Using Balanced Scorecard To Enhance Financial Performance

Evaluation of Company Mission and Vision Statement

Question:

Discuss about The Promotion And Evolution Of Performance.

The chief financial officer is required to manage the financial performance of the company along with the vision and mission of the company. Through this analysis, it has been found that it is required by the company to manage the performance and position in a better way through using various methods such as balanced scorecard. The mission and vision statement of the company has been evaluated in the case and it has been found that few changes are required to be done by the company to manage the performance (Coe and Letza, 2014). Chief financial officer of the company has thought to adopt the method of balanced scorecard to manage the performance.

Balanced scorecard is a tool to manage and identify the strategy performance of a company. This tool is used by the company to:

• Communicate that what the company is trying to accomplish
• Alignment of daily work which is done by the employee
• Prioritize the services, products and projects (Hoque, 2014)
• Evaluate and analyze the process of the company towards the strategic targets

The balanced scorecard connects the various dots among the strategic elements like mission, core values, vision, strategic focus areas and various other operational elements of the company which assist the company to manage and enhance the operations of the company (Bhattacharya et al, 2014). This tools primarily refers to the report of performance management which is used by the management or performance management team to analyze the strategically changes into the operations of the company. Following is the process of balanced scorecard:

According to the case, it has been evaluated that the Kelvin O’ Brien must is the tool of balanced scoreboard to reduce the level of issues in the company as well as enhance the revenues and the performance of the company which subsequently would help the company to achieve the level of the performance as well as the targets of the company could also be achieved. Balanced scorecard is a tool to manage and identify the strategy performance of a company (Keyes, 2016). The balanced scorecard connects the various dots among the strategic elements like mission, core values, vision, strategic focus areas and various other operational elements of the company which assist the company to manage and enhance the operations of the company.

According to the board’s meeting and the conversation among the directors of the company, it has been found that the traditional methods are not enough to analyze the performance of the company and assist the company to achieve the strategic goals. So, the balanced scorecard could help the company into achieving the goals.

Using Balanced Scorecard to Manage and Enhance Operations

Through using the following process, balanced scorecard could assist an organization in delivering and achieving the vision and the strategic objectives of the company. Balanced scorecard permits the managers to look at keep a track over the business form so that the basic questions of the company could be answered (Tjader et al, 2014). Such as,

• Customer’s perspective (how customers see the product)
• Internal perspective (what are the internal factors of the company)
• Innovation and learning perspective (could the value be enhanced)
• Financial perspective (how shareholders look the company) (Lin et al, 2016)

 Balanced scoreboard offers the information to the senior managers on the basis of various perspectives so that a better decision could be made by them easily. Balance score card minimizes all the relevant information and measures the performance of the company correctly. Further, it also assists the company to make various decisions about changes into the operations and performance of the company (Sainaghi, Phillips and Corti, 2013). The balance scorecard forces the management of the company to focus over various new outcome and measurement to analyze the position and make various critical decisions.

If the insurance company would accept the proposal of balance scorecard than the mission and vision and all the strategic objectives of the company could easily be achieved by the company. According to the case, the main vision of the company is to achieve high profits so that the superior’s returns could be offered to the shareholders. Further, the company is looking forward for the continuous changes into its business process and it also want to delight the customers. Further, the organization is learning from its mistake and wants to remove it in future (Rabbani et al, 2014).

Further, few issues have also been faced by the company. The removal of these issues could help the company to achieve the level of the strategic objective as well the vision could also be met by the company. The main issues of the company are poor customer services which could be removed by the company through using the customer perspective customer service. This would also help the company to enhance the customer’s loyalty. Further, the computer issues could be removed through using the innovation perspective of the company. Further. The key performance indictors which are innovation in the business operations and the best technology could also be achieved by the company through using the balance scorecard (Taylor and Taylor, 2014).

