A Comprehensive Guide To Balanced Scorecard Approach For Organization Performance Measurement And Improvement (essay).

Overview of Balanced Scorecard Approach

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With the ramified changes in economic and complex business structure, each and every organization are endeavouring towards using the advance strategic program and evaluation tools to win over the market. The balance scorecard approach helps the organization to consider the four main points of the business for formulating the business strategies. It also helps management to improve the work program as per the needs and demand of the clients. The balanced scorecard is a measure of the performance metric that helps in strategic management to identify the functions and improve the internal functions of a business and analyse the external outcomes. It assists in measurement and providing feedback to organizations. It helps in the better decision making of the organization. It helps in motivating good behaviour in the organization by differentiating four areas that need to be analysed. These areas are business processes, customers, finance and learning and growth. With the help of balanced scorecard, it helps to identify factors that degrading the company’s performance. It enables organization in implementing the strategy mapping to know the value addition within an organization. The investigation has been done related to training and knowledge resources to analyse the growth and learning. There are different analyses related to the different aspects of the organization to meet the organizational objectives. We are analysing the suitability of balanced scorecard on the company named Amcor. It is a multinational packaging company situated in Switzerland and Australia. It is a very renowned company that handles different type of packaging services. There are so many verticals that can be analysed with the help of Balanced Scorecard approach that leads to the growth of the organization

As per the Kaplan and Norton, balanced scorecard approach is the four factors tools which are used by the organization to evaluate the internal and external factors of the business. Balance scorecard is basically a tool to evaluate the performance management of an organization. It helps managers to keep a track on the business activities within the organization, and then control and monitor the consequences coming from the actions.  It helps in the creation and implementation of the strategies in an organization (Ansoff, 2014). It has basically four perspectives- Financial Perspective, customer perspective, internal process perspective and learning and growth perspective. Basically, balanced scorecard analyses these four perspectives and find out the major things in the strategic plan that can create an effect on any of the perspective. This approach basically helps in creating an analysis of these four verticals (Joshi, 2015).  Sometimes, this approach has proved very useful in successful strategy creation and implementation. These four verticals basically describe the four important requirements to reach the objectives. Financial Evaluation is the basic and traditional feature of the balanced scorecard. It deals with quantitative values like revenues and profits. This feature is very important to others but most of the time, more emphasis has been given to this. A customer plays a very important role in the achievement of the objectives.  An organization cannot sustain without the presence of the customers. It is necessary to know the customer perception to provide the product and services as per their choice in order to fulfil the requirements. Generally, organizations do a survey to know about the thought of the customers. It gives them a wider knowledge regarding the improvements. It can develop the knowledge regarding the new process and it ultimately leads to the growth of the organization. The more dynamic the business organization, the more effective and balanced will be the scorecard.

Four Perspectives of Balanced Scorecard Approach

Every company should know about the core competencies that can help in maintaining the internal environment of the business organization. It defines the important things needs by an organization to achieve objectives. It defines the way of evaluating the performance by measuring the efficiency of the operations. Employees are the most important resource for an organization as they carry on the process of producing the products and services. Toda, employees are given total leverage to bring up new ideas to grow in the market. Employees must possess the proper set of skills and knowledge to carry out various functions. It is important to provide time to time learning sessions and training to the employees to make them better. It helps the employees become obsolete and can reduce employee turnover too.

There are some features of Balanced Scorecard and the four perspective needs to be considered with respect to the features below-

1. Objectives- Organizations objectives is one of the major important reason for conducting the strategic planning It is the goal of every organization to fulfil the objectives of the organization in an efficient way. The balanced scorecard should reflect the objectives of the organization like an increase in the market share and create higher profits. It is important to consider the objectives of the organization while doing any sort of analysis.
2. Measures- Measures should be taken according to the objectives. All the objectives must put in a place to analyse the progress of the achievement of the objectives. These measures can show the level and actual growth of the success.
3. Targets- Every company sets different targets to reach the ultimate goals of the organization. The setting up of the targets can be department wise or company wise. There will be some specific targets that have been set up to achieve the pre-decided Setting up of the targets is important to know the way of reaching to the measures (Baporikar, 2017).
4. Initiatives- Initiatives are the actions taken by the organization y achieve the specific objectives. This is the last stage that decides the achievement and fulfilment of the growth (Smith, 2013). It is important to take initiatives because actions are very important to complete a specific task and to undertake measures (Lambert, 2012).

