Implementation of Balance Score Card (BSC) Essay

Implementation of Balance Score Card (BSC) - Essay Example Balance Score Card (BSC) is a framework for measuring performance on strategic level and accounts both financial and non financial measures (Banker, Chang, and Pizzini. 2011). BSC, since introduced by Kaplan and Norton in the early 1990s, has been adopted by large number of organizations. It is called BSC as it attempts to balance between short and long term goals while maintaining balance between financial and non financial variable (Kalpan, 2010). Proponents of BSC claim that it has many beneficial features that makes it preferred choice; such as connecting vision with strategy and activities down the hierarchy; cause and effect relationship of performance drivers with outcome etc (Chavan, 2009). Other feature that makes it most advocated is the fact of providing performance measurement and goal oriented guidance by combining variables or perspectives (2GC Limited, 2011). With agreement on benefits BSC offers to organization, fact remains that due benefit from BSC can only be avail ed based on appropriate and well thought implementation and there has been considerable debate on the implementation of BSC. This paper is also aimed to investigate and analyze success or failure of BSC that can be attributed to the appropriate implementation. Followed by introduction is the literature review of past academic studies done in the selected domain. Research methodology contains information related to method adopted to address the selected question. Analysis section provides analysis of the case studies selected to address the aim of this research. Finally, conclusion provides response to the question based on evidence collected in analysis section. LITERATURE REVIEW There is immense literature available on the BSC from various perspectives. This section will draw some relevant literature to BSC, its implementation with its proponents and critics. The section will also draw references related to implementation phase and cause implementation failure. Variation in studies are present that discussed increase in the adoption BSC due to the benefits it offers while others revealed firm’s decision of not adopting BSC due to less benefit it offers in proportion to the efforts required to implement it (Cardinaels, Paula, and Veen-Dirks. 2010). BSC has also undergone critical evaluation of assumptions on which it is built; such as managers’ capacity to link strategy to operational matrices in different departments and levels and issues related to designing BSC related to the respective organization etc (Geuser, Mooraj, and Oyon. 2009). Hence, discussion from various perspectives to explore possible deviation (Neely, 2005) while each aspect, directly or indirectly, referred to the factors that lead or hamper successful implementation of BSC. PEA, for instance, suggested complete procedure to develop balance score card to meet the challenges posed by other performance measurement in procurement organizations. It provided detailed guidance for a ll four perspectives including customer, financial, internal business processes and learning and growth perspective. It was also aimed to develop a model that allows comparability among various organizations along with providing a comprehensive performance measurement system (as given in image below (Procurement Executives’ Association, 2000). Hence, BSC shall be devised with adaptability to the nature and size of the firm (Rompho, 2011). Richardson (2004) provided six elements to be employed for the successful implementation of balance score card. These six elements include: first, development of strategy; second, involvement of strategic management and feedback from other management level of the new strategy; third, development of balance score card and its vision while both being aligned with vision of organization; fourth, implementation of balance score card performance measurement systems all around the organization and each level; fifth, communicating and educating the objective of BSC to employees and lastly

Balanced Scorecard, Costing System, and Production Costs Assignment

Balanced Scorecard, Costing System, and Production Costs - Assignment Example For firms which do not have a centralized operation, an essential requirement for them is responsibility centers which include cost centers, revenue centers, investment centers, and profit centers. The performance monitoring measures for these centers are standard cost, divisional profit and return on investment. The transfer price here is the amount that division A of a company charges to division B of the same company for a product transferred. Accounting systems act as critical support systems for managerial decision making in different organizations. Selecting a new market for a product is a critical strategic management decision which is done by suitable evaluation of costs and benefits. This involves the evaluation of the financial and accounting aspects of an organization as well. The financial variability and the system of cost allocation along with an evaluation of financial resources, activities, and capabilities are to be considered while selecting a target market for expa nding into or for launching new or existing products. Important factors like the time factors, employee performance and employee perception, costs factors, and performance of the organizations can be suitably evaluated through the use of the accounting systems in an organization. The financial information provided by the accounting systems like profit levels, sales growth, returns and other non-financial information like customer satisfaction levels, the performance of the competitors, customer loyalty and competing products act as a support system for managerial decision making for launching a new product into a market including the selection of an entry market. The reverse income analysis is used as a part of accounting to evaluate the capital budgeting aspects of the launch of a product into a new market. The managerial decisions which involve the investments done by an organization in real assets are the most important managerial decisions in terms of economic value creation. The capital investments are done by a business in new and existing projects including investing in building new plants, buying machinery, launching new products etc. are critical for deciding the economic future of a business.