Advantages and Disadvantages of Balance Score Card - Assignment Example

Small Business Enterprise Insert Insert Introduction Small business enterprise is a firm that is still growing and has not acquired a lot of capital. Many countries have a different interpretation of small business, depending on their economic condition as well as their employment rate. For instance, in the US, small business enterprise is an organization that employees less than ten employees. In addition, small business plan rating also depends on the amount of taxes that they pay within a given financial year, as well as the total amount of their assets. Task 1 (a) Performance of small business enterprises in comparison with other Similar sized companies in the same geographical area and industry. A small scale business enterprise, is an enterprise where is an investment in plant and machinery is more than Rs.5 of the corner, but it does not exceed Rs.10. In addition, most small business administration do set the capacity of the company depending on the structures of the enterprise. It includes the number of the employees and the level of revenue generated by the industry (Broom and Longenecker, 2011). However, the company can be small, medium or large business depending on the description that that the ministry in charge in any given country will provide. For example, in the United States, the small business plan is a firm whose gross average for the previous three years is not more than the current total average. In addition, the rating of the company also bases on the value of assets, annual sales as well as the net profit. The medium sized business enterprise includes; Tata Motors and the Texas Accountants firm. The two companies have varying profiles that guide the operations of the companies. In addition, the company profile always acts as a guide to the customers of that particular enterprise (Sen, 2008). Company profile is also a requirement that that the business plans ought to have in order to acquire permission to run the company. Task 1 (b) Profile of Tata Motors It is a small automobile company in India that has consolidated revenues of $ 2,000,000 in 2012-2013. The company is making efforts to increase its yearly income and the number of employees. The Tata motor group has 20,000 employees who are operating under a vision and the mission of the company (Keith and Gubellini, 2014). Tata Motors was put up in 1970; the company management has been trying to increase its annual revenue as well the number of employs it employs. In addition, the company will be in a position to boost its current status to medium business enterprise. The company is also opening various branches to increase its sales volume (Andersson, Miles and Ward, 1996). In addition, the company is also making efforts over different brands in the market in order to meet its customers demands successfully at any given time. Texas Accountants Firm Profile The start of the enterprise was in the year 1990 with a maximum of 10 employees. The company had a major objective carrying out auditing activities within the town of Texas as well as its environs. The enterprise had general revenue of $ 1,000,000 in the year 2010-2012 (Whatmore, 2013). In addition, the companies have been increasing the number of its clients as well as the number of its employees. The enterprise also has a mission of serving their customers diligently and honestly without any form of corruption or bribery. In addition, the business has a code of ethics as well the code of conduct that guides the operation of its employees. Performance measures It is the procedure for quantifying the efficiency of the previous actions of the enterprise (Erskine, 2012). In addition, it is also the process of evaluating how effective an organization deliver to its esteemed customers and the effectiveness of managements styles employed the enterprise managers. Balanced scorecard is one of the performance measurement techniques that are used by the two enterprises. However, the use of the scorecard will also need to apply statistical modeling to check the outcome of performance. Return on investment is another form of performance measurement technique that Tata Motors always uses to gauge the performance of its operation. In the art, the enterprise management will be in a better state to determine whether a given investment will be profitable enough. The return on investment will also help in advising the stakeholders of the enterprise whether to invest on a certain project or not. On the other hand, the accounts firm frequently uses the evaluation method, to assess the performance of the enterprise. In the technique, the enterprise will have to carry out performance analysis of all employee and the various departments in the organization. Task 1 (c) Advantages and disadvantages of the performance measures Some of the performance measures that the companies use include; balanced scorecard, management by objective and forced ranking. Balance scorecard It is a performance measurement technique used in strategic management to measure and give feedback to an organization in relation to the internal as well as external factors that affect performance. Advantages of balance score card It helps the enterprise to detect whether it is making profit or not. It also enables the enterprise in proper planning of its activities at any given time thus avoiding rush hour programs that can be costly at the end. In addition, balanced score card will provide feed back to the enterprise on how its employees are performing and where needs improvement. In addition, it will advise the plan to invest more in projects that bring more profit as well reduce the budget of the projects that do not yield much profit. It also helps the enterprise to keep it track records on how it has been performing from the start. Disadvantages of balance score card Time-consuming; preparation and implantation of the balanced scorecard are always consuming a lot of time that would have been spent doing other activities. It is costly; Development of balance scorecard will need some material that is expensive, thus giving the enterprise an extra cost. Skills required for its preparation; balance scorecard requires a lot of expertise and competence in order for it to attain its primary objective. It demoralizes the employees who have not meet the