Balance Scorecard of a PepsiCo Organisation - Case Study Example

Introduction Balance scorecard is a planning and a managerial system used in aligning a company’s goals and plans to its activities. The term short term scorecard implies that the performance measures can be quantified. On the other hand, balanced means the system is made-up of: Short and long term objectives; financial measures; indicators; and performance perspectives. Initially, there was use of a financial system which proved to perform a significant job of asset valuation. However, in the present age it is not competent enough. Reason being, the value of businesses is rooted in aspects such as customer rapport and inventive acts. As a consequence, useful reports cannot be derived. The financial perspective of balance score card narrows down to the use of returns, operating income, economic value gained, and capital employed. Financial approach of a balance scorecard is efficient enough to link a company’s long and short term strategies. PepsiCo is an outstanding business organization associated with the production of food and liquid refreshments. It obtained its name in 1965. This was after two companies (Pepsi-Cola and Frito-Lay) merged. It is located in New York and has been in existence for a period of approximately forty-eight years. It has net revenue approximately 65 billion dollars (PepsiCo). Presently, the annual report of 2013 as compared to that of 2012, indicate an upward trend of the performance margin. This can be attributed to availability of diverse products. They mostly motivated with the desire to satisfy their client’s wants. Moreover, it has created employment for a total of 274,000 people in its branches. In terms of social corporate responsibility, PepsiCo is playing a significant role by funding projects (water and health) and providing scholarly opportunity to the needy. The financial approach aims at addressing issues involving shareholders and investors. This is made possible through the incorporating of their views regarding financial goals. However, these goals vary depending on the level of growth of the business. These levels are usually classified with regard to the business cycle. In this case PepsiCo is categorized as being in between the initial phase and the growth phase. . The financial perspective of PepsiCo is simplified into objectives, measures, targets, and initiatives. Improvement of production performance of a firm cannot properly occur unless objectives are in place. The knowledge of the firm’s objectives is every workers responsibility. This is made possible through formulation of objectives. The ultimate success for PepsiCo is partly dependent on previous formulated objectives. From a financial approach the objectives of PepsiCo are as follows: to positively impact on cost effectiveness of the company. Influence sales of its commodity. This has been achievable through provision of commodities that are appealing; Increase shareholders wealth; Reduction of capital cost; Increase returns; Minimize cost of expenditure; Run supporting businesses; increase annual dividends.(PepsiCo) Expansion in the business setting is unachievable unless there exists ways of feedback collection. Feedback is the conveying of outcomes to the involved individuals. The formulation of performance measures will facilitate merging of the employee’s character with that of the organization. With regard to the financial report of 2013 compared to that of 2012, there were observable parameters indicating that PepsiCo objectives were achievable. Some of the factors used in measuring progress were as follows: The revenue generated within the business grew by 4 percent; the earning per share experienced a growth of 9 percent; the gross and operation margin increased by 90 and 40 basis respectively; There was free cash flow at 8.2 billion dollars; PepsiCo in the year 2013 experienced a rise in the annual dividends. As a consequence, 6.4 billion dollars was returned to share holders; there was a rise of 900 million dollars of productivity. This was more than the expected; finally, the returns on capital initially invested increased by 110 basis points which were higher than the expected.(PepsiCo) Targets are the expected value of income that the company hoped to get. In order to facilitate delivery of financial targets, each and every employee was expected to give their very best. Through formulation of targets business firms gain clarity of what their ultimate goals are. PepsiCo was able to achieve its initial 2013 targets and for this reason, it announced increased returns to its shareholders. With regard to the company’s target of 2013, there was the growth of organic revenue by +4.0% which was an indication of efficient net pricing. There was a growth of the net revenue by 1%. Secondly, there was an increase in the operating profit by +6%. This reflected the effects of growth in revenue and efficient saving with regard to the partial off-set of operating cost .Thirdly, there was the reduction of the effective tax rate by –9.2%. Forth, the operation scope increased 40 basis points and reported an increase of 70 basis points. Fifth, there was an increase of 0.07 dollars, in the earning per share ratio. This led to earnings per share ratio of 1.12 dollars. Sixth, the total returns to share holders were 6.4 billion dollars. This was made up of dividends ($3.4 billion) and repurchases of shares ($3.0 billion). Finally, there was an increase in cash from operating activities by +14% bring the value to 9.7 billion dollars. Currently, PepsiCo has set its target slightly higher than the previous year (2013). The company expects 7% growth in its Earning per Share of 4.37 dollars. In addition, the company expects: low-single-digit commodity inflation; productivity saving of close to one billion dollars; high expenses of interest influenced by increased debt balances; and an effective rate of taxation of 25%. Initiatives refer to action programs set up by an organization to enable it meet its objectives. In addition, they are meant to represent the most significant of all cross line of business to improve performance. PepsiCo invested in a number of capacity building initiatives that were undertaken for the purpose of achieving its goals. First, PepsiCo invested to enable equity of its 22 billion dollars brands. Similarly, they increased their advertising and marketing from5.2% to 5.9%. As a result, this led to a significant improvement of its brand equity. Presently, PepsiCo owns nine of the largest 40 packaged goods trademark in the US. Secondly, they fine-tuned their production machines by incorporating new innovations. As a consequence, there was introduction of fifty different food and beverage products in the United States. In addition, there was also the opining up of food and beverage center of innovation in Shanghai, China. In general, through the opening up of new centers and use of new improved machines PepsiCo was able to improve its production capacity and income through sales.(PepsiCo) Thirdly, despite uncertainty in some region their markets provided favorable environment for their growth. Similarly, their markets were acting as a major investment area. In addition, their products were affordable and convenient. For this reasons, the markets gave them assurance of consistent growth, furthermore, they had great returns from their sale.(PepsiCo) Fourth, through the creation of new nutritional brands (Quaker, Tropicana, Gatorade and Naked juice) across multiple markets, PepsiCo has been able to meet the needs of their clients. This has resulted to increase in their business revenues. This can proved with rise of PepsiCo’s revenue by 20%. (PepsiCo) Fifth, PepsiCo enabled talent enhancement amongst its employees. This was through investing in foundational leadership training and completely restructuring of PepsiCo University’s curriculum. Consequently, the beneficiaries of the new curriculum gained necessary skills required for the innovating new products. This has immensely contributed to creating of more innovative machines and different brands of their commodity. Therefore, this has made them more competitive. Sixth, PepsiCo sales teams were empowered with mobile technology. This improved their merchandising capabilities resulting to increased sales. In addition, the availability of online market provided a platform for customers of PepsiCo to easily purchase commodity of their choices. In summary, the incorporation of the online platform has boosted the net returns by 18%. (PepsiCo) Finally, the year 2014 and beyond is bound to gain more net income only if the following would be considered: consumers expected to go for more nutritious products. Therefore, there is need to speed up efforts aimed at meeting consumer demands; due to the disruption of the businesses by the digital technology. There is need to properly invest in efficient measures that would ensure cases of cyber-crime are minimized. In addition, there should be creation of a platform that would ensure easy service delivery to shoppers, retailers and consumers; the emergence of new markets is expected to outdo existing market in future. Therefore, there is need to invest in these markets; global warming effects are expected to affect the supply of raw material. As a way of avoiding drop in the net income, there is need for PepsiCo to derive alternatives; the political and social stability in some regions should be the norm and not an exception. In summary, non-financial factors such as climate change and political instability directly affect financial factors.