Restaurant Groups Plc - Balanced Scorecard, the Strategy Map, Practical Use of a Balanced Scorecard - Example

Finance Analysis Student’s Name: Instructor’s Name: Course Code: Date of Submission: Executive summary This report discussed the concepts f financial analysis in relation to Restaurant Groups Plc which is among the best and leading restaurants in the UK market. The balanced score card was used to determine the goals and objectives which should be done to improve the performance of an organisation. The vision of Restaurant Groups Plc is to be the leading organisation by offering quality products and services to meet the needs and expectations of the customers. The successful key indicators in the performance of the organisation include increased market share and increase in revenues. The four perspectives in the balanced scored card include internal process, the customer, financial and innovation and creativity. The report recommended that vigorous marketing will be done to increase the awareness of the products and services. It also recommended that customer loyalty programs can also be implemented to build trust and loyalty among the customers. Table of Contents Executive summary 2 Introduction 3 1. Vision and strategy of Restaurant Group Plc 4 2. Balanced score card 5 2.2 Perspective: Internal Business Process 6 2.3 Perspectives: Customer 7 2.4 Perspective: Financial 8 2.5 Balancing the balanced scorecard 9 3. The strategy map 10 3.1 Links and communication strategies of strategy map 10 3.2 Strategy map summary 11 4. Recommendation 11 5. Evaluation and discussion 12 5.1 Practical use of balance scorecard 12 5.2 Limitation 12 5.4 Critical evaluation 13 References 13 Introduction Restaurant Group Plc is one of the leading restaurants in the UK market. The company was incorporated in the year 1954and currently it operates more than 450 restaurants in the UK market. The company engages in variety of products and services which include table services, sandwich retail shops and restaurants. This means that the company has wide variety of products and services which meet the needs of the customers. The brands of the company include Chiquito, Frankie and Benny’s as well as Garfunkel. The company offers variety of products and services that meet the needs and expectations of the customers. This has led to increased financial performance (Ittelson 2009). This report will analyze the financial performance of the organization. 1. Vision and strategy of Restaurant Group Plc The following tables shows the concepts of vision and the strategies provide focus for the organisation. Vision Strategy Implementation Time scale To improve the customer base Developing new products to meet the diversified needs of the customers The products and services which are provided will be developed like using online services to services customers March 2015 to December 2015 Attract and retain customers Developing new markets Ensure that the stores are convenient for the customers March 2015 to December 2015 Reduce the cost of store management Reducing the cost of inventory management Ensuring the provision of £80m control of the cost Present Aim retaining the old customers Providing loyalty cards to the customers Creating awareness of the loyalty cards among the customers Present Improving the corporate finance of the organisation Increasing the sales Attracting new customers through advertisements Present Vision The vision statement of Restaurant Group Plc is to be the leading organisation in the provision of quality products and services to the customers to improve the experience of the customers. This vision has enabled the management of the organisation to formulate appropriate objectives for each department that are used to achieve the desired outcome. The mission statement of the organisation is to be committed to deliver superior services to the customers in the most efficient way to improve their satisfaction. In this effect, the financial stability of the organisation has been increasing due to the satisfaction of the customers (William 2010). Strategy The main strategy that is employed by Restaurant Group Plc is market focus strategy. This is the strategy that enables the organisation to focus on how to attract and retain customers. The organisation has diversified products and services that help to meet the diversified of the customers. This strategy has enabled the organisation to attract and retain customers leading to increased market share and also realizing high return on the investment (Avkiran 2011). The customer loyalty program like customer relationship management has helped to create loyalty among the customers hence retaining them. This strategy has enabled the organisation to enjoy high profit rations. 