Further, the internal business perspective of the company could assist the management of the company to make better decisions about the employees of the company and it would enhance the level of the competitiveness of the company. It would also enhance the level of success of the company. More, the financial perspective of balanced scorecard would remove the issues of dividend yield and through the vision and mission of the company could easily be achieved. It would also enhance the level of success of the company.

Perspectives of Balanced Scorecard

Thus through the above analysis, it has been found that balance scorecard would assist the organization and the Kelvin O’ Brien to reduce the level of issues in the company as well as enhance the revenues and the performance of the company which subsequently would help the company to achieve the level of the performance as well as the targets of the company could also be achieved (Upadhaya, Munir and Blount, 2014). The balanced scorecard connects the various dots among the strategic elements like mission, core values, vision, strategic focus areas and various other operational elements of the company which assist the company to manage and enhance the operations of the company. Balanced scorecard is a tool to manage and identify the strategy performance of a company. It would also enhance the level of success of the company.

Further, the various perspective of balance scorecard has been studied which are as follows:

• Customer’s perspective (how customers see the product)
• Internal perspective (what are the internal factors of the company)
• Innovation and learning perspective (could the value be enhanced)
• Financial perspective (how shareholders look the company)

The balanced scorecard of this insurance company has been prepared to reduce the problems of the company and achieve the visions of the company.

Threat of new entry: insurance company must have some threat from new entry in the industry as any company could enter into this industry at any time.

Supplier power: the supplier power in this industry is quite lower.

Buyer power: the buyer power in this industry is quite higher.

Threat of substitution:  this company is not required to have some substitution issues.

Competitive rivalry: the rivalry problems of this industry are quite higher due to various companies in the industry (Keyes, 2016).

                                                (Koufteros, Verghese and Lucianetti, 2014) 

Above are few factors due to which the company does not want to make changes into the operations of the company.

Balanced scorecard is a tool to manage and identify the strategy performance of a company. The balanced scorecard connects the various dots among the strategic elements like mission, core values, vision, strategic focus areas and various other operational elements of the company which assist the company to manage and enhance the operations of the company (Chenhall, Hall and Smith, 2014). Though, the balanced scorecard has few drawbacks which are as follows:

While the balanced scorecard is used by the company to manage the performance of the company and achieve all the vision of the company but for this process, the cost consumption and time consumption is quit higher. Correct use of this tool requires the understanding of process and the management also requires some training and experience in it to perform a better study (Pádua and Jabbour, 2015). This process involves the strategic planning process and thus the importance of achieving the vision is quite higher. It could be very challenging for a small sized organization.

Examples of Balanced Scorecard Objectives, Measures, Targets, and Initiatives

Further, through the evaluation and study over balance scorecard, it has been found that this strategic tool is used by the company to manage and enhance the performance of the company and achieve all the vision of the company but for this process, various information are required by the company (de Lima et al, 2013). Correct use of this tool requires information and thus it becomes important for the management to collect all the information to reach over a conclusion which is quite impossible. This process involves the strategic planning process and thus the importance of collecting all the required information gets higher. It could be very challenging for a small sized organization as well as long sized organization.

Further, the balanced scorecard connects the various dots among the strategic elements like mission, core values, vision, strategic focus areas and various other operational elements of the company which assist the company to manage and enhance the operations of the company. This tool primarily depicts that the management and the team has to go through the training session for this strategic tool (Lisi, 2015). Correct use of this tool requires a lot of training and various changes into the operations of the company and every company is not ready for that. This process involves the strategic planning process and thus the importance of getting trained becomes quite higher. It could be very challenging for a small sized organization as well as long sized organization (Garengo and Sharma, 2014).

Conclusion:

Thus through the above study, it has been analyzed that the chief executive officer is required to manage the operational, internal and financial performance of the company along with the vision and mission of the company. and the above study depicts that balanced scorecard would be quite helpful for the company to remove all the uses and problems and achieve the mission and vision of the company. Further, various other methods would also help the company to analyze the performance of the company. The mission and vision statement of the company has been evaluated in the case and it has been found that few changes are required to be done by the company to manage the performance. Chief executive officer of the company has suggested adopting the method of balanced scorecard to manage the performance. 

