Limitations of Balanced Scorecard - Term Paper Example

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The paper 'Limitations of Balanced Scorecard' concerns the dynamic environment, it is crucial for every organization to ensure that their performance level is measured from time to time and one of the most effective ways is to use Balanced Scorecard…
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Download file to see previous pages Many researchers have researched the various purposes of the balanced scorecards along with their role in enhancing the organization’s performance. The company has to manage the strategies for its survival and growth and it can respond to the environmental changes only by operations management. It is vital for every organization to ensure that the strategy is supported by effective business operations and systems; hence, it is important that the organization has to ensure that proper mechanisms are in place so that everything is appropriately placed. The company needs to ensure that four of its key problems are rectified regarding production, marketing activities, internal processes, and employee satisfaction. Hence, the management of the company must strive to apply the Balanced Scorecard as identified in the report and try to implement it in the organization. The management needs to set the short-term goals as well for the purpose of performance improvement by the implementation of the new system in the organization; it should ensure that appropriate mechanisms are in place that supports the organization in improving its performance. Introduction to Balanced Scorecard In today’s dynamic environment, it is crucial for every organization to ensure that their performance level is measured from time to time and one of the most effective ways is to use Balanced Scorecard (Figgie et al., 2002 and McGillicuddy, 2009). The scorecard is found to have strategic importance as the card is developed in linkage with the vision and goals of the organization and adequate awareness is created within the organization so that every stakeholder is well-aware of the importance of its implementation in the business activities. Many researchers have researched the various purposes of the balanced scorecards along with their role in enhancing the organization’s performance (Lawson et al., 2003 and Mintrop and Trujillo,2005). Considering the situation being faced by Rainbow Lighting Ltd., it has been found that the existing management of the company has been unable to increase the production and performance of the company. The sales of the company have not been increasing at an accelerating rate and the product range has been accelerating simultaneously; the product ranges of the company are classified as Alpha and Beta ranges. In the industrial sector, the company introduced bulbs by the name Everlasting Halogen Spotlight (EHS) bulb and the problems highlighted by its users created bad publicity in the market; it was reported that there was a fault in the manufacturing sector and the annual sales revenue decreased by 5%. Another problem faced by the company is that the sales order processing time is longer i.e. 21 days and the distributors are not satisfied with such a long time duration. The price of the bulbs was increased but the sales did not increase as compared to the total increase in the market. The rejection rate of the bulbs has increased from 3.6% to 5.4% and the production efficiency has decreased significantly. The employee turnover has increased to 6% from last year which was 5%; the employees are dissatisfied with the compensation package and their morale level is extremely low. ...Download file to see next pagesRead More
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