Essays on The Concept of the Balanced Scorecard Case Study

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The paper 'The Concept of the Balanced Scorecard' is a great example of a management case study. Organizational resources and capabilities allow a company to achieve superior quality, innovation, customer responsiveness, which creates superior value change and helps to get a competitive advantage upon its competitors. The resources and capabilities allow different products with substantially lower costs than their competitors. It allows earning a profit rate substantially above the Industry's average rate. For example, Toyota has distinctive competencies in the development and operation of the manufacturing process. Toyota has employed a whole range of manufacturing techniques, such as Just in time (JIT) inventory system.

Self-managing teams and reduced set up times for complex types of equipment. This complexity helps Toyota to attain superior efficiency and product quality which are the main factors of its competitive advantage in the global automobile industry (Johnson, & Scholes, 2001, 112-17) There are two types of organization resources. One is tangible resources such as land, buildings, plant and equipment and other is intangible resources such as brand name, reputations, patents, technology, and marketing Knowledge. To get a distinctive competency company's resources should be both valuable and unique.

Distinctive competence is defined as the unique strength that allows an organization to achieve superior efficiency as well as a competitive advantage. For example, Polaroid (Photography Company) able to get a competitive advantage upon its competitor by using its higher technological efficiency (Johnson, & Scholes, 2001, 112-17). In response to a concern that many senior executives were focusing exclusively on financial measurements such as return on investment and earnings per share to run their businesses, Robert Kaplan and David Norton introduced the concept of the Balanced Scorecard (BSC) in 1992.

While these metrics are undeniably important, it would be detrimental to the long-term success of a company to rely exclusively on these short-term metrics. Utilization of a BSC allows management to shift their focus away from short-term measurements and provides a method for performance metrics to be tied more closely to a firm's strategy and long-term vision. (Leauby & Wentzel, 2002, 56-60) Resources and capabilities both are interdependent, so these required a better analysis for an organization. A company may have unique and valuable resources but it has not the capabilities for good use of it, then it will be not easy for an organization to achieve or sustain distinctive competence or vice versa.

Companies may able to superior in the form of efficiency, quality production of goods, innovation, and customer responsiveness by using its resources and capabilities. By using the capabilities company's ability to differentiate and able to produce low-cost products. This finally gives higher profits than their competitors. So from the above discussion analysis of resources and capabilities are important for an organization (Johnson, & Scholes, 2001, 112-17). Kaplan and Norton define the BSC as "a comprehensive set of performance measures that provides a framework for a strategic measurement and management system".

The BSC consists of financial measures indicating the results of actions already taken as well as operational measures that drive future financial performance. The BSC gives managers information on four different perspectives: customer satisfaction, internal business process, innovation and learning, and financial. Using these operational measures drives future financial performance and allows a firm to simultaneously monitor their progress in building capabilities and acquiring necessary intangible assets needed for future growth.

Acquiring the necessary intangible assets enables an organization to: “ retain existing loyal customers while efficiently and effectively growing market share; introduce innovative products and services; produce high-quality products/services at a lower cost with shorter lead times; use employee skills and motivation for continuous process improvements; and deploy new technology, systems, and databases. ”  

References

Anthes, Gary H., Balanced Scorecard. Computerworld., February 17, 2003, B4

Bruns, William J., Accounting for Managers: Text and Cases. (2nd Ed) Southwestern, 1998, 150-54

Johnson, G. & Scholes, K. (2001), Exploring Corporate Strategy, 4th edition, published by Prentice Hall of India Private Limited. New Delhi. 112-17

Kaplan, Robert S. & Norton, David P., 1993: Putting the Balanced Scorecard to Work, Harvard Business Review. September-October pp. 132-142

Kaplan, Robert S. & Norton, David P., The Balanced Scorecard-Translating Strategy into Action. Harvard Business School Press., 1996, 22-23

Leauby, Bruce A. & Wentzel, Kristin. Know the Score: The Balanced Scorecard Approach to Strategically Assist Clients., Pennsylvania CPA Journal Spring 2002. 56-60

Porter, M. E. (1980) Competitive Strategy, The Free Press. 179-82

Porter, M.E., "What is Strategy?", Harvard Business Review, November-December (1996) 61-78

Youngblood, Alisha D. & Collins, Terry R., Addressing Balanced Scorecard Trade-Off Issues Between Performance Metrics Using Multi-Attribute Utility Theory. Engineering Management Journal, March 2003: 19-20

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