(PepsiCo) In conclusion, performance oversight role is of great benefit for the success of sectors within the economy. Unfortunately, tools necessary for evaluation of effective service delivery are minimal. For this reason, the present day business setting is utilizing intangible assets as an added requirement for effective analysis. This analysis is achievable by use of a tool like the balance scorecard method. It plays a significant role in assessing strategies through a number of inter-related performance measures, namely, employee knowledge base, finance, internal activities, and customer. Introduction Balance scorecard is a planning and managerial system used in aligning a company’s goals and plans to its activities. The term short term scorecard implies that the performance measures can be quantified. On the other hand, balanced means the system is made-up of: Short and long term objectives; financial measures; indicators; and performance perspectives. Initially, there was use of a financial system which proved to perform a significant job of asset valuation. However, in the present age it is not competent enough. Reason being, the value of businesses is rooted in aspects such as customer rapport and inventive acts. As a consequence, useful reports cannot be derived. The financial perspective of balance score card narrows down to the use of returns, operating income, economic value gained, and capital employed. Financial approach of a balanced scorecard is efficient enough to link a company’s long and short term strategies. PepsiCo is an outstanding business organization associated with the production of food and liquid refreshments. It obtained its name in 1965. This was after two companies (Pepsi-Cola and Frito-Lay) merged. It is located in New York for the 48 years. In addition, it has net revenue approximately 65 billion dollars (PepsiCo). Presently, the annual report of 2013 as compared to that of 2012, indicate an upward trend of the performance margin. This can be attributed to availability of diverse products. They mostly motivated with a desire to satisfy their client’s wants. Moreover, it has created employment for a total of 274,000 people in its branches. In terms of social corporate responsibility, PepsiCo is playing a significant role by funding projects (water and health) and providing scholarly opportunity to the needy. The financial approach aims at addressing issues involving shareholders and investors. This is made possible through the incorporating of their views regarding financial goals. However, these goals vary depending on the level of growth of the business. These levels are usually classified about the business cycle. In this case, PepsiCo is categorized as being in between the initial phase and the growth phase. . The financial perspective of PepsiCo is simplified into objectives, measures, targets, and initiatives. Improvement of production performance of a firm cannot properly occur unless objectives are in place. The knowledge of the firm’s objectives is every workers responsibility. This is made possible through formulation of objectives. The ultimate success for PepsiCo is partly dependent on previously formulated objectives. From a financial approach, the objectives of PepsiCo are as follows: to positively impact on cost effectiveness of the company. Influence sales of its commodity. This has been achievable through provision of commodities that are appealing; Increase shareholders wealth; Reduction of capital cost; Increase returns; Minimize cost of expenditure; Run supporting businesses; increase annual dividends.(PepsiCo) Expansion in the business setting is unachievable unless there exists ways of feedback collection. Feedback is the conveying of outcomes to the involved individuals. The formulation of performance measures will facilitate the merging of the employee’s character with that of the organization. About the financial report of 2013 compared to that of 2012, there were observable parameters indicating that PepsiCo objectives were achievable. Some of the factors used in measuring progress were as follows: The revenue generated within the business grew by 4 percent; the earning per share experienced a growth of 9 percent; the gross and operation margin increased by 90 and 40 basis respectively; There was free cash flow at 8.2 billion dollars; PepsiCo in the year 2013 experienced a rise in the annual dividends. As a consequence, 6.4 billion dollars was returned to shareholders; there was a rise of 900 million dollars of productivity. This was more than the expected; finally, the returns on capital initially invested increased by 110 basis points which were higher than the expected.(PepsiCo) Targets are the expected value of income that the company hoped to get. In order to facilitate delivery of financial targets, each and every employee was expected to give their very best. Through formulation of targets business firms gain clarity of what their ultimate goals are. PepsiCo was able to achieve its initial 2013 targets and for this reason, it announced increased returns to its shareholders. About the company’s target of 2013, there was the growth of organic revenue by +4.0% that was an indication of efficient net pricing. There was a growth of the net revenue by 1%. Secondly, there was an increase in the operating profit by +6%. This reflected the effects of growth in revenue and efficient saving about the partial off-set of operating cost.Thirdly, there was the reduction of the effective tax rate by –9.2%. Fourth, the operation scope increased 40 basis points and reported