Management Accounting: Analysis of Woolworths Limited using Balanced Scorecard

This study analyses the internal structure of Woolworths Limited using Balanced Scorecard. It discusses the features of Balanced Scorecard, its difference from traditional performance measurement system, and its suitability for Woolworths Limited.

Running head:MANAGEMENT ACCOUNTING
Management Accounting
Name of the Student
Name of the University
Author Note

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Executive Summary
The primary reason for this discussion s to conduct an analysis of internal structure of a
chosen business organisation. In the following study the chosen company is an Australia
based public listed company named WoolworthsLimited. In this assignment the concept of
Balanced Scorecard along with its primary and vitalcharacteristics will be discussed. In
addition to that the applicability of the same shall be analysed and evaluated in case of the
chosen company of WoolworthsLimited. The study is a comparative analysis of the process
in which the Balanced scorecard is more preferred that the than traditional performance
systems of management.

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Table of Contents
Introduction................................................................................................................................3
Answer to Question A-Brief company overview.......................................................................3
Answer to Question B- Balance score card and its features......................................................4
Answer to Question C- Difference between Balanced Scorecard and Traditional Performance
Measurement System.................................................................................................................7
Answer to Question D- Suitability of Balance score card in Woolworths Limited.................10
Conclusion................................................................................................................................11
References................................................................................................................................12

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Introduction
The primary motive of the following discussion is to conduct an analysis on the
chosen company of Woolworths ltd in order to establish the process of the business internal
process and performance can be developed and improved if there is an incorporation of the
management metric of Balanced Scorecard as a performance measurement tool for the
organisation (Cooper, Ezzameland Qu2017). The evaluation of the identification of the
process of businessalong with the internal weaknesses and strength of the new metric of the
businessis done here.
Answer to Question A-Brief company overview
The study deals with the analysis of the operational and managerial performance of
the chosen company WoolworthsLimited which is the largest retail business in Australia.It
consists of super market, petrol, liquor ad hotel divisions.In order Analysis of the internal
structure of the chosen company of Woolworths has been analysed along with the pros and
cons of the adaption of Balance score card metric in the company. The Woolworths Limited
was founded in September 1924 as "Wallworths Bazaar Ltd.", and the company became
"Woolworths Limited" on 22 September 1924.The company of Woolworths
specialisesmostly in the sale of groceries like the vegetables, fruit, meat, packaged foods
along with DVDs, magazines, products of health and beauty, household products, stationery
items and pet and baby supplies. The company at presents operates 1000 stores across
Australia that consists of more than 968 Supermarkets with additional 19 convenience
stores that carries the same logo Founded in the year 1924, Woolworths along
with Coles forms a near-duopoly of Australian supermarkets accounting for about more than
80% of the market of Australia.

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The particular association recorded on the Australian Stock exchange (ASX) is
Woolworths limited which is the biggest retail business in Australia. It comprises of general
store, oil, alcohol hotel industry divisions. It tries to build up the enhanced portfolio with
respect to managed utility framework resources and proceeding to be in the number one spot
position under the Australian foundation venture support. Further, the qualities whereupon
the organization is keeping up its development are fairness, honesty, maximising the value of
the security holder and maintenance of the high standards for corporate governance.
Answer to Question B- Balance score card and its features
The balanced scorecard alludes to the metric of executions that is utilized as a part of
the vital administration keeping in mind the end goal to strategic management and recognize
the variety of capacities that are interior of a business and their subsequent outer results
(Dudinand Frolova E 2017). The Balance Score card is used for the measurementalong with
delivering the response to the organizations. In this process the Data collection is a very
crucial step fordelivering the quantitative results, as the information collected is understood
by the executivesandmanagers, and used for enhancing the decisions and vertices taken for
the organization.The metric of balanced scorecard is utilizedfor reinforcing a good behaviour
in the business by segregating the four different aspects that are needed to be analysed. The
four zones are otherwise called the legs incorporates development and learning, business
procedures, finance and clients (Brewster 2017). The balance scorecard is utilized to
accomplish the different measurements, objectives, goals and activities that are contributed
from the primary four business function. Organizations can without much of a stretch
distinguish factors hindering organization execution and blueprint key changes followed by
future scorecards. With the balance scorecard, they take a supervise at the organization all in
all when observing the organization goals. An association may utilize the balance scorecard
for the methodology usage mapping to watch where value is included inside the organization.

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An organisation may likewise utilize the adjusted scorecard for the development of the vital
goals and activities. The balanced scorecard is a management tool that is used for evaluation
of an organization. Rather than evaluating the organization on a single criteria, the balanced
scorecard may measure the multiple companycharacteristics. With the help of the balanced
scorecard there can be measurement of the different features with equal weight, so a business
is only deemed successful if it is successful with all features (Hammer2015). Although there
can be additional features added to the balanced scorecard to fit the needs of the generallyin
the management process an organization there are four characteristics that every good
balanced scorecard must measure. That are as follows:
 Financial Evaluation of the company
The Financial evaluation is the most traditional characteristics of the balanced
scorecard. Not any executive will be attracted in a balanced scorecard if it does not
include the mentioned feature because it deals with profits, which are central to the goal
of creating shareholder value. Preferably, this characteristic should be regarded as equal
to the others as is the point of a balanced scorecard, but it is frequently given more
emphasis than the other characteristics (Handfield, Cousins, Lawson, and Petersen2015).
This feature includes such measures like the return on assetsreturn on equity and margins
of profit.
 Measurement of the Perception of the Customer
The process of measuring of the perception of the customer allows analyse and
understand the organization as it is perceived by the customers. The clients are the ones
without whom the business cannot exist. It is a feature that is less straightforward than
financial evaluation as it does not have the same indicators of static performance. The
Customer perception of an organization isgenerally obtainedwith the help of surveys that

