Business 499: Balanced Scorecard and Financial Perspective
Module 1 - Case
The Balanced Scorecard & the Financial Perspective
Assignment Overview
In this module’s case assignment you will be introduced to the balanced scorecard concept and will begin to consider how organizations link strategy with the balanced scorecard approach. We will look at the interrelationship of strategy and the balanced scorecard approach in more depth later on in this course. For now, however, it is good to understand the fundamentals of the BSC and to consider examples of how organizations have integrated the BSC approach into their daily operations in a fashion that reflects the strategy of the respective organizations.
To prepare for this case assignment you are to start by reading the required readings identified on the background page. You’ll note that one of those articles includes:
Martello, M., Watson, J., Fischer, M., (2008). Implementing a balanced scorecard in a not-for-profit organization. Journal of Business & Economics Research. 6(9), 67-80. Retrieved from:http://journals(dot)cluteonline(dot)com/index.php/JBER/article/view/2471/2517
This is the case study you will be evaluating for this assignment. Note that there is an option to download the PDF file rather than using the PDF viewer on this page. This may save you some aggravation.
After reading this article, formulate an argumentative essay around the following thesis statement:
Cattaraugus County Rehabilitation Center did an effective job of implementing a balanced scorecard approach in a fashion that reflects their organizational mission and vision.
If you do not think this thesis is accurate, you can argue that the Center did not do an effective job.
Assignment Expectations
Your analysis should be structured in terms of the following four perspectives (you will be using essentially this same comparative evaluation framework for the first four modules of this course):
Introduction: In this part of your essay you will need to set up your argument by introducing your topic and presenting your position or thesis statement somewhere in this introductory paragraph.
Analysis: In this section you will present several arguments arguing in favor of your thesis statement. Make sure you discuss how the Center used the score card quadrants to align with organizational strategy (or how it failed to do so).
Conclusion: Wrap up your argument with a clear and cogent synopsis of your findings. Do your best to convince your reader (aka, your professor) as to your position.
Additional Instructions: Your argumentative essay should be 3 to 4 pages in length (not counting your title page or references). You must include a list of references. APA formatting is preferred. Do not paste in sections of text into your essay. All of your work must be written in your own words. It’s OK to use a short quote now and again, but quotations must be in quotation marks and properly cited. In-text citations should be used anytime you are borrowing somebody else’s ideas, or information. That is to say, if you are borrowing a thought from a publication from G. Jetson’s article written in 2010, that section of text must be followed with (Jetson, 2010). Quotations, data, and general ideas (put into your own words) should all be cited.
The Balanced Scorecard and the Financial Perspective
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The balanced scorecard system is utilized widely in many organizations to align or support business activities to the strategy and visions of the firm, enhance external and internal communications, and assess the organization performance based on its strategic goals. Drs. Robert Kaplan and David Norton invented balanced scorecard as a performance measurement system that enables managers to develop a balanced view of how organizations are performing their business activities (MacKay, 2004). The balanced scorecard system offers a clear prescription of what organizations should assess to ensure their financial perspectives are balanced. The system enables organizations to clarify their strategy and visions and transform them to actions and to obtain feedback of both external outcomes and internal business processes to consistently enhance strategic results and performance. This paper explains that the Cattaraugus Country Rehabilitation Center performed an efficient task of implementing a BSC (balanced scorecard) approach in a manner which reflects its organizational vision and mission.
The Rehabilitation Center used the balanced scorecard system for assessing performance results and targets based on the four perspectives of performance (innovation, customer, financial and internal processes). Murby and Gould (2005) view that the Center has been responsible for its business activities to meet expectations of its different stakeholders groups (like shareholders, customers, employees, suppliers, and community). The Center uses the balanced scorecard to assess how its performance meets organizational goals relating to the expectations of the stakeholders. The expectations of the stakeholders are quite different. For instance, shareholders depend on the Center to improve and maintain their investment. Employees depend on the Center for their employment. The Center strives to balance such competing wants. The balanced scorecard is used to assess how effective the Center is performing in perspective of competing wants of different stakeholders.
Using the balanced scorecard system has enabled the Center to translate its strategy and mission into operational objectives and assessment for the four perspectives (Martello, Watson, and Fischer, 2008). In financial perspective, the organization uses the balanced scorecard system to assess how the firm realizes its financial goals and to evaluate financial measures (cash flow from operations, return on assets, sales growth, operating income, and reduction of administrative costs). In customer perspective, the balanced scorecard enabled the Center to assess how it meets the needs of its clients and to assess customer measures (customer retention, market share, customer satisfaction and new customer acquisition). In internal processes, the Rehabilitation Center used balanced scorecard system to measure how it enhances critical internal processes (defect rate, material turnover, the rate of practical capacity, time to create orders, lead time, and on time delivery). In growth and learning perspective, the Center uses the balanced scorecard to measure how it improves its capability to innovate. Growth and learning measures include employee satisfaction, resources spend on employee training, employee retention, new product sales as a percentage of total sales, and the number of new products.
Effective implementation and application of balanced scorecard happen when organizational stakeholders understand its use, function, and benefits. The Center is aware of the effective communication of the BSC throughout the firm. The Center developed a communication strategy to communicate effectively and market the BSC to the internal stakeholders groups. The objective was to make certain that all internal stakeholders comprehend the significance of the BSC, accept its function in operationalizing strategy and determine how their daily activities affect the organization’s strategy and goals (Martello, Watson, and Fischer, 2008). The management team came together to map the course to achieve strategic goals which would enable the Center to achieve a financially healthy position. The board of directors, managers of the Center and employees worked together to develop the plan for a successful future. To achieve the strategic goals; the plan was designed based on the four strategic perspectives. These became dimensions on the balanced scorecard which supported the Center&rsqu...