an increase of 70 basis points. Fifth, there was an increase of 0.07 dollars, in the earning per share rate. It led to earnings per share ratio of 1.12 dollars. Sixth, the total returns to share Introduction Balance scorecard is a planning and managerial system used in aligning a company’s goals and plans to its activities. The term short term scorecard implies that the performance measures can be quantified. On the other hand, balanced means the system is made-up of: Short and long term objectives; financial measures; indicators; and performance perspectives. Initially, there was use of a financial system which proved to perform a significant job of asset valuation. However, in the present age it is not competent enough. Reason being, the value of businesses is rooted in aspects such as customer rapport and inventive acts. As a consequence, useful reports cannot be derived. The financial perspective of balance score card narrows down to the use of returns, operating income, economic value gained, and capital employed. Financial approach of a balanced scorecard is efficient enough to link a company’s long and short term strategies. PepsiCo is an outstanding business organization associated with the production of food and liquid refreshments. It obtained its name in 1965. This was after two forty-eight years. It has net revenue approximately 65 billion dollars (PepsiCo). Presently, the annual report of 2013 as compared to that of 2012, indicate an upward trend of the performance margin. This can be attributed to availability of diverse products. They mostly motivated with a desire to satisfy their client’s wants. Moreover, it has created employment for a total of 274,000 people in its branches. In terms of social corporate responsibility, PepsiCo is playing a significant role by funding projects (water and health) and providing scholarly opportunity to the needy. The financial approach aims at addressing issues involving shareholders and investors. This is made possible through the incorporating of their views regarding financial goals. However, these goals vary depending on the level of growth of the business. These levels are usually classified with regard to the business cycle. In this case PepsiCo is categorized as being in between the initial phase and the growth phase. . The financial perspective of PepsiCo is simplified into objectives, measures, targets, and initiatives. Improvement of production performance of a firm cannot properly occur unless objectives are in place. The knowledge of the firm’s objectives is every workers responsibility. This is made possible through formulation of objectives. The ultimate success for PepsiCo is partly dependent on previously formulated objectives. From a financial approach the objectives of PepsiCo are as follows: to positively impact on cost effectiveness of the company. Influence sales of its commodity. This has been achievable through provision of commodities that are appealing; Increase shareholders wealth; Reduction of capital cost; Increase returns; Minimize cost of expenditure; Run supporting businesses; increase annual dividends.(PepsiCo) Expansion in the business setting is unachievable unless there exists ways of feedback collection. Feedback is the conveying of outcomes to the involved individuals. The formulation of performance measures will facilitate the merging of the employee’s character with that of the organization. With regard to the financial report of 2013 compared to that of 2012, there were observable parameters indicating that PepsiCo objectives were achievable. Some of the factors used in measuring progress were as follows: The revenue generated within the business grew by 4 percent; the earning per share experienced a growth of 9 percent; the gross and operation margin increased by 90 and 40 basis respectively; There was free cash flow at 8.2 billion dollars; PepsiCo in the year 2013 experienced a rise in the annual dividends. As a consequence, 6.4 billion dollars was returned to shareholders; there was a rise of 900 million dollars of productivity. This was more than the expected; finally, the returns on capital initially invested increased by 110 basis points which were higher than the expected.(PepsiCo) Targets are the expected value of income that the company hoped to get. In order to facilitate delivery of financial targets, each and every employee was expected to give their very best. Through formulation of targets business firms gain clarity of what their ultimate goals are. PepsiCo was able to achieve its initial 2013 targets and for this reason, it announced increased returns to its shareholders. About the company’s target of 2013, there was the growth of organic revenue by +4.0% that was an indication of efficient net pricing. There was a growth of the net revenue by 1%. Secondly, there was an increase in the operating profit by +6%. This reflected the effects of growth in revenue and efficient saving about the partial off-set of operating cost.Thirdly, there was the reduction of the effective tax rate by –9.2%. Forth, the