2. Balanced score card 2.1 Perspective: Innovation n and learning Key success factor Key performance level Target performance level Summary of the action plan Developing new channels of distributing the products Increasing number of stores Opening 12 stores every year starting the year 2015 Creating awareness of the products and services to increase the demand of the customers. Developing new markets after training the teams to implement the strategies. Developing the products Increase in the products developed and increase in the number of customers. Creating about 5000 lines of brands in the next three years. Increasing the budget to help in developing the product lines in the next ten months. Increasing employee satisfaction Assessing the employee turnover every year Decline in the employee turnover by 5% Compensating the employees well and improve the working conditions among the employees. Developing the staff skills Training programs like seminars 10 hours for every one year Identifying seminars for the employees to attend. Developing sponsorship programs. Restaurant Group Plc has developed internal capabilities that help to achieve the desired outcome in terms of turnover. Employee training and development helps to develop the skills of the employees so that they can provide quality products and services to the customers. The market development provides the customers with the options to select the best products they could use thus ability to retain customers. Developing the products is another concept developed to meet the needs of the customers hence ensuring effective satisfaction of the customers (Clyde 2006). 2.2 Perspective: Internal Business Process Key success factor Performance indicator Level of target performance Action plan Product and service efficiency Ensure effectiveness in distribution of the products and services Achieving 5% every year Invest in ICT to improve the provision of services to make work easy for the employees improving the quality of services provided Managing the cost of products and services Retain part of the profits Achieving £30m in terms of efficiency every year. Financial auditing and reviewing financial performance every financial year. Increase the accessibility of the products and services to the customers. Evaluating the turnover ratio Gaining 12 days turnover for every three years Ensuring effective advertising to promote the products of the company. Ensure customer relationship management programs Increasing service quality Satisfaction of the customers Reduce the employee complaints Quality control and assurance to ensure the complete process of serving the customers is effective The internal processes have influenced the performance of Restaurant Group Plc since the process is more effective and efficient hence improving the satisfaction of the customers. The key success factors include increased customer satisfaction, efficiency in the production process, reducing the cost of control and appropriate distribution and quality of the products (Eccles 2012). The process inventory has influenced the performance of the employees and the satisfaction of the customers. Restaurant Group Plc should look at the way the customers are served appropriately to improve their experience hence improving the turnover of Restaurant Group Plc. 2.3 Perspectives: Customer Key success factor Performance indicator The target performance Action plan Increasing customer base Increase in customer base Increasing the customer base by 3% Ensuring product development and promoting the products through advertising Increase the loyalty of the customers The expenditure of the customers per year Increasing the sales of the company by 4% Creating customer loyalty programs like loyalty cards and discounts to regular customers Creating awareness of the brands Evaluating the market share of the organisation per year Increasing the market share by 4% in the next three years Conducting vigorous marketing using social media such as Twitter and Facebook as well as television Ability to increase customer retention Experiencing repeat buying Increase customer retention by 3% Giving out membership cards to increase loyalty among the customers Due to high competition in the restaurant industry in UK, customer management is the practice that has enabled Restaurant Group Plc to improve its performance by attracting and retaining customers. The aim of Restaurant Group Plc is to improve loyalty among the customers. This strategy has enabled the organisation to attract and retain customers (Hřebíček 2014). Increase in customer base and customer retention indicates the increased performance of an organization. 2.4 Perspective: Financial Success factor The key performance indicator The level target performance Action plan The profitability Rate of return capital Targeting 10% return on the capital Realizing increase in the profits of the organisation as well as the increasing the revenues of Restaurant Group Plc Maximization of the assets Evaluating the return on net assets Realizing 20% net capital on the assets by the end of two years 3ncouraging overtime among the workforce Increase in the revenue from sales Assessing the financial performance of the organisation Increase sales by 3% in the next three years Conducting market campaigns to attract new customers to the products of Restaurant Group Plc. Enhancing return on investment Productivity level of the investment Increase output by 15% in next 1 year. Enhancing efficiency in service production process. The financial factor determines the success of an organisation as it reflects the performance of the organisation. In order to achieve the best financial results, the management should focus on increasing the profitability through customer satisfaction and targeting the maximization of the use of the assets. The rate of return can be determined by effective use of capital assets (Hřebíček 2014). 2.5 Balancing the balanced scorecard Perspective The metric number Capacity Learning and innovation 4 25 Internal process 4 25 Customer 4 25 Financial 4 25 Total 16 100 This can also be indicated by the following figure; In order to balance the score card, each of the perspective was allocated 25% and this is because all the perspectives have different interests and expectations as well as the objectives. These factors interrelate together to achieve the best results (Ittelson 2009). The allocation was done equally to ensure that each of the perspective to ensure that the segments can be dealt with equal effort instead of focusing on single perspective. 