Balanced Score Card - Essay Example

? BALANCED SCORE CARD By Balanced Score Card Introduction Various analyses and expert reports show that theBalanced Score Card influences in various ways on the performance of both the financial and non-financial measurements of organizational strategy (Brown, & McDonnell, 1995, p. 7; Simeon, & George, 2012, p. 218; Punniyamoorthy, & Murali, 2008, p. 421). In general, the balanced scorecard is an important measure of strategy since it involves the measuring of results from some specific scores. Many scholars of management accountancy agree that there is a direct relationship between the kind of application of management strategies and the outcome of the application processes. According to various studies, the Balanced Score Card system affects strategy at the levels of finance, customer, internal, and growth. One advantage of this strategy is that it relies significantly on measurable outcomes that weigh against specific goals as spelt out in the organization’s specific mission and vision. According to a range of financial management literature, the application of the Balanced Score Card is manifest at the financial level of strategy (Punniyamoorthy, & Murali, 2008; Figge, Hahn, Schaltegger, & Wagner, 2002, p. 269). This is because, financial growth strategies are comparably easier to ascertain as compared to the other levels of strategy as customer growth and satisfaction. The universal characteristic of these strategies involve the active application of specific periods within certain financial goals are measured (Brown & McDonnell, 1995). The levels of success or failure are measured within the specified period in order to obtain the most accurate standards of measurement as spelt out within specific growth objectives and strategies. On this score, it becomes appropriate to consider the fact that time factor remains one of the most important considerations of the rate of growth. Financial Management In many organizations, the determination of growth using the Balanced Score Card method involves the determination of revenue growths and profits (Chavan, 2009). This usually entails the determination of the rate of growth in profits as understood together with certain financial measurable. The application of the strategy involves the determination of the strategic growth objectives and the outcome measures as the key determinants of growth within the strategy (Chavan, 2009). For instance, within a manufacturing company, strategic growth could involve the determination of various strategies for growth and other processes (Brown, & McDonnell, 1995). Some of the issues that relate to the development of strategy within the understanding of the Balanced Score Card relate to the need to adjust outcomes within definite operational paradigms. On this matter, it is necessary to consider the fact that the application of strategy remains an integral issue that applies within various factors and strategies of growth. The determination of specific outcome measures assists in providing the management with specific indicators of telling whether the strategy relates well with the projected goals (Chavan, 2009). The assumption is that the end-result is significantly a factor of the strategy within, which it was achieved. The relationship between outcome and process depends on the manner in which the strategy relates with the financial objectives and the ability of the management to harness all the other aspects of the strategy towards the attainment of the same. The various processes that attach to strategy relate to other application specifics that combine to form some continuous link between the starting point of the strategy and the budgeted outcomes (Chavan, 2009). Critics of the Balanced Score Card strategy contend that other variables apart from the mechanics of the strategy could be involved in the achievement of the specific goals of the organization. Organization processes are subject to multiple internal and external factors, which affect the processes in different ways. However, scholars favoring the application of the strategy argue that the results are often consistent with the overall objectives as set out at the planning phase of the strategy (Bhatnagar, Puri, & Jha, 2004). The process involves evaluations and checks against various factors in order to align it with specific factors that attend to the final strategy. On this score, the results are considered as consequences of the cumulative forces of the details, which make up the strategy (Bhatnagar, Puri, & Jha, 2004). Details of financial performance as understood within the Balanced Score Card strategy involve definite quantification such as percentages and graphic illustrations. Illustrated performances often support the computation of the efficiency of the strategy because they involve the checking of the operations against the specific factors that are determined within the wider strategy. Supporters of the strategy contend that it involves a combination of mathematical accuracy and timely projections to measure the degree of efficiency of the same system. As such, the methods applied in the strategy have to be considered together with multiple factors that connect into a range of objectives as planned by the management. Sometimes, the percentages of the performance are planned in a manner that is consistent with the concept of consistency. A firm that desires to report a consistent pattern of growth could arrange such outcomes in ways that illustrate the notion of phenomenal growth (Plant, Willcocks, & Olson, 2003). The