The Importance of Balanced Score Card

The report has been undertaken towards the explanation of the Balance Scorecard Approach and the manner in which the method performs. The company FC High Tech Manufacturer (FCH) is a leading hand phone manufacturer and has an operating in various parts of East Asia and thus, the performance of the company by using the Balance Scorecard Approach is shown in the report.

The report further takes the consideration of the conclusion after the planning done towards implementation of the usage of the Balanced Score Card across the entire company. The potential difficulties that the company will likely face by the choice of the measures of performances will be elaborated in the report.

The Balance Score Card method undertakes the following viewpoints into consideration:

Financial- The same undertakes the financial performances of the organization

Customer- The satisfaction of customers and the attitudes and the share of the market goals

Internal process- The coverage of the internal goals

Learning and growth innovation- The human and organizational capital, training and system of information (Abdullah et al. 2013)

The growth of the organization is dependent on the activities and the growth and development of the company is driven by the above mentioned perspectives i.e. the enhancement of the internal processes, learning and innovation and others. The same will lead to the effectiveness in the customers and its efficiency. The balance scorecard helps in the following manner:

The translation of the vision of the company is done in the strategy determined after clarification. The business leaders reach a consensus and the objects after getting linked with the deliverables gets affected that changes the performances. 

The strategic objectives and the measures are communicated and linked with the operations that helps in the establishment of effective connection among the stakeholders that further leads to encouragement of the refinement in the processes and thus help in the promotion of the feedbacks.

The planning of the targets and the set up of the same towards the alignment of the same will help in the identification of the targets that are measured by the objectives of the organization. The targets are set that are linked towards the attainment of larger objectives made strategically.

The feedback and the learning procedure of the company increases that refines the process of decision making

The potential difficulties that the company will likely face in the choice of performance measures are as follows:

There are strategies that have a tendency of being high in levels and have an approach that is forward and future looking. They have the risk and threat of removing or declining the ability of translating or transforming into an effective Balance Scorecard. The best strategy to meet such situation is the revisiting and refining of the strategy with the management and the owners for getting clarity in the direction and the aspiration of the business organizations. The effectiveness in the translation can take place by the inclusion of the targets related to the medium and long term targets, segment of market and customer and the values of the customer. The same must include the statements of the organization and the horizon of the planning that exists in a range of 5 to 10 years.

Potential Difficulties

There are various definitions that define the elements of the strategy related to the business organization. There are a wide range of definitions given to the meanings related with the objectives, goals, mission, vision and other important segments that need to be communicated among the management and stakeholders of a business organization. The common vocabulary thus relates to the risks of the improper alignments that occur across the enterprises getting enhanced or amplified (Boscia and McAfee 2014).  Hence, a common or general dictionary must be present for a common vocabulary for publishing and for providing a reminder towards the participants. The participants thus need to use the same in the meetings of planning or other decision making processes.

The Approach of the balance scorecard is widely ranged and has a lot of detailed nature and technicalities and thus in the initial stages, there are high probability of getting lost among the details and technicalities present. Several confusions can arise due to the Strategy Maps, Strategy themes that may further cascade the individuals to get into a lot of confusions that surround the initial stage implementation of the approach (Bhasin 2012). The remedy will include the start with the articulation of the approach across the various perspectives of the balance scorecard method for the development of the overall objective by the preparation of the Strategy Map. A sensible and a clear picture would come up after the plan that is required to be communicated throughout the business organization. The subsequent stages may mark the introduction and implementation of the Strategic Themes that will be spread throughout the business organization.

The cascading or flowing towards the level of individuals is challenging and the same requires the engagement of the use of the mental and physical strength of the workforces. The same requires the acquisition of the targets and commitment. If there is no attainability or achievement of the individual engagement, then the individual level of the balance scorecard will become vague and will represent nothing more than an existence of documents or records of the exercise of the same that will form part of the reporting period. There will be no occurrence of changes or modifications within the workforces and the best cure for the same is the engagement of the whole team towards the formulation of the Balanced Scorecard and convince them to participate in the same (Kaplan 2012).

There can be situations where there can be loss of track of the mechanism that records the actual and the targeted data and can severely lead to the potential threats and hazardous situations and conditions. The best cure is the gentle reminders at short intervals to the team for the effective use of the Balance scorecard. 

