What Is Bsc?
The balance scorecard which is also known as (BSC) is a tool that is used by organizations to measure the numerous outcomes that may result from the activities they carry out. It helps in evaluating the financial performance of an organization, the level of customer satisfaction, the excellence with which the internal processes are run and the ways by which the employees learn and various ways in which they can grow. The outcomes from the organization can then be connected to the vision of the organization and also their strategies (Gupta 114)
Perspectives in a BSC
Financial perspective
The outcome of a particular organization can be considered from the point of view of the finances. From this angle, various aspects of the finances can be considered such as the profitability of the organization. The scorecard technique should take into consideration that for most organizations, the profit making perspective is one of its major objectives and hence cannot be ignored. This is the returns that an organization makes after they have included all their deductions from their income and what they remain with is the profit.
The growth of an organization is also to be considered in the scorecard because this is crucial for any organization if it aims at being competitive over a long period of time.
The growth can be calculated in form of percentages, where the gradual increment of profits is considered, the increase of shares that are made available in the market stock exchange and also the worth of the organization at that particular time. This requires documents from previous financial years to come up with a steady and reliable feedback of the financial increment or decrement (Gupta 115).
The value of the shares is also included in the scorecard as a way of valuing the organization against the many more in the market. The value also determines the amount of capital the organization may be having in circulation from the shareholders.
The share that the organization has in the market is also necessary, such as the size or the volume of customers, the resources among their competitors and this is important is setting goals for the next financial years. The operating expenses have to be considered especially the ones that have been reduced as a clear indication of growth with minimal expenses and this may also lead to a higher profit. The assets are also recorded to show the turnover they can bring forth is they are disposed.
Customer Perspective
Customer satisfaction should also be highly regarded in the scorecard since without the customers the organization cannot run. The time that it takes for an organization to respond to a customer is necessary because the faster it is the better feedback and loyalty the organization gets. The time that it takes to cover a particular issue for a customer is also necessary as it determines if an organization gets to keep its customers or not (Gupta 116).
The quality of customer service is also necessary as it sets the standards of the organization and also helps in its evaluation. The quality on the part of the customer translated to the effectiveness of the organization to meet their needs. Performance and the service delivered by the personnel is also considered on the score card. The cost that is incurred by the organization to meet various activities is necessary, if a customer is required to give an extra fee so that they can get special services that are not offered free of charge.
Internal Perspective
The business may have internal processes and that perspective is considered in the scorecard. The processes that are found within the business or the organization are; cycle time, quality, employee skills and productivity. The cycle time is recorded from when a new product is introduced to the market and the time it takes to reach the maturity stage.
The maturity stage is when product begins to get popular with the clients and it goes to a peak and the time it gets to the plateau stage of growth. The time it takes in this cycle is recorded and used in the evaluation in connection to the vision of the organization.
The quality of products or services offered by an organization or business should be considered in order to assess the value of the organization in the current market. The skills possessed by the employees also matter because they dictate the output of the organization and also the quality to be delivered by that particular business.
The productivity has to be put in context because this is what makes a business relevant and the managers must ensure that all activities are geared to increase the productivity and at the same time maintaining their quality.
Decisions that are made within the business will manifest in the kind of results that come out of this. These decisions have to be recorded to create accountability of every result to a previous action or decision.
Actions in the business are also to be in the scorecard from whatever level they may have been made from. Every action has a reaction and some may be working together with the vision of the organization and others may be the reason why most of the objectives have not been meet in the business.
The coordination of activities is very crucial, as this is what gives the over-view of the strategies laid out by a business. The better the processes work out together the better the outcome that comes with it. The resources that are within the business have to be considered too.
The resources can be in form of money or even assets and all these have to be looked at in a way that they can be used to enhance the production or continuity of the organization. The capabilities also have to be recorded so that they can easily forecast the ease with which the organization can adapt to future changes in the market.
Innovation and Learning Perspective
The employees are of great value to an organization and their skills determine the productivity of the organization. The employees have to be trained through a learning process on the various ways of meeting the standards and quality of the organization.
