CIMA defines Balance Score card Assignment

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BALANCE SCORE
CARD – ANALYSIS
AND SUITABILITY
STUDENT NAME:
STUDENT ID:

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EXECUTIVE SUMMARY
CIMA defines Balance Score card as a tool to organization which assist an
organization in evaluation of level of performance with the intention to improve level
of performance in future of an entity. It is the comparison of past performance level
which an organization already performed and future performance level which the
organization want to achieve. The main intention of framing this report is identify the
linkage between the performance level and the company’s goals and objectives. The
another aim of preparing this report to assess the difference between the traditional
performance measurement system which mainly focus on short term financial and
competitive measures and Balance Score card which is new technique and focus on
long term financial and competitive measures. This reports helps in understanding
how the top level management measured the value generated in past by per unit of
resource and how much value will be generated in future. This report provides a
platform for organization to incorporate new performance measure – Balance Score
card in their internal control systems so that various goals and objectives like enhance
customer satisfaction can be achieved. With the defined aims the report has been
prepared with appropriate headings and sub headings and proper conclusion has been
drawn thereon.
Table of Contents

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EXECUTIVE SUMMARY............................................................................................. 2
INTRODUCTION........................................................................................................ 3
CLIENT DISCRIPTION................................................................................................ 4
BALANCE SCORE CARD............................................................................................ 6
MEANING............................................................................................................. 6
FEATURES............................................................................................................ 7
COMPARISON WITH TRADITIONAL PERFORMANCE MEASUREMENT...........................7
SUITABILITY FOR CLIENT.........................................................................................7
CONCLUSION AND RECOMMENDATION.....................................................................9
REFERENCES............................................................................................................ 9
INTRODUCTION
Each and every company shall strive to maintain the system robust in order to achieve
the objectives as defined by the company. In order to have such system, the company
shall adopt a defined and the valuable technique which will help the company in
integrating the efforts towards the attainment of the common objectives. The
techniques or method so tried to be implemented shall be best and according to the
needs and the requirements of the business of the company. Although there are many
management accounting tools and the technique available with the companies
operating in the particular industry but for the purpose of this report, the balance
scorecard has been discussed in detail. For the furtherance of this report, the company

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that has been chosen is the manufacturing division of the Ford Motor Company. It is
the company based in United States.
The report has started with the description and details of the company so as to have an
understanding of the company. The description includes the name of the company, its
nature of business and how the company is currently operating its functions. Then the
technique of balance scorecard has been discussed in detail with its meaning and as to
what are the main characteristics that it carries in each process. After mentioning the
features, the technique of balance scorecard has been compared with the traditional
system for the measurement of the performance of the company. In this the
advantages of the balance scorecard has been given which is over the traditional
system. Then the detailed discussion has been made regarding whether the balance
score card so listed is suitable and applicable to the selected company.
With these discussion and analysis the report has been presented with the appropriate
headings and subheadings and all the data for the purpose of this report has been
collected from the reliable and the available sources.
CLIENT DISCRIPTION
For the furtherance of this report, the Ford motor company has been selected. The
company has been carrying out its functions since the year of its incorporation which
is nineteen hundred and three. The company has been into the business of
manufacturing of the cars, trucks, SUV’s and the electric vehicles. The company does
not only manufactures but also markets and sells the automobile goods. The company
has their own division of financing and provides the finance to the customers as and
when the demand arises and only on the purchase of the goods of the company. The
company has operating across the globe and for the purpose of this report, the
subsidiary of company located in Australia as Ford Motor Company Limited has been
considered and accordingly the analysis has been made (Ford Company, 2017).
Before proceeding with the application and suitability of the balance score card to the
company, it’s better to have more detailed discussion on the strategic objectives of the
company. It is because only after knowing the company in detail, the applicability and
suitability of the balance score card can be verified. Few are the strategic objectives of
the company which will help in assessing the main purpose of this report.

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 The first strategic objective of the company is to have the increased the fuel
economy on the global basis. It can be done by the reduction in the rate of
emission of the gases which are hazardous in nature. It has been mentioned
that the company has been able to achieve the improvement of ten percent in
the emission of carbon dioxide. This ten percent is regarded as the benchmark
of the industry and is the best in the automobile industry.
 The second strategic objective of the company is to have the right or
monopoly in the industry to manufacture the product which will be light
weighed. The market share can be measured through the data that has been
collected in the survey for the customers including the corporate who are using
the goods of the company. Currently the company is producing lighter goods
with one hundred and fifty to seven hundred pounds.
 The third strategic objective of the company is to have the number of customer
base increased with the usage of their goods. It means the customers using
their goods in the market shall be more and thereby having the high market
share. The strategy that the company has adopted for the same is to conduct
the marketing of the products through advertisements or door to door
advertisements and through the way of business promotion events. Higher the
customer base of the company higher will be their chances for survival in the
future.
 The fourth objective of the company is to have the smooth and efficient
working culture in the office. For this the company shall work to have the
system where the corporate governance in good terms shall be there. This can
be only achieved through the system of having the good office culture of the
company. The culture is not related to the deployment of the individuals
employed in the organisation rather it is concerned with the proper and
effective working of the organization. The code of ethics as developed in the
organization shall be followed by each and every employee employed in the
organization. Not only this, the good working culture will then is developed by
conducting the workshops so as to aware the employees about the working
culture of the company. Thus, for developing the working culture the
employees have to work within the limits as defined by the company policies
rules and procedures.

