Discussion – Balanced Scorecard

Discussion – Balanced Scorecard

Managers in multinational organizations rely on different measures to improve the performance of the organization. A balanced scorecard allows managers to identify and improve internal business operations and their resultant external outcomes. Data collection and analysis form a crucial aspect of a balanced scorecard, as this information is what managers analyze to predict future business outcomes. Company personnel use the information to make future business decisions. As a strategic management performance metric, the balanced scorecard seeks to improve the financial and operational aspects of the business.

The balanced scorecard helps to view the business from four different perspectives. These include internal business, financial, customer, and learning and innovation perspectives (Kumari, 2011). First, the customer perspective helps managers understand customers’ perceptions about the business (Kumari, 2011). The internal business perspective helps the business managers to understand what internal operations they may improve and enhance the organization’s overall performance. On the other hand, the learning and innovation perspective seeks to understand how the business may create value and expand. Finally, the financial perspective investigates the company’s perception among stakeholders and how they can improve their bottom line to attract prospective investors. Global business managers need detailed information about different aspects of the business simultaneously for the organization to gain a competitive edge.

Four Perspectives of a Balanced Scorecard

Financial Perspective

The financial perspective of the balanced scorecard represents a company’s long-term objective of getting superior returns from the capital investment made. Financial measures have been the traditional way of measuring business performance, and they include elements such as profitability, revenue per sales, and growth in sales (Farooq & Hussain, 2011). The balanced scorecard focuses on additional measures for business success, but the financial measures remain crucial determinants of business success. A business with more profitability, high revenue on sales, and consistent sales growth will have a positive portrayal among potential investors (Farooq & Hussain, 2011). In the context of the furniture business, efficient cost management will play a crucial role in improving the company’s financial position. Cost control will apply to production, distribution, and other operational aspects of the business.

Customer Perspective

The customer perspective of the balanced scorecard focuses on the business’s core customers, helping the business formulate specific strategies to improve customer satisfaction. After gaining insights into customer needs, the company comes up with strategies that may go a long way to help it gain an edge in the market (Farooq & Hussain, 2011). Most businesses collect and analyze customer data to understand their customers’ needs. In the Internet and social media era, global enterprises do not have to have a one-on-one meet-up with customers to understand these insights. The Internet will help business personnel understand customer preferences through social listening. Through this strategy, managers monitor customers’ social conversations on the company’s social networking pages. With respect to the furniture business, one of the expected and profound customer needs is high-quality wood products.

Internal Business Perspective

An internal business perspective refers to the procedures and processes the business should master or improve to be successful. Most enterprises focus on order management, production speed, delivery, quality management, and product development initiatives the business must implement to fulfill customer needs (Farooq & Hussain, 2011). It is worth noting that the focal point of the internal business perspective is related to the customer perspective of the balanced scorecard. To serve the customer better, some aspects of business operations must change, hence the connection. In the context of the furniture business, one area that requires attention is late delivery. Late delivery often results from multiple business failures requiring individual attention. The manufacture of most orders begins after an order placement. As a result, there is a need for the business to fasten the manufacturing process to ensure that deliveries arrive on time.

Learning and Growth Perspective

According to Farooq and Hussain (2011), the learning and growth perspective of the balanced scorecard is the backbone of a thriving business. That is because it involves improving employee skills and information systems that contribute to organizational improvement. Some elements of the learning and growth perspective include employee training, alignment of employee skills with job demands, employee satisfaction, and implementing employees’ suggestions. Common changes concerning this perspective include changing job descriptions, transferring employees to other departments, and encouraging employees to provide suggestions. Concerning the furniture business, managers will need to pay attention to improving employee skills and motivating them. Employee motivation will come in handy in the business as it will encourage personnel to work toward fulfilling customer orders.

Overview of Ethics and One other Strategy that would be Part of my Company’s Strategic Framework for Global Expansion

Ethics is also crucial to helping a business expand globally successfully. One of the significant ethical concerns is about labor practices. Different countries have varying regulations on labor practices; hence, managers should research country-specific labor laws before expanding globally (Godiwalla & Damanpour, 2006). A business should offer fair compensation, provide good working conditions, and comply with the relevant local laws to be safe.

In addition to the balanced scorecard, another strategy I would embrace as the business expands globally is the SWOT analysis. A SWOT analysis offers a glimpse into the business’s internal environment (strengths and weaknesses) against its external environment (opportunities and threats). A SWOT analysis helps the business understand its current position and what may be adjusted for the business to improve. Just like the balanced scorecard, a SWOT analysis framework helps managers identify potential growth areas (Cadle et al., 2010).

Why Use Different Strategies in Global Expansion

The global business environment is dynamic and characterized by constant changes that pose multiple potential threats. Therefore, one of the motivations for using different strategies is to mitigate threats. By spreading threats across different approaches, the business enhances survival chances if one business area or strategy fails (Roux, 2021). Also, applying different strategies helps the business optimize its resources. If the business focuses on one approach, it should dedicate all its resources to the same. However, there is a likelihood of wastefulness if the strategy does not yield the desired results. Hence, applying multiple strategies helps the business get a safe landing in case some of these strategies fail.

Conclusion

In summary, businesses expanding to a global environment apply diverse strategies to gain a competitive edge. One of the profound strategies businesses apply is the balanced scorecard. The balanced scorecard offers insights into four key business areas: financial, internal business processes, learning and growth, and customer needs. Unlike the traditional model of focusing only on the firm’s financials, the balanced scorecard helps managers deal with different business challenges simultaneously. Apart from the balanced scorecard, ethical considerations and adaptation and localization strategies also help businesses gain a competitive edge in the global business environment.

References

Cadle, J., Paul, D., & Turner, P. (2010). Business analysis techniques. British Informatics Society Limited.

Farooq, A., & Hussain, Z. (2011). Balanced scorecard perspective on change and performance: a study of selected Indian companies. Procedia-social and behavioral sciences, 24, 754-768.

Godiwalla, Y. H., & Damanpour, F. (2006). The MNCS global ethics and social responsibility: a strategic diversity management imperative. Journal of Diversity Management (JDM), 1(2), 43-52

Kumari, N. (2011). Balanced scorecard for superior organizational performance. European Journal of Business and Management, 3(5), 73-86.

Roux, P. (2021). International Business Expansion: A guide to decision-making for greenfield expansions. https://www.diva-portal.org/smash/get/diva2:1591659/FULLTEXT01.pdf

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Description 4–6-page paper that discusses the following:
Deborah enters your office ready to discuss the project. She discusses her feedback on the plan thus far. She states that your team is doing an excellent job researching and you’ve been keeping her up-to-date on your findings. She commends you for your focus on effective management strategies because your team has been looking at every aspect of the company and considering both internal and external pros and cons. She asks that your team now apply the findings to develop a strategic framework so that the company can begin its global expansion programs. You decide that Deborah has brought up another good point and that the balanced scorecard would make a good part of a strategic framework.

Discussion – Balanced Scorecard

A balanced scorecard suggests that we view the organization from four perspectives (the learning & growth perspective, the business process perspective, the customer perspective, and the financial perspective). Create a 4-6 page paper that discusses the following:

What is a balanced scorecard?
Briefly discuss the four perspectives of the balanced scorecard and analyze what each means to your organization.
In addition to the balanced scorecard, provide an overview of ethics and one other strategy that would be part of your company’s strategic framework for global expansion.
Why is it important to combine different strategies when pursuing global expansion?
In addition to your textbook material, here are a few resources that may help you learn more about the basics of the balanced scorecard:

http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard
The materials found in this week’s M.U.S.E. may help you with this assignment.