Comment this discussion compare to the mesurement of Balance scorcard ? When bus
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Question
Comment this discussion compare to the mesurement of Balance scorcard ?
When businesses want to understand how they are doing they can usually look at t few indicators. Financials are always a starting point, to see how well the company did according to the books or financial statements. Another indicator can be how much market share they are consuming compared to years past. A third area to look at is reviews from everywhere. These could be on the company’s website, a search engine, and local or area newspaper or magazine, etc. These indicators help the owners and managers understand how they are doing. The balance scorecard is something that Dr. Kaplan and Dr. Norton came up with and published in 1992 in a Harvard Business Review article which includes all three of those indicators plus an addition one that looks at the internal processes of the company (Balanced scorecard, n.d.). The internal indicator is something many people might overlook, but it is making sure the company is becoming efficient and processes and procedures are making sense for employees to follow, as well as some internal satisfaction.
Genesis Energy needs to complete a balanced scorecard to help indicate where they stand as a company before they expand overseas. Genesis needs to look at their financials. Where the company lies with their lenders and stockholders. Their current ratios, debt to equity ratio, and WACC should all be present. This will help upper management and future investors to easily understand how the company is doing and what type of financials the company will be needing to acquire in the future. Genesis will be undertaking some new equity, this is the section that they should be explaining what income they are receiving, how much it will cost the company to acquire that capital, and what the expectation will be of Genesis to the new equity owners.
Any future growth should be stated whether it will be an actual growth or projected/ goal growth. This helps everyone understand what they next move will be, and how to arrive at that goal or expectation. This should also include the mission or vision statement and how the new goals tie into those core values. This should not be an area where brainstorming happens, but what has been the outcome of planning. This should show someone what Genesis wants to achieve and how they will fulfill it. Any information pertaining those needs should be included in these two sections.
Not all indicators need to have a monetary value. The second half of the balance sheet needs to include the customers opinions, both external and internal. Having an outside third party conducting a survey or hosting a platform for external customers to express their thoughts on Genesis’s services can be a scary thought. There will be great, good, ok, and bad reviews, some in the same day, but these are important to understand how Genesis is doing to satisfying their customers. This can also be measured in the market shares. If Genesis’s market share is increasing, then there should be a positive outlook from the customer perspective because they continue to purchase products and continue to do so. Likewise, if their market share is shrinking, then they need to look to understand why and how to fix that problem. This can also help Genesis to properly price their products after feedback and sales ratios (Balance scorecard, n.d.).
The last section is the one that some people might overlook, the internal customers or employees. For companies to truly become successful, they must think of their employees as customers. They are the ones performing the daily routines and producing goods for the company to sell. If they are not happy, then they are not working as efficiently, which brings profits down. This area can describe new changes happening with employees as far as policies and procedures which will help streamline production or help reinforce safety. For each employee, there is a walking billboard that can either help sell or inhibit a future sale of products. What better way to understand the flow of products and procedures than through the employees whose job is it to perform those every-day.
The balanced scorecard will help showcase all four of these categories to potential lenders, customers, and current employees. This document helps look at all the stakeholders in the company, not just the owners, managers, and stockholders, but everyone with vested time, money, energy, and passion into the company.
Reference
Balanced Scorecard. (2015, August 28). Retrieved March 10, 2018, from https://www.investopedia.com/terms/b/balancedscorecard.asp
Explanation / Answer
Balanced scorecard is a management tool that measures organizational performance on four pre defined measures. It helps to critically analyze the factors that relate to vital functions of organization, with an objective to identify the gaps in performance and correct them to make the outcomes better.
Balanced scorecard measures following four factors that are critical to the organization.
1. Learning and growth - It measures how the organization captures the vital information from the business environment and how efficiently it uses it. It also measures the degree of aptness in procuring and preserving the knowledge and using it to achieve competitive advantage for the organization.
2. Financials - These include vital financial parameters that reflect the financial health of the company in the eyes of investors, customers, shareholders and other stakeholders.
3. Business processes - This refers to the operational efficiency with which the processes work. It includes productivity and cost effectiveness, gaps and bottlenecks, wastages and delays, and how the company addresses them.
4. Customers - This includes customer satisfaction index with the products and services of the company. The feedback can be gauged with the company's own database or inputs from independent channels like social media, blogs, e commerce websites, forums among others.
The balance scorecard is a vital tool to see the organization as a whole in the competitive marketplace. It helps in identifying key impact areas, opportunities, challenges and organization's actual position in comparison to the strategic objectives. It also helps the organization to redefine and redo its strategy to meet the current and future challenges that can be pedicted from the findings of Balance scorecard.