The main objective of using the approach of the balanced scorecard is to create a system that can help an organization to measure the performance and ways to improve the same. The balanced scorecard is becoming as popular as it shows the clear picture of the activeness of organizational goals. It is considered as a management strategy that can be used for different functions of the organization. It helps the management to understand and to know the objectives and roles in a bigger way. It also enables the organization in doing quantitative analysis. Some organizations become unsuccessful in using this method of strategic analysis as mostly they fail to understand the objectives of the organization. Balanced scorecard breaks down the objectives and makes it easier for the organization and employees to understand the same (Roßbach and Karlow, 2011).  The balanced scorecard is needed by business organizations as it increases the focus on the strategies of the business and always leads to improving organizational performance. It also helps in targeting the major determinants of the future performance. It helps in proper communication in the organization related to the vision, mission and strategies (Kaplan and Atkinson, 2014).

For the implementation of the Balance scorecard approach, in this report, Amcor Company has been taken into consideration. Amcor basically produces packaging services that are flexible and rigid for a different type of products like food, health, beverage and tobacco (Hess and Liedtka, 2012).  It also involves in protecting food, beverage, pharmaceutical, medical, personal, home and personal care goods. It is listed on Australian Securities Exchange. It has also included some of the international market indices that basically reflect the international status of the same.

Case Study: Implementation of Balanced Scorecard Approach in Amcor

The main vision of the company is to enter into packaging services of big products and achieve a good profit and sales in upcoming five years. It also wants to enter into a competition of providing customized products in the market (Lambert, 2012).

It wants to provide customer satisfaction on a higher level and approach the other segments of the market too. They want to get success by providing higher profits to their stakeholders (Badia-Miro?, 2015).

Their overall strategy includes people that are totally engaged in developing high performance and working hard as a team. They have the customers that are loyal to the brand. They are growing and prospering Amcor’s quality, innovations and services. They are providing a continuous growth and profits to their investors. They provide a very positive work environment for the employees (Suri and Sushil.,2017).

The main motive behind the creation of a strategic map is to create some changes in the current business structure and to achieve the decided objectives and goals.  It shows the diagram that can be used by the company to note the initial strategic goals created by the organization. The entire strategic map has been structured by focusing on the present and future goals and objectives. It also gives an idea about the future outcomes and present outcomes of the organization and increases the turnover of Amcor. The strategic planning focuses on expanding the supply of diversified products in the packaging manufacturing. It also wants to make some innovative techniques in order to optimize production (Keyes, 2011).

1. Financial Perspective- Amcor has a good sustainability in the market and it wants to satisfy the needs of the customers as well as the stakeholders and shareholders. It wants to maximize the shareholder’s value to a great extent. It wants to create a position in the market that can help in increasing the value of the company’s shares. It focuses on increasing the revenues of the organization (Flanigan, 2016). It covers all the revenue, cash outflow and business functioning of organization which could be considered while determining the projected return on capital employed. If the project undertaken gives a higher return on capital employed as compared to others then it will be inferred that Amcor Company is creating value on its investment. This financial perspective sets him qualitative targets for the organization (Ibrahim, 2015).
2. Internal Business processes- It wants to create a quality partnership with the big players in the market as Amcor is involved in the packaging of basic products only to it can be an opportunity for the company to enter into some other packaging service companies to create a quality It can help both the companies in growing at a higher pace. It is focusing on creating more effective for its operations. It wants to involve a low cost of the operations to create products of the same quality in order to make higher profits. It never wants to compromise on the quality of the product as it can hamper the customer base of the company. People show their brand loyalty towards a particular brand because of the quality that provides satisfaction to the customers (Pangarkar, Kirkwood and Pangarkar, 2012).
3. Learning and growth- Amcor have a very good staff and it provides a very positive environment for the employees to work in so that they cannot face any kind of issue. It has a strategy to recruit more qualified staff in order to increase the efficiency of the operations. It has also created training programs for the growth and development of the employees. They can become master in doing their work and it is an advantage for the organization only (SALONER, 2018).

These both measurement tools have their values and used by managers to measure the performance of the company and formulate effective strategies to win over the market (Boscia, and McAfee, 2014).