operation scope increased 40 basis points and reported an increase of 70 basis points. Fifth, there was an increase of 0.07 dollars, in the earning per share ratio. This led to earnings per share ratio of 1.12 dollars. Sixth, the total returns to share holders were 6.4 billion dollars. This was made up of dividends ($3.4 billion) and repurchases of shares ($3.0 billion). Finally, there was an increase in cash from operating activities by +14% bring the value to 9.7 billion dollars. Currently, PepsiCo has set its target slightly higher than the previous year (2013). The company expects 7% growth in its Earning per Share of 4.37 dollars. In addition, the company expects: low-single-digit commodity inflation; productivity saving of close to one billion dollars; high expenses of interest influenced by increased debt balances; and an effective rate of taxation of 25%. Initiatives refer to action programs set up by an organization to enable it meet its objectives. In addition, they are meant to represent the most significant of all cross line of business to improve performance. PepsiCo invested in a number of capacity building initiatives that were undertaken for the purpose of achieving its goals. First, PepsiCo invested to enable equity of its 22 billion dollars brands. Similarly, they increased their advertising and marketing from5.2% to 5.9%. As a result, this led to a significant improvement of its brand equity. Presently, PepsiCo owns nine of the largest 40 packaged goods trademark in the US. Secondly, they fine-tuned their production machines by incorporating new innovations. As a consequence, there was introduction of fifty different food and beverage products in the United States. In addition, there was also the opining up of food and beverage center of innovation in Shanghai, China. In general, through the opening up of new centers and use of new improved machines PepsiCo was able to improve its production capacity and income through sales.(PepsiCo) Thirdly, despite uncertainty in some region their markets provided the favorable environment for their growth. Similarly, their markets were acting as a major investment area. In addition, their products were affordable and convenient. For this reasons, the markets gave them assurance of consistent growth, furthermore, they had great returns from their sale.(PepsiCo) Fourth, through the creation of new nutritional brands (Quaker, Tropicana, Gatorade and Naked juice) across multiple markets, PepsiCo has been able to meet the needs of their clients. This has resulted to increase in their business revenues. This can proved with rise of PepsiCo’s revenue by 20%. (PepsiCo) Fifth, PepsiCo enabled talent enhancement amongst its employees. This was through investing in foundational leadership training and completely restructuring of PepsiCo University’s curriculum. Consequently, the beneficiaries of the new curriculum gained necessary skills required for the innovating new products. This has immensely contributed to creating of more innovative machines and different brands of their commodity. Therefore, this has made them more competitive. Sixth, PepsiCo sales teams were empowered with mobile technology. This improved their merchandising capabilities resulting to increased sales. In addition, the availability of online market provided a platform for customers of PepsiCo to easily purchase commodity of their choices. In summary, the incorporation of the online platform has boosted the net returns by 18%. (PepsiCo) Finally, the year 2014 and beyond is bound to gain more net income only if the following would be considered: consumers expected to go for more nutritious products. Therefore, there is a need to speed up efforts aimed at meeting consumer demands; due to the disruption of the businesses by the digital technology. There is need to properly invest in efficient measures that would ensure cases of cyber-crime are minimized. In addition, there should be the creation of a platform that would ensure easy service delivery to shoppers, retailers and consumers; the emergence of new markets is expected to outdo existing market in the future. Therefore, there is a need to invest in these markets; global warming effects are expected to affect the supply of raw material. As a way of avoiding the drop in the net income, there is a need for PepsiCo to derive alternatives; the political and social stability in some regions should be the norm and not an exception. In summary, non-financial factors such as climate change and political instability directly affect financial factors.