set standard. Advantages of management by objective It is quick to prepare, for it base on organizational goals. It requires fewer skills to implement Enable the organization to work towards it set goals Disadvantages of management by objective Management will only concentrate on achieving its set goal. It time demotivates an individual who does not meet the established goal. It can only be implemented by managers who understand how it operates. Forced ranking It is a performance measurement technique that ranks the performance of one employee against the other. Advantages It is quick thus saving on time It is cheap as it only deals with a comparison of employee performance It enables an employee to understand his performance level Disadvantages of forced ranking It demotivates an employee who performs poorly It is also a time consuming by comparing all employees in an organization It needs an expert to analyze jobs that are in different professions. Task 2 (a) Weaknesses in the small business enterprises There are various areas that the small firms fail to put into consideration hence becoming a stumbling block for them, from realizing their set goals and objectives. Poor management styles are one of the weaknesses that the management of newly established enterprise will face because it does not have sufficient knowledge, skills and expertise to run the business. It is, for this reason, the responsibility of shareholders to ensure that they outsource or train an employee, in order to acquire the expertise for efficient operation of the business. In addition, Proper debt management is another weakness that small enterprises currently face. It is because the enterprise management does not keep proper books of accounts; by that making the company lose track of its debts. In addition, lack of mortgage records can be another source that can encourage theft and misappropriation of the books of accounts of the enterprise. However, the company can also capitalize on the weakness so as to avoid unnecessary loss. The management of the company can do so by ensuring that it keeps proper books of accounts, as well as frequent auditing of its accounts. On the other hand, the enterprise will be up to date with its operation, and it can easily trace its debts and other resources that outside the business premises. In addition, in order for the enterprise to overcome the above weakness, it should be able accurately to ascertain the credit worthiness of the customer. That is before awarding such a favor that will prevent inconvenience caused by debtors, making the business not to meet its operational cost.Adequate supervision of workers is another great weakness that small enterprises currently face. It is a weakness to the enterprise in the sense that, strict control does not give an employee freedom to speak out the thought and ideas that one has. It is, for this reason, the responsibility of line managers and the directors of the enterprise to ensure that employees get the proper motivation, in order to meet the organizational set goals. In addition, the commitment of the employees to the business will also help boost production in the enterprise. It is, for this reason, the role of management to ensure that it finds a suitable technique to motivate its employees. Proper employee motivation will boost the morale of workers in whatever that they do and thus increasing the production level in the business. It can be carried out by ensuring that the enterprise employs the individuals with required skills and expertise. Communication is also another sector that can be a great weakness in the business. Most companies have got no official or formal communication channels within the enterprise, hence boosting the rate of information distortion (Davila, Epstein and Shelton, 2007). If there is no adequate communication in a business, then it means that individual set, as well as objectives, will not be achieved. It is through communication that the management of the enterprise will be adequately communicating to its employees and its esteemed customers. However, it is the management duty to ensure that it adequately describes the rules and regulations governing the company as well as what it expect of its employees. Training and development of workers also need for proper communication. Without proper communication, there will be no effective training program, and instead it will be a waste of time and resources. For this reason, the business enterprise will have to ensure that it has proper channels of communication and eradicate any possible communication barriers. Product promotion is another difficulty that small commercial enterprises are currently facing. With reduced product promotional channels, the enterprise will not be in a point to sell it goods and can end up operating at a loss. With the proper product promotion, the business will be able to attract many customers to the world and will be able to make maximum profit. It is, for this reason, the responsibility of small commercial enterprises to heavily invest in marketing and promotion of its goods in order to have adequate returns on investment. Fair advancement of workers will also ensure there is contention in each worker thus providing their morale in raised high output in the business hence. The officers responsible for the development should not be of corrupt qualities so that the above measure may be useful. Hence, the enterprise will be in one way attracting and retaining competent employees into the business. The mechanism will prevent the workers from leaving the company to seek for greener pastures. Lack of adequate initial capital is another weakness that small business is facing. Without sufficient capital, the business will not be in a position to get the finances it needs to carry out effectively its operations. It is, for this reason, the role of the management to ensure that it sources adequate resources to facilitate its operations at any given time (Lau, 2005). Competition from medium and large size companies is another threat that small business are facing today. In order for small scale business to overcome the threat, they have to ensure that they produce quality products and services. In addition, it also has to meet customer demands at any given time, thus winning the loyalty of the client. Task 2 (b) Recommendations Government