The Company’s Strategy Map
The objective of every business organization is profit maximization through the provision of high quality products and excellent customer service which contributes to gaining more significant market share amidst stiff competition. To achieve their objective, an organization will thus employ the use of appropriate strategies and management tools to help counter the market and industry competition and expand its sales volume through both existing and new markets (Northcott and Ma’amora Taulapapa 2012). Some of the vital ingredients of a successful business venture other than the provision of quality goods and services are excellent customer service, and sufficient training of the staff to have a proper understanding of their roles. Other include proper maintenance and organization of the workplace and exceptional marketing strategies that help promote the company’s products to new and existing customers (Hsu and Liu 2010).
Drawing from our case of ‘The Business’, it is observed that the organization pays little attention to the very basic fundamentals of a business success which have significantly contributed to its poor performance. The case of ‘The Business’ outlines numerous weaknesses which when assumed, may result in the total failure of the business (Smith 2010). Based on the numerous identified weaknesses of the business, it is prudent to have a total overhaul of the entire management system and employ new strategic systems that will propel the organization to its glory. One of the most appropriate strategic planning and management system that is applicable to ‘The Business’ case scenario is the Balanced Scorecard using its performance measures; the tool will help drive the business to success gaining more significant market share and expanding sales to new and existing markets. The present paper, therefore, delves in developing and discussing the dynamics of Balanced Scorecard, illustrating the strategic map for the enterprise, the objectives of the company and how the use of Balanced Scorecard contributes to the achievement of the business strategies.
A strategy map is one vital component of communicating an organization’s business structures to the employees and the whole management. By definition, organization’s strategy map is a framework which tends to create value for a firm through the connection of strategic objectives in an explicit way illustrating the cause-effect relationship with each other following the four fundamental goals of the Balanced Scorecard (BSC). These are financial, customer, processes, learning, and growth (Yüksel and Da?deviren 2010). In essence, therefore, strategic mapping are crucial parts of the BSC which primarily help illustrate the strategies that a firm can employ to create value from its products. The strategic map is thus one vital tool which helps organizations achieve a high level of business objectives based on a firm’s weaknesses and strengths.
Strategy Map for ‘The Business’
With the help of a well-structured strategy map, all the workers and the management body will have a clear understanding of the general outlook of the organization’s strategy and their roles in achieving the firm’s objectives. The strategic map, therefore, acts a guide that gives workers an opportunity to view how their responsibilities contribute to either the achievement or failure of the firm’s strategic objectives (Wu, Lin and Chang 2011). A strategic map accrues some benefits to an organization that employs its use, and one of them is that it creates an easy, simple, neat visual representation way of communication. It further helps identify organization’s key objectives, unifies the organization’s goals into a single strategy and through its financial perspective of the BSC, it contributes to the creation of long-term shareholder’s value (Bigliardi and Bottani 2010). By aligning organization’s strategic objectives around the business strategy, the map ensures the successful implementation of the business strategy which eventually contributes to the improvement of organizational performance.
Based on the present case scenario of ‘The Business’ a strategic map will be the most prudent tool to help improve its performance. In drawing the business strategy map, the organization’s five year’s objective is considered based on the weaknesses that are experienced at the business based on its current structure (Arzu Akyuz and Erman Erkan 2010). Currently, the firm’s five-year objectives include increasing sales volume annually to a maximum of about A$5 Billion in five years, attaining positive operating income with a sales return of 15% and expanding its market share to a minimum of 11% in five years. Other than the five-year financial objectives that ‘The Business’ aims at attaining, the management is also mandated to enhance the current organization structure which seems to have totally the non-financial operations which significantly contribute to the achievement of the firm’s financial objectives. Through the implementation of the BSC, it is anticipated that new management of ‘The Business’ will enhance the communication system within the business to help clarify the primary and desired outcome from the business operations in regards to quality service and customer satisfaction.
The implementation of the BSC through strategy mapping aims at restructuring the location of the business to make it more accessible to the target customers giving them amble parking, and this will expand the business’s market share. It is also anticipated that ‘The Business ‘updates its inventory system to only stock in abundance what the market demands besides having a truthful marketing strategy that does not deceive the public of their services. Having qualified personnel is also a vital component in the success of the business as it gives customers confidence and satisfaction. The implementation of the BSC will thus aim at providing sufficient and necessary training of the staff to equip them with the prerequisite skills which will enhance the performance of the business. Using these objectives, an appropriate strategy map for ‘The Business’ can be drawn that will help connect all the objectives with the overall organizational strategy (Taticchi, Tonelli and Cagnazzo 2010). The strategy map for ‘The Business’ will take the following style;
The Objectives of the Company and Their Importance
Figure 1: Balanced Scorecard Strategy Map
Given the present organizational structure of “The Business,” the primary objective expected to be achieved through the implementation of BSC is the attainment of clarification and proper focus of the firm’s desired outcome, strategy, and its non-financial operations. According to Tseng (2010), the real power of BSC in any business environment is always to develop a performance measurement system that aligns the various perspectives of the business operation to achieve the desired results at the end of a fiscal year. Thus, proper study and analysis of “The Business” situation as well as a discussion with key personnel in the firm about the internal processes would reveal the methods and fundamental success pillars that if adequately triggered would contribute to the desired outcome. The current situation of the business indicates that there is lack of proper clarification of what the company aims at achieving at the end of the financial year and this explains why the firm records a nil operating income.