Abdullah, I., Umair, T., Rashid, Y. and Naeem, B., 2013. Developments on balanced scorecard: a historical review. World Applied Sciences Journal, 21(1), pp.134-141.

Awadh, A.M. and Alyahya, M.S., 2013. Impact of organizational culture on employee performance. International Review of Management and Business Research, 2(1), p.168.

Bhasin, S., 2012. Performance of Lean in large organisations. Journal of Manufacturing Systems, 31(3), pp.349-357.

Vagueness in the Strategy

Boscia, M.W. and McAfee, R.B., 2014. Using the balance scorecard approach: A group exercise. Developments in Business Simulation and Experiential Learning, 35.

Danaei, A. and Hosseini, A., 2013. Performance measurement using balanced scorecard: A case study of pipe industry. Management Science Letters, 3(5), pp.1433-1438.

Gavurová, B., 2012. Source identification of potential malfunction of balanced scorecard system and its influence on system function. E+ M Ekonomie a management, (3), p.76.

Kaplan, R.S., 2012. The balanced scorecard: comments on balanced scorecard commentaries. Journal of Accounting & Organizational Change, 8(4), pp.539-545.

Kartalis, N., Velentzas, J. and Broni, G., 2013. Balance scorecard and performance measurement in a greek industry. Procedia Economics and finance, 5, pp.413-422.

Nørreklit, H., Nørreklit, L., Mitchell, F. and Bjørnenak, T., 2012. The rise of the balanced scorecard! Relevance regained?. Journal of Accounting & Organizational Change, 8(4), pp.490-510.

Fiege, R., 2012. Social Media Balance Scorecard. Erfolgreiche Social Media Strategien.c

a)
Target Costing
Particulars	Amount ($)
Raw materials	12
Direct labour	7
Packaging	9
Variable production overheads	5
Total production cost	33
% or target profit	20%
Total target cost	39.6
Market price	50
Cost Gap	10.4

b) The company could minimize or eliminate the cost gap in the following manner:

• The features of the products must be reviewed
• The features that considers the addition of the cost and value of the significant nature must be removed at the time of viewing by the customers
• The team value approach must be adopted as the team works best towards reduction of the costs
• The members of the design, marketing and assembly must be communicated to reduce the costs
• The supplier chain must be reviewed with a range of questionnaires related to the savings of the cost
• The waste and the idle time must be reduced

1. c) The pricing method must be the one that on incorporation will lead to the best and effectiveness in the whole system within the company. In the given case, there is no reflection of the competition “market realities” and thus the same requires the value based approach. The approach undertakes all the premium and other considerable prices.

 The transfer based approach undertakes all the cost of production but not the other values and thus, the value based approach is to be undertaken for the reflection of the premiums and other market realities.

a) The poor quality costs can be categorized under two heads i.e. the internal and external failure costs. The internal failures arise at the time when the customers are not delivered with the poor quality products and thus are identified at a prior period of time.

The examples of the internal failure costs consist of the following: 

The products that have lost its quality and must be discarded after the application of material, labor and other indirect costs

The products of defective nature must be confirmed for the quality specifications

The process that requires costs for the production of the products with poor quality

The shutting down of the processes for the fixation of problem

The examples of the external failure costs consist of the following:

The complaints must be investigated and responded in an effective manner

The cost of the replacement and the handle of the products with poor quality must be considered

The costs of the warranties of the claims must be considered

The legal costs must be considered that would result in the injury of the customer.

The external failures must be higher as the drugs and other components might be inappropriate that would lead to non correction of the diseases of the public. The internal failures will not be ascertained as the compositions and other things can be discovered only after the applicability of the same. The customers after undergoing the drugs can understand the processes.

b) The significant risks which CP is likely to face consider the following:

The competitive forces that create risks of trust and other concerns.

The scientific nature that is applied towards the productivity needs to be strong as the company devoid of the same can lead to the decline in the market activities

The customers and their expectations are increasing and hence a single default in the structure of the organization can lead in the decline and fall of the whole organization

On assessment of the health technologies, there can be higher probability of inappropriate inclusions that can increase the risks.