Balance Scorecard Analysis of BAE System

Running Head: Balance Scorecard Analysis of BAE Systems
Balance Scorecard Analysis of BAE Systems
Name of the Student
Name of the University
Author Note

1
Balance Scorecard Analysis of BAE Systems
Table of Contents
Response to question 1-.............................................................................................................2
Literature Review.......................................................................................................................6
The theory of Stakeholder- R. Edward Freeman...................................................................6
Response to question 2...............................................................................................................7
References-...............................................................................................................................14

2
Balance Scorecard Analysis of BAE Systems
Response to question 1-
The traditional approach of measuring the performance is based on the techniques and
information which are available in the cost accounting, financial accounting and management
accounting. The financial measures which are primarily measured by the traditional
techniques include the revenue, profitability, cash flows, return on investments, return on
assets, earning per share. These measures are backward looking and are therefore known as
lag indicators since they only show the past data and focus on representing the historical
performance (Rezaei, et al. 2016). However, these quantitative performance measures help in
controlling and improving the performance of the organization but at the same time it results
in providing incorrect decision making in the long run. There are certain characteristics of
this traditional approach which helps in the measurement of the performance of the
organization (Cameron 2015). Such as-
 It only concentrates on measuring the key and crucial variables other than
concentrating on the petty issues.
 These measures focus on the key business drivers which are mainly responsible for
the success of the business.
 These measures are a mixture of the present, past and the future hence they make sure
that the business is concerned with all the three perspectives.
 These measures are based on the needs of the stakeholders of the organization which
include the customers, shareholders and other key stakeholders.
 These measures are flexible in nature so that it can be adjusted as per the changes in
the strategy and environment.
 These measures are needed to have goals and targets and these targets and goals are
based on research instead of arbitrary numbers.

3
Balance Scorecard Analysis of BAE Systems
Contrary to this, such traditional approach of performance measurement is subject to
certain drawbacks. These drawbacks can be explained in the following manner (Vij and Bedi
2016)-
 The traditional performance measures are mainly short term focused and it helps in
collection of information which are financial and operational and do not focus on
profit, income, overhead expenses and other figures included in the accounting
system. Therefore, this is the reason for the organization to wind up in the long run. In
order to have a smooth running of the business the organizations should also focus on
longer term measures which are customer and employee satisfaction, quality of the
products and services and other public responsibility measures.
 Most of the traditional measures lack relevance with the demands related to the
modern business environment and are basically based on irrelevant and outdated
principles.
 These performance measures mainly focus on the cost data and the revenue data
instead of the process and sometimes the measures provide misleading and irrelevant
information. The performance measures which contain financial results of bottom line
are unable to take steps for useful corrective actions.
 These performance measures do not contain any activity and process. The activity and
process is necessary for deciding the value added and non-value added activities and
processes. At the same time, it is crucial for the business organisations to analyse the
type of the processes for fulfilling the requirements of the customers from time to
time.
 In order to understand the correct and effective implementation of the strategies the
organizations find it difficult to make a proper assessment for the same. However, the
performances are measured based on certain specific areas only and they do not