contribution; small business enterprises have got little capital to start up. I, for this reason, recommend that, the government, as well as money lending institutions, should be willing to assist small entrepreneurs. The government will have to do so without asking for securities because small enterprises have few assets to provide as securities for the loans they require. Provision of readily available market; the government should also support small companies through buying their goods at an excellent price. In addition, the government should ensure that goods from outside the country get heavy taxes so as to minimize overflow products in the market. Provision of quality services and products; the small business enterprises should ensure that they produce quality products that can attract and retain the customers to the enterprise. For this reason, the enterprises will be in a better position, to expand its business as well increase the number of its employees. For any business to prosper, the management should be ready to keep proper books of accounts, and ensure that there are clear transparency and accountability. The company should put it into practice by having clear rules and regulations to guide the conduct of their employees. Proper motivation of workers; the management should also ensure that it adequately compensates its employees by improving the morale of workers that in turn will increase efforts in whatever that they do. Market analysis; small business enterprises should also ensure that they carry out adequate market analysis before starting a business. It will enable the enterprise’s product and goods to move quickly hence gaining quick returns to boost its operations. Employment of the latest technology; the company needs to impress the technology in marketing as well as in production of its products. For this reason, the enterprise will be in a better position to produce quality services and meet its customers demand at any given time. Task 3 (a) Assessment of existing business objectives Any operational goals that an enterprise adopts must be SMART. That is; the goal set by the company has to be systematic (Seow and Hillary, 2006). The operation of business activities has to be systematic in the sense that, there are specific rules and regulations that guide the undertaking in an enterprise. In addition, there has to be clear procedures that employees and the management of the business must strictly follow in order for the company to attain the set goals and objectives. Measurable objectives; as a small business enterprise, it needs not to set the goals that it cannot attain. For this reason, the enterprise will have to set goals that will match with its resources and expertise. While setting the objectives, the enterprise will also have to gauge the potential and capabilities of its employees. It will have to assign a task to an individual, bearing in mind that one will stand a better chance to accomplish the task within a particular time. Measurable objectives will also serve as a motivational tool to the employees of an enterprise. Because once they have attained the set goal, employees will have a high spirit to work even extra harder. Attainable objectives; the enterprise should also set goals that it can attain without much straining. It will only do so by making sure that it correctly carries out the budgeting exercise. Through budgeting, the enterprise will be in a position to allocate many resources to the productive projects. Once the project has adequate resources and a good number of employees, the company will attain the set objectives without a lot of difficulties. In addition, the plan should also set attainable goals for its employees. The management will be in opposition to understand the capabilities of its employees only if they have targets. Achievable objectives will also enable the company, not to strain a lot, instead operate within its capabilities. The enterprise should also set realistic targets; the objectives established by an industry should not be discouraging but challenging. Hence, the enterprise will be in a better position to attain its set goals and targets. Thus, the enterprise will be in a position to meet its customers demands at any given time. Apart from satisfying the customers, the company will be in a better position to expand as well attracting more clients and employees into the organization. The objectives set by the enterprise should also be time bound. Once an industry has made its decision to undertake the business direction, and then it has to set clear objectives that can it achieve within a given period. Having objectives that respond to time, will enable the enterprise to meet its set goals during that financial period. For this reason, having SMART goals in an enterprise will be so useful to an organization towards attaining its set goals. Task 3 (b) Business plans to incorporate appropriate changes Change is a critical concept that will enable an individual properly to understand the complexity of the enterprise world. Through understanding of change, the businesses will embrace change without friction.In order for companies to advance from small business enterprise to medium and large enterprise, it will develop a competitive business plan. In setting up business plan to catch up with the current developments changes, the company ought to have clearly specified goals and objective. However, the firm also needs to have a budget that will guide its operations. In setting the budget, the business strategies activities and priorities it projects. The business owners should also have personal savings to invest into the company. Apart from personal savings, the company should also visit financial institutions to ask the lending institution for loans to help them expand their business. The management of the enterprise should also employ those who have the skills that an industry needs to accomplish the tasks ahead.Competition is another sector that a company has to put into consideration while setting out its business plans. The enterprise will have to understand, the products and services that other enterprises within the same industry offers. For this reason, the enterprise will be able to know the type of quality and services it has to over into the market. By offering quality services and products that are higher than those