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 The last and the main strategic objective are to consider the need as well as the
objectives of the stakeholders of the company. It is because it is the
stakeholder only because of which the company runs consecutively for the
future years and the company shall consider all the needs and the requirements
of the stakeholders. The stakeholder includes the shareholders of the company,
investors, potential investors, banks and the financial institutions, the
government authorities and the employee of the company. The company has
adopted the policy of full and timely disclosure to the stakeholder in order to
avoid the ambiguity in any manner and in case any deviation comes into
notice, then the same will rectified to the satisfaction of the stakeholders of the
company.
Thus, by having the detailed discussion on the objectives and the working of the
company, the importance and the applicability and suitability thereon can be verified
with the method known as Balance Score card.
BALANCE SCORE CARD
Balance score card is the method which will be flowed through out the report. At first,
the meaning of the balance score card will be discussed along with the features.
Through the implementation of the Balance Scorecard, the company will have the
better measurement systems.
MEANING
Balance Score Card is the planning system that is being frequently used by many
companies across the globe. Companies include not only the profit making
organisations but also includes the not for profit making organisations. It provides
both financial and non financial measures required to evaluate the performance of the
company. Through these measures the management of the organisation have the view
of performance of an organisation in the balanced manner. The balance score card has
defined four perspectives through which the company’s overall performance can be
viewed in the effective manner (CIMA, 2015). These four perspectives are –
Financial, Customer, Internal Business Process and Learning and Growth. . Each of
the perspective delivers different values to the company. Through this report the Ford

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Company has been chosen for which the overall objectives of the company will be
explained and thereafter objectives of the Manufacturing unit of the organisation will
be explained. Keeping in view the objectives so listed, the balance score card will be
identified suitable only after analysing the features of it (Kaplan and Norton, 2014)
Financial perspective is basically embedded for meeting out the needs of the
shareholders and other stakeholders like rate of return on capital employed, earning
per share, etc. Customer perspective deals with the customer satisfaction and
attraction. Internal business processes helps the company to measure the viability of
the processes between the stage when the customer needs are identified and when the
customer needs are satisfied. Last perspective deals with the measures to evaluate the
long term growth of the company (Niven and Paul, 2012).
Having dealt with the meaning of the balance score card it is necessary to understand
its features only then the comparison can be made with the traditional method
measurement.
FEATURES
For the purpose of having the best system of the balance scorecard, following are the
distinguished features of the balance score card that every company shall have:
 First feature of the balance scorecard is the financial evaluation. Everyone is
interested in knowing this perspective because of its dealing with the
profitability of the company and other measures such as return on assets,
return on equity, net profit margin and etc. The financial perspective serves as
the focus for the objectives and acts as the measure for the aim of the company
and also acts as measures in the other score card objectives. This form of
perspective reflects the concern for profit organisation stating that every action
has cause and effect relationship which helps in measuring the financial
performance of an organisation in short run and long run. While identifying
the objectives and measures various matrices are considered which are
appropriate for different units operating in an organisation. These matrices
help in linking the financial objective of the unit to the strategy adopted by the
organisation as a whole.
 Second feature is of the customer perspective. It deals with the customer
satisfaction. It helps in understanding as to where the organization stands at
from the view of the customer. This feature will not always be static like

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financial evaluation indicators rather it keeps on changing (Isoraite, 2014).
This form of perspective measures the compatibility of the organisation to
provide the goods and services of better quality, to assure the timely and
effective delivery of the goods to the consumer, to provide the customer a
desired level of service and overall satisfaction to the customer. The need and
requirements of the customers shall be fulfilled in an effective manner as the
organisation derives the value of their products and receives the profit only
because of the customer satisfaction. Therefore, it is regarded as the basic and
important form of perspective for the effective working of the organisation.
(Kaplan and Norton, 2016)
 Third feature is of having the system of sound internal control processes. This
form of perspective deals with the results of the business generated internally
that leads to the success of the organisation not only financially but also by
increasing the level of satisfaction provided to the customer. In order to
achieve the organisation objectives and the expectation of the customers, the
key business processes should be identified on which the organisation as a
whole should work with full dedication. By placing the key business processes
it is ensured that the drawbacks will be more than the satisfactory and also
helps in achieving the expectation relating to the performance as well as
customer satisfaction.
 Fourth and the last feature is of the learning and growth perspective which
basically deals with the employees of the company. This form of perspective
focus on the ability of the personnel working in the organisation, the
information system installed in the organisation and its effectiveness and the
change in the organisation in order to support the objectives of the
organisation. Every process requires the manpower to accelerate the process in
the right direction and on the right path. Processes will only succeed when the
manpower who are adequately skilled and are motivated accordingly and are
supplied with the proper, accurate and timely information are the real
personnel who are driving the process. This process takes on increased
importance in organisation as most of the organisations have undergone a
drastic and radical change in every sphere. To meet the ever changing
requirements in the business and to gain the competitive advantage over other
organisations and to gain the expectation of the customer, personnel should be