(PepsiCo) In conclusion, performance oversight role is of great benefit for the success of sectors within the economy. Unfortunately, tools necessary for evaluation of effective service delivery are minimal. For this reason, the present day business setting is utilizing intangible assets as an added requirement for effective analysis. This analysis is achievable by use of a tool as the balance scorecard method. It plays a significant role in assessing strategies through a number of inter-related performance measures, namely, employee knowledge base, finance, internal activities, and customer. Bholders were 6.4 billion dollars. This was made up of dividends ($3.4 billion) and repurchases of shares ($3.0 billion). Finally, there was an increase in cash from operating activities by +14% bring the value to 9.7 billion dollars. Currently, PepsiCo has set its target slightly higher than the previous year (2013). The company expects 7% growth in its Earning per Share of 4.37 dollars. In addition, the company expects: low-single-digit commodity inflation; productivity saving of close to one billion dollars; high expenses of interest influenced by increased debt balances; and an effective rate of taxation of 25%. Initiatives refer to action programs set up by an organization to enable it meet its objectives. In addition, they are meant to represent the most significant of all cross line of business to improve performance. PepsiCo invested in a number of capacity building initiatives that were undertaken for the purpose of achieving its goals. First, PepsiCo invested to enable equity of its 22 billion dollars brands. Similarly, they increased their advertising and marketing from5.2% to 5.9%. As a result, this lets duiadwbrimprovement of its brand equity. Presently, PepsiCo owns nine of the largest 40 packaged goods trademark in the US. Secondly, they fine-tuned their production machines by incorporating innovations. As a consequence, there was the introduction of fifty different food and beverage products in the United States. In addition, there was also the opining up of food and beverage center of innovation in Shanghai, China. In general, through the opening up of new centers and use of newly improved machines PepsiCo was able to improve its production capacity and income through sales.(PepsiCo) Thirdly, despite uncertainty in some region their markets provided a favorable environment for their growth. Similarly, their markets were acting as a major investment area. In addition, their products were affordable and convenient. For this reasons, the markets gave them assurance of consistent growth, furthermore; they had great returns from their sale.(PepsiCo) Fourth, through the creation of new nutritional brands (Quaker, Tropicana, Gatorade and Naked juice) across multiple markets, PepsiCo has been able to meet the needs of their clients. This has resulted to increase in their business revenues. This can proved with rise of PepsiCo’s revenue by 20%. (PepsiCo) Fifth, PepsiCo enabled talent enhancement amongst its employees. This was through investing in foundational leadership training and completely restructuring of PepsiCo University’s curriculum. Consequently, the beneficiaries of the new curriculum gained necessary skills required for the innovating new products. This has immensely contributed to creating of more innovative machines and different brands of their commodity. Therefore, this has made them more competitive. Sixth, PepsiCo sales teams were empowered with mobile technology. This improved their merchandising capabilities resulting to increased sales. In addition, the availability of online market provided a platform for customers of PepsiCo to easily purchase commodity of their choices. In summary, the incorporation of the online platform has boosted the net returns by 18%. (PepsiCo) Finally, the year 2014 and beyond is bound to gain more net income only if the following would be considered: consumers expected to go ,for more nutritious products. Therrfore. \\\\\on speed up efforts aimed at meeting consumer demands; due to the disruption of the businesses by the digital technology. There is need properly to invest in efficient measures that would ensure cases of cyber-crime are minimize. That is, there should be the estabishmeenr of a platform that would ensure easy service delivery to shoppers, retailers and consumers; the emergence of new markets is expected to outdo existing market in the future. Therefore, one should invest in invest in these markets; global warming effects are expected to affect the supply of raw material. As a way of avoiding the drop in the net income, there is a need for PepsiCo to derive alternatives; the political and social stability in some regions should be the norm and not an exception. In summary, non-financial factors such as climate change and political instability directly affect financial factors.(PepsiCo) In conclusion, performance oversight role is of great benefit for the success of sectors within the economy. Unfortunately, tools necessary for evaluation of effective service delivery are minimal. For this reason, the present day business setting is utilizing intangible assets as an added requirement for effective analysis. This analysis is achievable by use of a tool as the balance scorecard method. It plays a significant role in assessing strategies through a number of inter-related performance measures, namely, employee knowledge base, finance, internal activities, and customer. Y1094754 ) Work Cited PepsiCo. Pepsi Co 2013 Annual Report. New York, 2013. Print. Read More