References:

Bhattacharya, A., Mohapatra, P., Kumar, V., Dey, P.K., Brady, M., Tiwari, M.K. and Nudurupati, S.S., 2014. Green supply chain performance measurement using fuzzy ANP-based balanced scorecard: a collaborative decision-making approach. Production Planning & Control, 25(8), pp.698-714.

Threats and Opportunities in the Industry

Chenhall, R.H., Hall, M. and Smith, D., 2014. The expressive role of performance measurement systems: a field study of a mental health development project. Accounting, Organizations and Society.

Coe, N. and Letza, S., 2014. Two decades of the balanced scorecard: A review of developments. The Poznan University of Economics Review, 14(1), p.63.

Cooper, D.J., Ezzamel, M. and Qu, S.Q., 2017. Popularizing a management accounting idea: The case of the balanced scorecard. Contemporary Accounting Research.

de Lima, E.P., da Costa, S.E.G., Angelis, J.J. and Munik, J., 2013. Performance measurement systems: A consensual analysis of their roles. International Journal of Production Economics, 146(2), pp.524-542.

Garengo, P. and Sharma, M.K., 2014. Performance measurement system contingency factors: a cross analysis of Italian and Indian SMEs. Production Planning & Control, 25(3), pp.220-240.

Gibbons, R. and Kaplan, R.S., 2015. Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?. The American Economic Review, 105(5), p.447.

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), pp.33-59.

Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press.

Koufteros, X., Verghese, A.J. and Lucianetti, L., 2014. The effect of performance measurement systems on firm performance: A cross-sectional and a longitudinal study. Journal of Operations Management, 32(6), pp.313-336.

Lin, M.H., Hu, J., Tseng, M.L., Chiu, A.S. and Lin, C., 2016. Sustainable development in technological and vocational higher education: balanced scorecard measures with uncertainty. Journal of Cleaner Production, 120, pp.1-12.

Lisi, I.E., 2015. Translating environmental motivations into performance: The role of environmental performance measurement systems. Management Accounting Research, 29, pp.27-44.

Pádua, S.I.D. and Jabbour, C.J.C., 2015. Promotion and evolution of sustainability performance measurement systems from a perspective of business process management: From a literature review to a pentagonal proposal. Business Process Management Journal, 21(2), pp.403-418.

Rabbani, A., Zamani, M., Yazdani-Chamzini, A. and Zavadskas, E.K., 2014. Proposing a new integrated model based on sustainability balanced scorecard (SBSC) and MCDM approaches by using linguistic variables for the performance evaluation of oil producing companies. Expert Systems with Applications, 41(16), pp.7316-7327.

Sainaghi, R., Phillips, P. and Corti, V., 2013. Measuring hotel performance: Using a balanced scorecard perspectives’ approach. International Journal of Hospitality Management, 34, pp.150-159.

Speklé, R.F. and Verbeeten, F.H., 2014. The use of performance measurement systems in the public sector: Effects on performance. Management Accounting Research, 25(2), pp.131-146.

Taylor, A. and Taylor, M., 2014. Factors influencing effective implementation of performance measurement systems in small and medium-sized enterprises and large firms: a perspective from Contingency Theory. International Journal of Production Research, 52(3), pp.847-866.

Tjader, Y., May, J.H., Shang, J., Vargas, L.G. and Gao, N., 2014. Firm-level outsourcing decision making: A balanced scorecard-based analytic network process model. International Journal of Production Economics, 147, pp.614-623.

Upadhaya, B., Munir, R. and Blount, Y., 2014. Association between performance measurement systems and organisational effectiveness. International Journal of Operations & Production Management, 34(7), pp.853-875.

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