Through strategic mapping of the internal processes, success factors as well as desired outcome, it is highly expected that the company’s operations would be aligned appropriately for excellent performance. In the current setup, it is noted that the activities are not aligned with the firm’s objectives since the business lacked trained personnel, it has poor customer service that has contributed to customers’ dissatisfaction, and the quality of the products are also low. These factors are indications that the current structure has no focus on achieving the company’s objectives. However, it must be noted that setting the improvement objectives for “The Business” activities and processes cannot be on the basis of the established standards of the prevailing market environment (Tayler 2010; Wu 2012). The organizational management structure as well as previous performance both financially and non-financially must be used as benchmarks in establishing useable and applicable objectives.
Another objective that is anticipated to be attained at the end of the BSC implementation is the realization of the vital role that each perspective of the organization plays in the overall performance and productivity of the firm. In view of “The Business” present situation, it is evident that the company pays very little attention to some of the crucial non-financial factors (Niven 2011). Some of these factors include providing ample parking area for its consumers, training of its staff in its products, updating its stock inventory and poor employee management (Chen, Hsu and Tzeng 2011). Thus, the strategic mapping would help the organization identifies some of its attractive and unattractive positions that have a direct impact on its performance and success. In other words, establishing a visual representation of how the performance measures need to be taken to improve the productivity of the company is vital to unify the goals of the corporation into a single strategy that is easily executable.
The famous concept of the balanced scorecard (BSC) was first introduced and actively propagated by the works of Kaplan and Norton (1992). According to them, BSC is strategy and performance measurement tool that is used by an organizational human resource to evaluate the efficacy and efficiency of the firm’s processes, design, and architecture (Kaplan, Norton and Rugelsjoen 2010). The tool is also used to keep track of the various activities that the company team members are working on at any particular moment as well as carefully monitor the cause and effects of any change that is adopted within the organizational structure to ensure adherence to the specific business goals. An organization’s BSC serves four basic functions, and these include communicating the business objectives, aligning the daily operations with the individual roles of the workers and prioritizing the organization’s projects, products, and services (David 2011). It further helps in the measuring and monitoring of the organization’s progress towards the achievement of the strategic targets in the strategy map.
Upon consideration of the financial situation of ‘The Business’ and its operations, it is evident that the company has paid no attention to its non-financial areas to ensure excellent customer service as a strategic move to boost its success (Niven 2011). As a management tool, the balanced scorecard will be useful to combine both the historical financial data together with significant qualitative information on those areas which despite the fact that are not related to financial issues are vitally important to the organization success. The tool will enable the management at the business to align the roles of the workers with the organization’s objective to ensure that all the business activities are geared towards achieving the desired outcome within the financial year and in the five-year plan (Smith 2010).
As a performance management model, BSC has four generic perspectives, namely Financial, Internal Processes, Customer Perspective and Learning and Growth. Through this tool, ‘The Business’ would be viewed from four different perspectives and necessary measures taken to improve the specified areas that are pulling the firm’s economic efforts down (Kaplan, Norton and Rugelsjoen 2010; León-Soriano et al. 2010). Thus, before designing a fitting BSC for the firm, it is essential to correctly understand the situation as it is in the organization and then develop a strategy map based on the stipulated objectives for improvement. In other words, The Business scorecard would be established on the basis of the measure, specified targets and various initiation or action plans that are aimed at improving organizational performance of the corporation.
As noted by Eden and Ackermann (2013), BSC forms the cornerstone of the strategic management system as it addresses the pertinent deficiencies that exist in an organization such as linking a firm’s long-term and short-term financial objectives. Through the use of the BSC at ‘The Business,’ managers during their decision-making process, will be able to translate the business vision which helps create a consensus with regards to the organization’s strategy. Additionally, implementation of the BSC will enhance the communication at all levels of the organization. This is vital in linking the strategies at all levels of the business with the unit of individual goals to ensure that all the activities are geared towards achieving a common objective (Hwang et al. 2011; Jassbi et al. 2011). By improving the communication system at ‘The Business,’ the management will be able to efficiently integrate its activities with organization business since the workers will have a clear understanding of their objectives.
As provided by Kaplan (2012), BSC promotes goal congruence in an organization by encouraging three primary activities between individual workers and the overall organization. Adopting BSC thus makes the users to effectively engage in activities such communicating and educating, setting priority objectives and linking rewards to individual performance measures and these are in turn linked to the organization’s business strategy (Hsu and Liu 2010). Using BSC at ‘The Business’ will enable the workers to have an efficient communication system where they express their views freely on issues that can enhance the overall business performance.
Additionally, communicating and educating will enable the workers to understand the organization’s policies which make them aware of the organization’s strategies thus aligning their individual objectives to organization’s goals. BSC will also promote goal congruence through business planning where it will enable the managers to efficiently integrate their strategic planning and their financial budgeting processes (Barnabè 2011). Through this process, the management will ensure that its budget is geared towards supporting the overall strategies of the company. Among the workers, good reward system will act as an encouragement making them loyal in their responsibilities to help achieve organizational goals. Good reward system makes employees feel being valued at the organization.
Conclusion
Balanced Scored forms an integral of an organization, and it significantly contributes in aligning business strategies and the overall objectives. Based on the present case of ‘The Business,’ adopting the use of Balanced Scorecard will help restructure and streamline the organization’s activities to be geared towards achieving the overall business objectives. Based on its importance, therefore, Balanced Scorecard should be adopted by firms facing management challenges as it acts as an effective communication tool that gives a good organizational picture of its strategy elements and its initiatives. Infusing the elements of a balanced scorecard in an organization system will thus result in high performance, good management, and improved operation quality.
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