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motivated to take the new responsibilities, acquire new skills, acquire
innovative technology and adopt the change if any in organisation.
COMPARISON WITH TRADITIONAL PERFORMANCE MEASUREMENT
The company has been adopting the budgeting method for the measurement of the
performance of the company. Budgeting is the management tool under which the
standards are set for each and every activity of the company and against which the
performance of the company is judged. These standards are prepared in accordance
with the past experiences of the company as well as in accordance with the judgment
made by the management of the company if any. The budgeting has been regarded as
the traditional performance measurement as it is the old indicator for measuring the
performance. Although the balance scorecard is also an old method but due to its
gaining importance in the last so many years it can be said that the method is new as
compared to budgeting.
Under the method of budgeting, the company is required to prepare the materials
budget, sales budget, purchase budget and cash budget and so on. These budgets help
in minimising the cost of particular thing if the budget gets exceeds or if there is the
scope of saving of the money of the company.
Budget usually plays very crucial part in the success of the business of the company.
It persuades each and every manager of the company as well as the persons who have
been charged with the corporate governance of the company to be ready for all the
events that may happen in the near future. Master budget comprises of all the forms of
budget and lays down the plan for all the activities of the company in total. All the
budget which is required to be made for the specific purpose like purchase budget or
sales budget forms the part of the master budget only. The main advantage of the
preparation of budget is that the company can have an idea as to how the activity is
required to be performed and what type of measures can be undertaken so as to bridge
the gap between the actual results as well as the budgeted results. For instance if the
company’s budgeted results or the desired results is that the production budget shall
be at the minimum and the company will work accordingly in order to achieve the
desired results. There is one important concept of zero based budgeting which is
widely used by the companies across the world. It enables the company to consider
the base year as zero and instead start the budgeting process at the fresh. Thus in this
way the budgeting is the important factor for success of every business.

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But if the same is compared with the balance score card then the budgeting is
identified with the low level. It is because of the fact that the balance scorecard
provides the four perspectives in which all the functioning of the company can be
measured against the set standards and therefore, the balance scorecard shall be
implemented in order to be more informative and detailed.
SUITABILITY FOR CLIENT
Yes, the balance score card is suitable for the company. It is not only suitable for the
company but also convenient and more useful for the company. It is because of the
following reasons:
- The balance score card has four perspectives which in itself carries the whole
of the functions of the company and considers the same and from those
perspectives gives the indicator of the performance of the company.
- It provides an inbuilt target system of achievement.
- Through the budget the internal control processes cannot be measured and
sometimes through which the actual costs gets increased. But in the balance
scorecard the company can measure the internal control processes in a very
good and deep manner.
- As the company is the manufacturing company, all the four perspectives
covers all the areas and as the company has many activities and large
operations, balance score card will provide the best results.
Thus, in this way the balance score card is suitable for company.
CONCLUSION AND RECOMMENDATION
Balance score card is in the current scenario a prevalent technique for the
measurement of the performance of the company. For the purpose of this report, the
data of Ford Manufacturing Company has been used. The features of the balance
score card have been discussed in detail along with the comparison with the budgeting
being the traditional method of performance measurement. In order to conclude the
report, the balance score card has been explained in detail and it has been established
that the balance scorecard is the best measure for the measurement of performance.

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It is recommended for the company to implement the system of the balance scorecard
system in place.
REFERENCES
CIMA, (2015), “Effective performance management with the balance scorecard”
available from http://www. cimaglobal.com/ Documents/ImportedDocuments/
Tech_rept_Effective_Performance_Mgt_with_Balanced_Scd_July_2005.pdf
accessed on 16-05-2018.
Ford Company, (2017), “Annual Report” available on http://corporate.ford
.com/homepage.html accessed on 16-05-2018
Isoraite M., (2014), “The Balance Score Card Method : From Theory to Practice”
available from https://www.mruni.eu/upload/iblock/d42/Isoraite.pdf accessed on 16-
05-2018
Kaplan R. and Norton P, (2016), “The Balance Scorecard: Translating Strategy into
Action”, Harvard Business School Press, 512(2), pp 42-52
Kaplan R. and Norton P, (2012), “The Balance Scorecard: Translating Strategy into
Action”, Harvard Business School Press, 423 (4), pp 111-115
Niven, Paul. R, (2012), “Balance Scorecard Step by Step: Maximizing performance
and maintaining results”, John Wiley & Sons, Inc., New York,