There is a difference between BSC and the traditional measures of performance measurement. The traditional measures of performance measurement only keep a track of the financial verticals of the company (Detyothin et al., 2015). They only focus on the profit earned from the sales and requirement of the capital. They analyse the financial functions that are totally based on the internal accounting books and reports like profits, revenues, cash flows, return on assets, earning per share and economic value addition.  These are mainly called as lag indicators as they can show the past data and present the historical information only. But the analysis of quantitative measures is also sufficient to control and improve the performance of the organization. It can also help in the decision-making process of the company for the long term growth. The traditional measure tools could only assist in formulating the strategic plans but with the ramified changes in economic, management department needs to identify the solution of the future problems at the spot. However, due to the uncertainty of the future, managers fail to identify the future issues but by using the different advance measurement tools, they could easily estimate the problem areas and its impact on the business in determined approach.  The traditional performance measurement tools are ratio analysis, ABC costing and capital budgeting which is used by the management to identify whether the organization is performing well in the market or not. However, these tools measure company’s performance on the basis of revenue and other statistical data. If the manager wants to see the growth of the business and evaluate internal and external factors then these traditional measure fails to identify the core aspects.

Comparison with Traditional Performance Measurement Tools

Balance Scorecard measures- Balance Scorecard is a performance measurement tool that basically addresses the weakness of the traditional performance measurement systems. It includes both the quantitative as well as qualitative verticals of an organization (Worek and Micari, 2016).  It possesses a strategic non-financial metrics for performance measurement. It shows a balanced view of the position of the organization. BSC is beneficial in this competitive business environment as it helps in better strategic implementation as it takes all the intangible assets into accounts and is considered as a big advantage. It helps in linking the strategic management system with the strategic objectives of the organization. It focuses on the four different perspectives that give a good advantage to the company (Kaplan and Atkinson, 2014). The balanced scorecard approach is a best suitable method which assists organizations to formulate the strategies and work program which could be used by the organization to win over the rivals in business. It segregates the duties and work program to implement the effective strategies and increase the effectiveness of work program.  The balance scorecard approach also assists in mitigating the marketing and internal control issues and evaluates the internal work functions of the organization. After that these factors are used to customize the products and services as per the needs and demand of the clients at large. This balance scorecard approach assists in the evaluation of the case which evaluates the present and future business issues of company and keeps the management ready to encounter those issues in determined approach.  

BSC is suitable for Amcor because it helps in analysing the effectiveness of each function of the organization as well as it helps in creating a quality partnership in expanding the business. It describes the strategy of a company and decides the cause and effect relationship. It also helps in clear communication within the organization related to the strategies (Ansoff, 2014). It communicates strategies to all the members by translating the same into understandable measures operational targets. Balanced Scorecard also focuses on the non- financial measures and considers it as a part of the program in order to achieve the desired financial performance (Boscia, and McAfee, 2014). It only finds the important measures in the identification of the critical areas to work upon. The manager totally focuses on the implementation of the strategy in an effective way. It also helps Amcor in highlighting the major trade-offs that help the manager in the critical conditions when it became impossible to consider the operational and financial measures together. It can also help in preparing a clear picture in front of stakeholders and shareholders. It identifies the requirement of training and development to the employees. It deals with the best and effective measures of the performance to achieve the goals and objectives of the organization. It can create more efficiency and effectiveness in the different operations of the organization (Ansoff, 2014). The balance scorecard approach set up four different quadrants which assists organization to meet its short term and long term objectives in effective manner. There are several factors such as financial perceptive, customers need, learning and growth and interwork culture. These all factors assist in making business more effective and clients oriented at large. Therefore, after evaluating these four quadrants, it could be inferred that balance scorecard approach helps in setting target for the employees, identifying the issue and employees conflicts in the value chain activities, implement the learning and growth strategies and customized the products and services as per the needs and demand of the clients in market. These four factors are the major parts for formulating the strategies on the top level. Management department of company could use these strategies to win over the market and implement the effective working in organization. Therefore, by using the balanced scorecard, management could also evaluate the internal and external factors which might impact the future growth of the organization

Conclusion

Balanced Scorecard is a very effective approach as its name denotes, it creates a balance between the activities and the objectives of the organization. It helps in creating strategies to reach the goals of the company. It is considered as a mechanism that helps management to track the company’s performance and creates management strategy accordingly. It helps in providing a very extensive overview of the objectives of the company by splitting them into the parts rather than limiting the same in terms of financial values. It helps Amcor in creating a strong brand name and creates a very good and potential customer base. It can create a good reputation among the workforce of the organization too. Now, in the end, it could be inferred that each and every company should start to use the balanced scorecard approach over the traditional measurement approach. This approach helps in implementing the strategic decisions and increasing the overall outcomes of the business.

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