arrangement of the patterns of growth is considered because of growth based on the particular application processes. The percentages reflect the levels of annual growth, which makes it possible for the growth to be considered within certain specifics of growth (Plant, Willcocks, & Olson, 2003). The different scores as used in the strategy depend on the nature of outcomes as desired and determined by the different aspects of growth. It is important to consider the fact that some of the issues relating to the aspect of growth within an organization derive from factors of sales, growth in revenue base, profits, reduction in the levels of expenditure, and other financial determinants of growth. These financial measurable factors are controlled by a range of determinants, which control the level of performance as envisioned within particular parameters. Usually the attainment of specific measures involves the setting up of certain measures to regulate some element of focus and operational discipline as set up within the strategy. Levels of success of any organizational strategy are largely controlled by the level of fidelity to the course and the ability of the management and implementers of the strategy to work together in perfect harmony (Plant, Willcocks, & Olson, 2003). On this matter, the organization of the details of the strategy is largely considered to remain within the province of the management. The work of the management is to control the operations of the strategy in a manner that conforms to certain standards and procedures that regulate operations and strategies. The involvement of scores is supposed to represent some aspects of specifics as understood within the overall picture of performance. The aspect of growth or performance must be understood within the limits of the score. According to some financial analysts, any major deviations from the expected curves of operation must be reason for concern. Such eventualities would imply the existence of unforeseen positive or negative factors within or without the system of operation. The Balanced Score Card approach operates on the principle of controlling the variables and determinants of operation (Plant, Willcocks, & Olson, 2003). Customer Management Customer management remains one of the most important non-financial measurable for the Balanced Score Card strategy (Rasila, Alho, & Nenonen, 2010, p. 279). In any business or organization, customers are regarded as the pillars on which all the operations, successes, strategies, and aspirations are anchored. Customers make it possible for businesses to conduct businesses in ways that align with the requirements of strategies and aspirations of end users. Such possibilities require a keen sense of detail to the specific needs and opinions of the customers. In the estimation of supporters of the Balanced Score Card strategy, such needs necessary require an application of a range of policies and issues that connect with the interests of the customers (Bhatnagar, Puri & Jha, 2004). This makes it possible to regulate matters and facts in ways that are consistent with changing market forces as interpreted from the perspective of the customers. Just as in the other financial measurable factors, the scores set up for attaining the needs of the customers are significant in achieving certain set objectives. According to past and recent analyses, organizations that structure their customer management paradigms using the Balanced Score Card approach are more likely to benefit significantly as compared to other organizations that adopt broad approaches on the same (Hepworth, 1998, p. 559; Wongrassamee, 2003, p. 14; Matthew, & Miller; 1998). Few comparative studies have been done regarding the impact of the type of strategy on customer retention, satisfaction, and growth. However, emerging propositions from various fields that connect with financial management have made bold suggestions regarding the relationship between the Balanced Score Card approach and the kind of impact on performance as understood within the structure of management performance (Barakat, 2012). The causal relationship between strategic customer management and the Balanced Score Card approach could be appreciated in terms of a range of factors that connect with scores and specifics. In any business, the aspect of proper customer management unites various strategies including customer relations, product improvement, branding, and many other specifics that attend to the general process of customer improvement (Barakat, 2012). Many times, the concept of customer improvement depends on certain factors that connect the effects of the strategies and the desired consequences (Barakat, 2012; Rich, 2007; Amir; 2002). For example, the desire to break into new market segments would necessarily require the determination of the unique features and aspirations of the targeted market. For instance, such matters would involve the active adjustment of certain systems and processes in order to appeal to the tastes of the targeted market. A firm that plans to set up business outside its accustomed market niche would require to apply different strategies that appeal to the interests and nature of the targeted clientele. For instance, variations in matters of demographics would require some element of adjustment in order to satisfy the needs of the new clients. On this note, it would be important to consider the fact that the Balanced Score Card requires the determination of details of the targeted clientele in order to serve them in the most appropriate ways possible (Bhatnagar, Puri & Jha, 2004). Some of the issues that require the attention of the company would be matters of culture and variations in the principles of governance. Such issues are necessarily determined through the creation of certain specific scores that guide the usage of the same. It is important to regard the effects of the various scores in terms of the driving factors of growth and performance. The use of the Balanced Score Card strategy to regulate the growth of the customer could involve the determination of purchasing patterns (Bhatnagar, Puri & Jha, 2004). At this level, the product would constitute the strategic objective. The trends and behavior of the customers around a certain product or a range of products could be measured within some definite scores that involve the application of the different marketing processes. In this regard, some of the issues that apply to the process could be measured as an outcome of a range of processes that involve the application of multiple indicators. It is within such perspectives that various determinants emerge to help in the determination of the kind of processes and concerns to be followed. Some of these measurable specifics could involve the application of annual purchase growth scores. The scores for determining the specific targets within the process of customer growth are usually regulated in ways that offer specific growth advantages within the overall process (Kaplan, & Norton, 1996). The determination of the growth could be places within percentages or other determinants that help in providing some specific aspects of information about the trends of growth. On this score, it becomes important to consider the fact that certain factors often combine to work towards the determination of certain given specifics as understood within the aspect of strategy. The range of strategies that connect within the Balanced Score Card strategy are generally meant to streamline and control certain measurable goals in order to determine the levels of failure or the degree of deviation from the same (Chandra, 2008). It is important to consider the fact that certain aspects of strategy must necessarily work together in order to effectively harness the processes of strategy as contained within the balanced score card approach. Strategies such as improving the relationship between the company and customers are often conducted through interactive database systems in order to retain the customers. Other scores could involve the strategic improvement of the quality of the goods and services to align with the interests of the clients (Jackson, Sawyers, & Jenkins, 2009). Companies such as Coca Cola, Mac Donalds and others have managed to achieve significant levels of growth through the application of measurable strategies that seek to align the company’s strategies with the desired outcomes. The causal relationship between the Balanced Score Card strategies and the eventual performance of the organization is equally seen in its application on the organizational learning process (Drury, 2007). The movement from one point of knowledge and skill to another is a key defining aspect of the strategy. There is the need to illustrate the challenges that organizations face in terms of strategy as a consequence of the kind of strategy involved. Organizational learning perspectives are important in the determination of human development (Jackson, Sawyers, & Jenkins, 2009). Clear goals and strategies are put in place to determine the levels of growth of the human resource. Comparative analyses into the nature of performance between companies’ shows that firms that continually invest in organizational learning strategies are more likely to experience better yields as compared to others that invest less in strategic learning goals (Niven, 2005; Needles, Powers, & Crosson, 2010). The development of the human aspect within a firm is necessary in the rapidly changing society. Such strategies must be seen within the broad perspective of human development within the organizational strategy. Barriers The application of the Balanced Score Card approach normally meets a range of barriers that affect its capacity to yield results in accordance with the needs and the expectations of the planners. Vision Barrier Vision barrier is a term that is normally used to describe situations where the implementers of the strategy cannot comprehend the specifics of the strategy. Vision barrier usually involves the application of various processes that must attend to different matters that connect to the specifics of application (Needles, Powers, & Crosson, 2010). For instance, the language used in the description of the vision and the strategy could elicit competing interpretations among the implementers of the strategy. Such an eventuality could be as a result of complexities in the language on the technical details of the strategy. In order to counter against vision barrier, it is recommended for the management and planners to involve other levels of the organization at the decision-making phases of the strategy. According to analysts, vision barrier is more likely to affect companies that operate through a top-down approach of strategy as compared with those that engage in horizontal systems of management (Bhatnagar, Puri & Jha, 2004). Management Barrier Management barrier is another major challenge that affects the application of the Balanced Score Card approach. Usually, Management Barrier results when the management does not reserve sufficient structures for reviewing the implementation of the strategy (Hansen, Mowen, & Guan, 