of the competitors, then the enterprise will be able to win more clients hence boosting its returns.Business structures; is another sector that a business will have to consider while setting up its business plan. The business structure will have to be established by the management of the company to assist in reporting relationship in an industry.Task 3 (c) An action plan, is a strategic move that organization management uses as effort guides towards the achievement of the set goals and objectives. It is an action plans for implementing changes so as to improve the performance of small business enterprise. The management will have to decide in advance what objectives to work on, when to start the operation and who will have to carry out that particular task. In order for an organization to implement its action plan, it needs to have competent employees who can successfully perform the assigned task. It is, for this reason, the responsibility for the management to make that it possess the skills required. In order to have the skills, the management will have to train its employees to attain the skills. Training and development will help an enterprise correctly to apply the changes it has a business. That will allow them to get the skills successfully to handle the change introduced into an industry. In addition, the enterprise will have to take its employees to seminars and trade exhibitions to boost their skills so as to manage the introduction of change effectively. In addition, time is a significant factor that will guide the management in its action plan, for it state when certain project starts or end. Once the management knows the duration that it will take a certain project, it will be able to budget for it and delegate duties to individuals. Task 3 (d) Theories to support the investigation Theory is a principle that gives an explanation of any given phenomena. Tata motors and Texas accounting firm has some ideas that give facts in relation to the operation of its activities. For instance, the motivational theory; it is a theory that states that an employee will increase the performance once there is motivation. Motivation to employees is through fair compensation and proper working conditions. Under motivational theory, the management of the enterprise will have to guarantee the employees that change is not there to harm them instead to bring them more benefits. Under the motivational theory, the change will bring the employees more challenging tasks that will boost their morale once they attain the set goals and objectives. Behavioral theory; it is a method that will give facts on how an employee will behave under certain circumstances. The theory states that, different behaviors respond differently to the introduction of change. There are individuals who will receive change positively, and others will have to be forced to accept change introduction into the enterprise (Reuvid, 2010). Leadership theory is another theory that the two companies put use to ensure efficiency in change management. Leadership theory is a theory that gives an explanation of different leadership styles that leaders use in their daily operations. In order for change to be effective managers will have to employ different leadership styles that will ensure that there are fairness and equality among the employees and the management. In addition, goal theory is another theory that the two companies use. Goal theory is a theory that gives facts about the companies set goals and objectives. The two firms use goal theory to ensure that it is on the right track, in achieving their set aims and targets. Task 4 Impact of management change on the operations of small business enterprises Effect of change on the activities small businesses Enterprises Introduction of change into an enterprise has got a greater impact to the functioning of the company enterprise. That is; the change will bring positive influence to employees in a corporation. For instance, motivational theory will motivate individuals in an organization to have a positive mindset about change. Despite the fact that change will come with a new way of doing thing, it will also earn employees new skills and experience. For instance, the company that has been manually marketing its products will have to change into online marketing (Lewis, 2002). Online marketing is a marketing strategy that has come as an outcome of the change in technology. Employees in an organization will stand a chance of interacting with other business people across the world. By doing so, they will be sharing ideas that will help them improve their skills and knowledge. Apart from the positive impact of change, it also has some negative consequences for the enterprise. It will take the employee in a business more time to understand the new changes in the industry. In addition, a new change is also costly to a company. That is; the enterprise will have to invest more in training its employees on how to handle new changes. An alternative to employee training is outsourcing that is still costly to the business enterprise. In addition, installation of new machines and equipments in the company premises is another significant challenge that the company plan will encounter. List of References Andersson, C., Miles, D. and Ward, J. (1996). Business management. Geneva: International Labour Office. Broom, H. and Longenecker, J. (2011). Small business management. Cincinnati: South-Western Pub. Co. Davila, T., Epstein, M. and Shelton, R. (2007). The creative enterprise. Westport, CT.: Praeger. Erskine, R. (2012). Business management. Prentice Hall. Harzing, A. and Ruysseveldt, J. (1995). International human resource management. London: Sage Publications. Keith, L. and Gubellini, C. (2010). Business management. New York: McGraw-Hill. Lau, L. (2005). Managing business with SAP. Hershey, PA: Idea Group Pub. Lewis, L. (2002). Managing business and service networks. New York: Kluwer Academic/Plenum Publishers. Reuvid, J. (2010). Managing business risk. Philadelphia, PA: Kogan Page. Sen, M. (2008). Business management. Jaipur, India: Oxford Book Co. Seow, C. and Hillary, R. (2006). Managing business processes for corporate sustainability. Bradford, England: Emerald Group Pub. Whatmore, G. (2010). Business management. Cambridge [England]: Published for the National Book League at the University Press. Read More