It is possible to choose such an enterprise as British Petroleum to illustrate the use of performance measurement tools. In particular, one can apply the method that is known as the balanced scorecard (BSC). This approach is helpful because it incorporates some very important indicators such as financial performance, relations with customers, innovation, and internal efficiency (Kaplan and Norton 72; Neely, Adams and Kennerly 2). If the BSC is applied to assess the performance of this organization, one should consider several aspects. At first, the net revenues of this company increased in 2014. So, the management may continue to use the business practices that were previously adopted.
Furthermore, this organization was able to eliminate the internal inefficiencies related to the work of the supply chain (Mohapatra 65). Moreover, the company has established very productive relations with its major clients such as large manufacturing enterprises. One should also note that British Petroleum can quickly develop and adopt new technologies that can minimize the impact of their industrial activities on the environment. As a result, the organization can effectively adjust to the regulatory requirements of different governments. Nevertheless, it is important to mention that the company still struggles with the effects of the Deepwater Horizon oil spill that posed significant environmental threats (Corn 1). The company had to incur significant financial losses. Moreover, its reputation was tarnished. It is the key problem that senior executives should address.
There are several advantages of using the BSC. This method can cast a light on several important factors that can affect the sustainability of a company. For instance, it is possible to mention clients’ perceptions, production efficiency, learning, and ability to adapt to changes. So, the management can make more informed decisions while developing the future policies of the company. In contrast, many performance assessment tools focus only on financial results. However, they do not show how these financial outcomes are determined (Niven 4). Furthermore, the BSC is useful for explaining the views of important stakeholders such as clients or employees. Nevertheless, there are some limitations to this technique.
In particular, it cannot be applied to assess the vulnerability of a company to external changes. For instance, companies can be profoundly affected by new technologies, regulations, economic crises, and so forth. In particular, the performance of British Petroleum is strongly dependent on environmental policies developed in different countries. Thus, it is necessary to apply other tools such as PESTLE analysis. Additionally, the BSC does not always explain how managers can solve the problems faced by businesses (Brown 192). So, one can argue that the use of the BSC is not sufficient for the needs of managers. Therefore, it must be accompanied by other tools.
Overall, the measurement of performance is important for evaluating various strategic options that are available to the company. They can help the management understand which approach can best meet the current needs of organizations. Additionally, the choice of a strategic option is often dependent on the evaluation of risks to which a company is exposed. Furthermore, the evaluation of performance can show if a company has sufficient resources to achieve a certain strategic goal. Thus, the use of these evaluation tools is important for proper decision-making. However, managers should be able to evaluate the strengths and weaknesses of different tools. Additionally, they should understand how to combine these methods. In turn, it is possible to suggest that British Petroleum should focus on the environmental sustainability of their operations. Moreover, they should work on the development of alternative energy technologies because they will enjoy greater demand in the future.
Works Cited
Brown, Mark. Beyond the Balanced Scorecard: Improving Business Intelligence with Analytics, New York: Productivity Press, 2007. Print.
Corn, Lynne. Deepwater Horizon Oil Spill: Coastal Wetland and Wildlife Impacts and Response, New York: DIANE Publishing, 2010. Print.
Kaplan, Robert, and David Norton. “The Balanced Scorecard: Measures that Drive Performance.” Harvard Business Review 70.1 (1992): 71-79. Print.
Mohapatra, Sanjay. Business Process Reengineering: Automation Decision Points in Process Reengineering, New York: Springer Science & Business Media, 2012. Print.
Neely, Andy, Chris Adams, and Mike Kennerly. The Performance Prism: The Scorecard for Measuring and Managing Business Success, New York: Person Education, 2002. Print.
Niven, Paul. Balanced Scorecard Step-by-Step: Maximizing Performance, New York: John Wiley and Sons, 2010. Print.