AMR, 27.
Kang, J. S., Chiang, C. F., Huangthanapan, K., & Downing, S. (2015). Corporate social responsibility and sustainability balanced scorecard: The case study of family-owned hotels. International Journal of Hospitality Management, 48, 124-134.
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