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Management Accounting Assignment Sample (DOC)

   

Added on  2021-06-15

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Management Accounting

Executive SummaryThis report is developed to gain an analysis of the sustainability of Balance Scorecard(BSC) to be applied by business corporations at present for keeping a track of their businessperformance. In this context, it has been identified from the report that BSC is an effective toolas compared to traditional costing method as it provides an overall assessment of the financial aswell as non-financial business performance. Wesfarmers need to adopt a sustainability balancescorecard to keep a track of its sustainable performance as it aims to maintain a long-term focusin creation of value and developing its business portfolio. The adoption of balance scorecard willhelp the group to identify the necessary strategic actions it needs to implement for maintainingits sustainable growth. The balance scorecard will help in identifying the problems in each of theperspectives of the company such as customer, internal process, financial and learning andgrowth. It will provide a framework to the company for realization of its core values andstrategic actions into a practical manner and creating value for the stakeholders as per its missionand vision statement.

IntroductionBusiness organizations nowadays are increasingly emphasizing on the use of efficientperformance metric system for gaining an overview of their overall performance assisting themin development of the strategic initiatives. The use of performance measurement systems enablesthe managers in development of adequate growth strategies that helps in overcoming the overallcosts and improving the efficiency of operations. Balance Scorecard (BSC) is one such effectiveand efficient system of performance measurement system used by business organizationsnowadays to develop an insight into their overall performance and development of long-termgrowth strategies. In this context, the present report is developed on the opinion of amanagement consultant providing knowledge to the CEO of a firm client about the use of BSC inprivate companies. The firm is currently undergoing an evaluation of its budgeting system andthus CEO who has recently attended a seminar in BSC wants to assess whether this performancemeasurement tool is suitable to be used within the company (Brown, 2007). The firm clientselected for the report purpose is Wesfarmers Pty Ltd, a supermarket giant in Australia. The report covers a detailed description of nature of the selected company, description ofBSC and its features, difference of BSC from traditional performance measurement systems anddiscussion relating to whether BSC is suitable to apply in the selected company.a. Description of the Firm’s ClientWesfarmers Limited is an Australian retail company involved in carrying out diversebusiness operations such as supermarkets, liquor, hotels and convenience store, homeimprovement and office supplies. The company carries out its retail operations actively acrossAustralia and New Zealand having about 800 supermarkets and 900 liquor stores, 700 servicestations and 88 hotels. The company aims to create value for its shareholders by promoting thecontinuing growth and development of its diverse operations. The company was established inthe year 1914 and since then it has become one of the largest listed companies in Australia. It isregarded to provide employment to about 220,000 employees and also having a shareholder baseof approximately 530,000. It aims to achieve this by satisfying the customer needs andexpectations by providing them innovative product and services. Also, it aims to provide a safeworking environment to the employees by rewarding their good performance and providing the

opportunities for advancement. The company also places emphasis on responding effectively tochanging attitudes and expectations of the communities and environment. It also emphasizes onacting with integrity and honesty in carrying out its business operations for ensuring its long-term growth and development (Wesfarmers: Our Businesses, 2018). b. Description of BSC & Its FeaturesThe Balance Scorecard (BSC) is a business framework used for strategic managementand planning by business organizations. The scorecard examines the performance of anorganization both on the basis of financial and non-financial perspective. It is regarded as amanagement system that helps in focusing long-term strategic goals for an organization. Thedevelopment of strategic vision helps in assessing the overall performance of an organization bysegregating it into specific criteria. The model was developed by Kaplan and Norton fortranslating the mission and vision of an organization into realistic actions. This is done byidentifying the loopholes into an organization performance and developing consecutive strategiesfor achieving the target figures. The scorecard is an effective technique for communication andevaluation of the success achieved in realizing the mission and strategy of the organization withthe use of financial and non-financial measures. It is regarded as a practical performancemeasurement metric for providing assistance to the executives about their strategic managementplanning process. It is an approach used for providing feedback to the organizations and helps indevelopment of strategic actions into realizable performance objectives (Chavan, 2009). Balance Scorecard refers to tactical planning tool and controlling system that has beenused by public companies, private companies, government organizations and other entities allover the world. Balance Scorecard has a unique feature that helps the business activities toachieve the organization targets through increasing the internal and external communication,implementing control and measuring the performance. Balance Scorecard is completely based onthe four major perspective that driven the business strategies of the company. The four mainperspectives of the balance scorecard are financial perspective, customer perspective, internal orbusiness process perspective and learning & growth perspective. The business strategies aredivided into these four perspectives in order to find the measures to achieve them. The businessstrategies are based on these four perspectives as each of these perspective provide defined goal

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