For instance, when a business introduces new services or products to the market, it is important for management to equip the employees with the necessary information on the new release so that they can comfortably market the new products to the customers and they will answer all questions with ease.
The employees have to be shown that the customers are of great value, and this may come about through training that will help them see that every single customer, may they be loyal customers or potential customers should be treated in the same esteem so that they can feel they belong to that business. The efficiency with which the employees operate should also be considered, which can be seen through the time it takes them to attend to clients (Gupta 120).
Case Study: Al-Kindi Pharmaceuticals
Al-Kindi Pharmaceutical Industries PLC is a medium sized biopharmaceutical company that has been one of the many organizations across the globe that has successfully implemented the business scorecard as a tool in management. This can be clearly seen at the corporation level and it has carefully trickled down to the employee levels at each individual level.
It can be seen that the organization has to work hand in hand with everyone in the company to achieve outcomes that have a great connection to the vision of the organization and to work with their strategies.
The strategies that are put in place by the organization so that they can work for all the stakeholders have been in the context of the four perspectives in the business scorecard. The four perspectives are; financial performance, internal business processes, learning and growth and the reputation with customers. The pharmaceutical company has a matrix form of organization and this can be seen where there are different directors in various branches.
This form of structure helps in increasing the profit as the various stations ensure that the company covers a greater area of market. The internal business processes such as the decisions to be made or actions have to be presented to the managing director before they are passed to be applied to all areas, hence reducing the level of risks or mistakes and promotes orderliness.
The geographical distribution ensures that there is customer satisfaction as they are reached individually to their grassroots. The growth and learning process of the employees can be seen from the development of the various directors in each station who can keenly work with each employee to give a higher outcome for the company in overall production.
Al-Kindi Pharmaceuticals have been in operation for thirty years in Bahrain. They have sought with time to have minimum cost and at the same time maintain the quality of their products. This led them to having the business scorecard, which would outline the vision, mission, objectives and even the strategies to ensure that they remained in the market for a long time.
Al-Kindi is a research driven company, which looks into the global healthcare with great values in the biopharmaceutical chain, and they endeavor to form a strong matrix of capabilities. The company focuses on the medical need in the field of cancer, inflammatory diseases and diabetes. The company ensures that they provide therapies that are based on affordable innovation.
The company ensures that the stakeholders are taken care of in the four perspectives of the business scorecard. The finances of the company are recorded and it may appear to the employees that the services or therapies are affordable through their vision. The company also seeks to show customer’s satisfaction in the range of diseases in which they offer research in therapies. The owners of the company are reassured that they will get the profits they aim at attaining and the customers are guaranteed of the proper healthcare.
The internal processes of the pharmaceuticals business have been featured in the quality of the healthcare they aim to achieve. They point out that the matrix organization they use is of paramount benefit by collectively using different capabilities or skills of the employees in various fields and the diverse station all around the world.
Al-Kindi has a strategy in place that ensures its operations are legal through the licensing partnerships. This is guaranteed to provide them with a wider access to the people across the globe and to add on to this it will help them to penetrate a larger market hence raking in more profits for the company.
The company also assures its customers through the strategies that they will deliver great breakthroughs in various fields of research. This reassurance is the best thing to the loyal customers and it helps in attracting as well as retaining the potential customers. (Melendez-Ortiz and Vincente 200)
Conclusion
A strategy is very necessary for a company as it also outlines the way in which the employees will be trained and how they will learn in the same way. For example, Al-Kindi will require including in their strategy how they will be equipping the employees with the information on the new products or even the new services they may be delivering to the market. This will be important to them in the effort to win more customers to their side. This also helps in maintaining the quality standards of the company, which is viewed by many as being reliable.
In conclusion, the business scorecard is essential in growing companies that hope to establish themselves in a rapidly growing market. It is used by almost seventy percent of the organizations all over the world. It can be deduced that any business that fails to implement a BSC is destined for a decline in the outcome.
Works Cited
Gupta, Praveen. Six Sigma Business Record. New York: The McGraw-Hill Companies, 2007. Print
Melendez-Ortiz, Ricardo and Vincente, Sanchez. Trading in Genes. Chicago: Earthscan, 2005. Print