Balance Scorecard Report

This report analyzes the use of the Balance Scorecard and benchmarking for performance measurement in AB Limited. It also examines the application of standard costing in both manufacturing and service businesses. The report provides a comprehensive analysis of these techniques and their relevance to business performance improvement.

Balance Scorecard

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 3...................................................................................................................................1
(a). Explaining balance scorecard and its uses to measure performance of AB Limited............1
(b). Explaining benchmarking and its uses to improve performance of AB Limited.................2
QUESTION 4...................................................................................................................................2
(a). Outlining uses of standard costing and its reasons to be reviewed.......................................3
(b). Explaining whether standard costing can be applied to both manufacturing and service
business.......................................................................................................................................3
CONCLUSION & RECOMMENDATIONS..................................................................................4
REFERENCES................................................................................................................................5
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INTRODUCTION
Evaluation of a business is a significant task to be performed by an organisation in order
to ascertain positive and negative influencers of that firm. Maim aim of this project report is to
build an understanding about various techniques which can help in assessing performance of a
company such as balance score card and benchmarking. In this project report standard costing is
examined in detail along with techniques of performance evaluation in order to serve managing
director of AB Limited (Prakash and Pant, 2013).
QUESTION 3
(a). Explaining balance scorecard and its uses to measure performance of AB Limited
Balance scorecard is a measure which is used under strategic management to enhance
internal functions and operations of a business organisation. It is a financial metric which
provides feedback to management of business by analysing data which is collected. Balance
scorecard is a metric which identifies strategic priorities of business which are typically finance,
customers, internal management and growth. These priorities are evaluated in order to ascertain
overall performance of a company (Balance scorecard, 2017).
In order to measure the performance of AB Limited, a balance scorecard is required to be
developed.
Strategic
priorities
Objectives Measures Targets Initiatives
Finance Making AB
Limited
financially strong
by enhancing
various ratios
such as ROCE,
profitability and
asset utilisation.
In order to
measure Finances
of this company
various metrics
must be used such
as ROCE, cash
flow, net margin
ratio and volume
growth.
It is important to
evaluate all the
targets which
were set by AB
Limited. ROCE
must be 19%,
cash flow 5000
dollars per month
and net margin
12%
In order to
achieve targets of
AB Limited,
initiative that
must be
performed is asset
deposition.
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Customer Attaining
customer
satisfaction
Customer
relations and
Dealer gross
profit growth
45.00% Dealer committee
Internal Operational
excellence
New product ROI 20.00% Review program
Leaning and
Growth
Motivated and
effective
workforce
Strategic
competency
85.00% Skill development
programs
From the above balance scorecard it has ascertained that by classifying objectives with
priorities can help in evaluating overall performance. For example: Against strategic priority of
customers; suitable objectives, measures, targets and initiatives are taken which can checked and
determined whether they were achieved by AB Limited or not to measure their performance.
(b). Explaining benchmarking and its uses to improve performance of AB Limited
Benchmarking is a measurement of the quality of a business organisation. It measures
various aspects of a business firm like AB Limited, such as policies, procedures, profitability,
operations and many more.
Benchmarking is a method from which AB Limited can measure their performance by
setting a benchmark or a standard which is considered to be achieved to fulfil organisational
objectives. There are various uses of this technique which enables AB Limited to analyse their
performance, these uses are mentioned below:
 It helps in determining what improvements must be done to achieve targets or
benchmarks by AB Limited.
 It also helps in assisting measures from which company can attain high performance
levels.
 Information which is gathered to evaluate performance of the company can be effectively
interpreted and analysed to improve performance (Marcos, Rouyet and Bosch, 2012).
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QUESTION 4
(a). Outlining uses of standard costing and its reasons to be reviewed
Standard costing is an accounting technique that helps an organisation to identify
variances between actual performance of a company and standards of the company. This
technique enables an organisation like AB Limited to set standards and ascertain standard costs
for organisational operations. This costing technique has various uses:
 Standard costing is used by organisations to control their cost involvement in
organisational operations. Costs are controlled by valuation of stock and improving
pricing of products.
 This costing technique is used to ascertain variation between standard and actual
performance of the company. This can help in identifying reasons which can bridge these
variations.
 This can help in setting budgets in an organisation which leads to motivated staff as they
have clear line of direction. By developing budgets, a business organisation can have a
basis of estimation which can provide guidance of improving performance.
Standards which are set by using standard costing are required to be assessed and
reviewed due to following reasons:
Basis of estimation – By reviewing standards, an organisation can get basis of estimation
for future costs. By ascertaining standard cost, a company can contribute towards planning and
budgeting function.
Comparison – By reviewing standards, a company can identify variations in the actual
and standard performance which further helps in comparison. Standards which are specified by
the companies are based on predictions due to which they can negatively impact the
organisation. In order to attain favourable variation, standards are reviewed.
Awareness – The process of standard reviewing can help an organisation to develop cost
awareness among employees of business firm so that they can be adjusted according to the
estimated prices, costs and fluctuations of cost. These standards can also levy negative impact
and this information must be provided in order to raise awareness about cost standards and their
negative influences (Boscia and McAfee, 2014).
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(b). Explaining whether standard costing can be applied to both manufacturing and service
business
Standard costing is a process of setting standards or benchmarks for the organisation and
identifying variations between actual and standard performances. It is considered that standard
costing is typically used in manufacturing industry, but this costing technique can also be used
by service businesses also. To provide justification to above statement, various evidences are
mentioned below:
 Service industry is involved with providing services to clients in which a considerable
amount is invested. By using standard costing technique, organisation can set standard
cost for their rendered services and variations can be identified after performance of that
service. Using this technique in all the services can result in higher cost involvement also.
 Standards are set for each service which is performed by the company in order to
ascertain whether is variation is favourable or adverse (Heginbotham and et.al., 2015).
CONCLUSION & RECOMMENDATIONS
From the above project report it has been concluded that performance measurement is a
significant task for an organisation to be performed. In order to measure the performance of AB
Limited, management of this company should be balance scorecard instead of benchmarking has
it helps to cover all the aspects which are important for a business entity. In the second question
of this project report, it has been analysed that standard costing is suitable for manufacturing as
well as for service industry.
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REFERENCES
Books and Journals
Marcos, A. F., Rouyet, J. I. and Bosch, A., 2012, January. An IT Balance Scorecard design under
service management philosophy. In System Science (HICSS). 2012 45th Hawaii
International Conference on (pp. 4972-4981). IEEE.
Boscia, M. W. and McAfee, R. B., 2014, January. Using the balance scorecard approach: A
group exercise. In Developments in Business Simulation and Experiential Learning:
Proceedings of the Annual ABSEL conference (Vol. 35).
Heginbotham, E., and et.al., 2015. The US-China military scorecard: Forces, geography, and the
evolving balance of power, 1996–2017. Rand Corporation.
Prakash, G. and Pant, R. R., 2013, December. Performance measurement of a dairy supply chain:
a balance scorecard perspective. In Industrial Engineering and Engineering
Management (IEEM). 2013 IEEE International Conference on(pp. 196-200). IEEE.
Online
Balance scorecard. 2017. [Online]. Available through:
<https://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard>
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