2009). Some of the issues that relate to the management of the challenges is necessarily related to a range of issues concerning managerial dynamism. The management, in many cases fails to design an appropriate strategy that could be relied upon in the development of robust structures for the determination of issues and strategies that concern matters of management (Jackson, Sawyers, & Jenkins, 2009). This factor often leads to challenges of implementation due to the possible mismatch that result to challenge the systems. In order to protect the strategy from the adverse elements of application, the management should design periodical systems of reviewing the implementation process. This would enable the implementation of remedial processes in the event of dysfunctional systems. Operational Barrier In some situations, the application of the Balanced Score Card system is significantly affected by operational barrier. This barrier affects the process by bringing various departments into conflict with others. Generally, the management of the processes fails to align well with the other departments leading to conflicts in areas such as funding (Andriof, 2002, p. 21). Organizational structure could also lay significant challenges to the process of organizational strategy. Before engaging in the processes of the strategy, it is important to consider the fact that some aspects of the department require to be streamlined in order for any new changes and strategies to apply effectively. On this matter, it is important to consider the fact that some of the structural connections between departments must be revamped to suit the design of the strategy for maximum effect. People Barrier Ranges of studies have established that people remain some of the key barriers in the implementation of any meaningful changes within departments (Brown, 2007; Sloman, 1999; Kammerer, 2009). The efficiency of systems is greatly determined by the capacity of the people to effectively engage with change processes as established within the organization. On this matter, it is important to consider the fact that the human factor in the implementation of any forms of strategies requires significant attention in order to influence meaningfully on the changes. Some of the issues that connect to the aspect of strategy are determined by the application of processes and situations that regulate the responses of the individuals towards the changes within the management. Naturally, some employees are resistant to changes and would wish to retain the traditional methods and systems (Kammerer, 2009, p. 57). It is important for organizations to explain the strategies sufficiently in order to increase the capacity of the strategy in general. Some of the challenges that have attended to the application of the Balanced Score Card strategy are that some of the scores may prove unworkable (Bhatnagar, Puri & Jha, 2004). Other scores may work at cross-purposes with some of the fundamental values of the organization. Such eventualities have often worked against ambitious strategies in ways that cause significant losses of amounts invested in the change processes and in other issues that relate to change and development. In essence, it is important to consider the fact that issues relating to strategy tend to work against the concerns and processes of individuals as considered within the overall framework of change and strategic planning within organizations. Conclusion Multiple studies and scholars concur on the impact of the Balanced Score Card on change processes. The exact impact of these changes is to be analyzed from the perspective of change because of method and strategy. All strategies have their eventual outcomes. The Balanced Score Card usually affects processes in ways that impact significantly on the outcomes. The outcomes have been measured within processes that relate to finances and those that relate to non-financial measurable (Jackson, Sawyers, & Jenkins, 2009). Some case studies have provided compelling evidence that the Balanced Score Card affects the strategies in different ways. The trend in some of these cases shows that the impact of the process is manifest at the financial elements of the strategy as compared to the non-financial aspects of the strategy. The implication of these findings is that certain elements that work within the strategy are more likely to result in changes as compared to some others. Strategies that relate to business development and growth are generally regarded within the determination of the strategies of business (Jackson, Sawyers, & Jenkins, 2009). Non-financial aspects of the strategy are more likely to be affected by some other issues and forces that lie outside the range of scores as designed within the operational mechanism of the strategy. Strategies are supposed to provide the pathway of achieving certain goals. However, in the wake of other external forces within the strategies, the situation becomes subject to more than one singular force. As such, the Balanced Score Card approach works better in systems whose internal processes are consistent with the methodology of scores (Bhatnagar, Puri & Jha, 2004). The causal relationship might be viewed in clearer light from such perspective, as shown in the multiple discourses on the same. Works Cited Amir, M, S 2002, Benchmarking performance management systems, Benchmarking, 9(1), 62-85. Retrieved from http://search.proquest.com/docview/217358373?accountid=45049 Andriof, J 2002, Unfolding stakeholder thinking. 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