3. The strategy map The following figure shows the strategy map Innovation and learning Internal business process Customer perspective Financial perspective 3.1 Links and communication strategies of strategy map Taking the consideration of the above strategy map, the four perspectives can indicate that they have a relationship. All the success factors have critical success factors as well as the balanced score card. The strategy map shows that domestic products and services can help to achieve the desired outcome. The domestic product can also indicate that there is relationship with the customers as it helps to create awareness of the products and services (James 2013). In addition, the process perspective shows that the process can help to distribute the products appropriately to the customers to meet their demand. This will improve the turnover of the sales. The product and service quality influences the satisfaction of the customers, customer retention and increasing awareness of the products and services (Roca 2012). Customer perspective relate with financial perspective by influencing the financial stability of Restaurant Group Plc since the customers can be retained if they get quality products and services. 3.2 Strategy map summary The strategy map goals and objectives can help to achieve the goals and objectives of the organisation. The strategy map steps should be implemented step by step so that the goals and objectives can be achieved. This will help to integrate the four perspectives (Tracy 2012). For instance, the growth in sales can be achieved and increased profitability and this will lead to the achievement of the goals of Restaurant Group Plc. 4. Recommendation In the first place, the management of Restaurant Group Plc should take steps to undertake marketing and promotions to create awareness of the products and services with the aim of attracting and retaining the customers. The use of advertising agencies such as televisions and social media can also be used to market the products (Weistroffer 2010). In addition, Restaurant Group Plc should conduct effective process reengineering to ensure that the process is effective in offering quality products and services. This will help to build loyalty among the customers hence attracting and retaining customers since they will have positive experience with the products and services of Restaurant Group Plc (Kaplan & Norton 1996). Another recommendation is that Restaurant Group Plc should be able to assess the value of the assets regularly with the aim of determining the depreciation of the assets and replenish them to ensure that that the internal process is effective thus influencing the quality of products and services to the customers (Norreklit 2000). 5. Evaluation and discussion 5.1 Practical use of balance scorecard A balanced score card is an important tool that can be used to measure the performance of Restaurant Group Plc. The balanced score card shows the strategies developed and how they can be implemented to improve the success of the organisation (Baity et al 2014). In addition, the balanced score card can indicate the financial performance of Restaurant Group Plc and this is important in determining the relationship between the four perspectives. The indicators of performance will help to evaluate the viability of the assets and the strategies that can be taken to manage the financial performance (Baity et al 2014). Finally, the balanced score card is a management tool that is important in planning hence controlling the goals and objectives of the organisation. 5.2 Limitation The first limitation of using the balanced scorecard is that it only focuses on conception and in this way it is difficult to assess the situation without looking at the practical past experiences. This means that the balanced scorecard is based on experiences and cannot work well where there is no experience (Preko 2012). Another limitation is that the balanced scorecard can only be implemented according to specific market conditions and depends on the size of the organisation. This means that balanced scorecard needs to be changed regularly to ensure that the changes in business environment are incorporated effectively. This implies that balanced scorecard may not be appropriate in the companies and business situations (Baity et al 2014). 5.4 Critical evaluation The success of implementing the balanced scorecard depends on the engagement of the stakeholders. Engagement of the stakeholders improves the motivation of the staff hence they will be committed to implement it. However, the engagement of the stakeholders can take time to implement the balanced score card and can consumer resources (Stickney 2009). The balanced scorecard has enabled Restaurant Group Plc to monitor its performances by assessing the key performance indicators using the four perspectives. This means that Restaurant Group Plc can assess its performance by assessing the internal process and customer base as well as the financial performance. However, balanced score card is prone to changes in the business conditions which make it hard to achieve the goals and objectives. References Avkiran, N. 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In: s.l.:Logos Verlag Berlin GmbH. William, L 2010, Practical finance management, South-Western College. Read More