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includes asking questions to the customers regarding the company, if the identification is
donethe information can be gotten whether they associate the company with value.
 Identification of the Internal Processes of Business
In order the organisation has toprosper and flourish, a company must obtain the
knowledge of its core competencies. The balanced scorecard conducts the identification
of the businessinternal processes. This includes analysing and understanding which
processes are most important to an organization in order to succeed and evaluating how
well the firm performs them (Nudurupati2014). The objective of this feature is the
measurement of the efficiency of the mostvital operations of the firm. The instancesof the
processes these includemanufacturing, marketing and distribution.
 Learning and Growth
The Business organisations should continuously advance and develop of the risk
becoming out-dated. Hence, growth and learning are included on a balanced scorecard.
This is a measure of how well a company is being able to develop a new knowledge and
processes and how well it is able to translate this into progress and expansion for the
organisation. If the more firm is more dynamic the better the company will score
according to this characteristics of the balanced scorecard (García-Holgado, García-
Peñalvo, Hernández-García, and Llorens-Largo2015).
Therefore, it can be said that the balanced scorecard is a very essential tool which the
management has that can enable performance measurement of the enterprise along with
enhance the planning process of the business. There exits four constituents in a balanced
scorecard that includes the Financial perspective that defines thebusinesses financial goal,
Perspective of theCustomerthat defines the products that the organisation is giving to its
business customers, the Internal business process which defines the internal processes

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which are followed by the management for adding value to the product of the business
and learning and growth perspective which defines what activities are there which the
business undertakes for upcomingprogress of the corporate organisation.
Answer to Question C-Difference between Balanced Scorecard and Traditional
Performance Measurement System
For the process of getting the knowledge of the differentiation of the between
traditional performance measurement system and Balanced Scorecard, it is vital to know the
Traditional Performance Measurement System. The Traditional Performance measurement
system is primarily concentrated on the measurement of the financial performance of the
business which the business generates by selling its products (Gibbons and Kaplan2015).
This enables the measurement of the accounting reports that includes the revenue,
profitability and cash other financial indicators. The data that are measured are generally
quantitative in nature and can be used developing the financial performance and will not
evaluate the process of management and decision making that would help in the long run
businessconditions.
A company mustconcentrate on the vital aspects that may beboth financial and non-
financial in nature. In the recent timethe objective of the company may not be just mass
production and hence it only cannot rely on only the financial data of the business and has
also has to emphasises on the intangible assets manufactured or purchased by the company
like goodwill, customer relationship, human and intellectual capital. It is not advisable to
totally rely on the financial data of the business there are other factors which a business must
consider before taking the decisions(Jeston2014).

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Thesystem of traditional performance measurement cannot determine the strategies of
the business. It should focus on the policies of long term business development of the
business and must relate to the availability of resource and opportunities which the business
has to achieve in the long run. Therefore, it is evident that the traditional performance
measurement system only measures the short term business. On the other hand the Balanced
Scorecard is a newtool for performance measurement that may highlight the weakness in the
traditional system of performance measurement(Welford 2016). The Balance scorecard also
includes the non-financial metrics unlike the traditional performance measurement system
thus providing a balanced view of the performance of the business. Therefore, the BSC takes
in hand both financial and non-financial aspects that can influence the management of the
business (Birkinshaw2016). Additionally, BSC focuses on thealterations that takes place in
the modern environment which is highly competitive in nature. It considers intangible assets
of the business that is an important source for competitive advantage in the current market.
In this context four perspectives can be discussed that includes firstly the financial
perspective of the business that is focused on the financial goals andobjectives an
organisation. This helps in the analyses the performance related to the finance of the business
for the current and the previous year (Uldam 2016). The goal is to value the money related
success of the business and furthermore track how the business look to the requirements of
the investors of the organization. The generally utilized budgetary measures which can be
ordinarily found in a balance scorecard are the profitability of the business, income which is
earned by the business, return on ventures of the organization, and profit for capital employed
of the business, income and sales development of the business. The monetary indicators
which are identified with the general accomplishment of the business are represented in the
balance scorecard which is set up by the business. The financial point of view point of view is
additionally very valuable in characterizing the monetary objectives of the business

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(Hoque2014). The second viewpoint is that of the clients that incorporate into the balance
scorecard mirrors the view point of the clients of the business with respect to how they see
the organization. This is essentially concerned about a ultimate fulfilment of the client and
their retention. Since the clients are the life blood of a business and without their constant
support the organizations will not have the capacity to survive. The maintenance of potential
client is fundamental for long term business survival and development. The balance score
card helps in the long term planning procedure of the business and measures which are
incorporated into such a point of view are consumer loyalty rate, client maintenance
proportion, quality execution, level of offers which is accomplished and the criticisms which
are gotten from the clients. At the viewpoint of learning and development it spotlights on the
intangible segments that are the operational and human capital of the business. This
distinguishes whether there is a probability for the business to progress any further, enhance
the business structure and make an value for the clients (Tjader et al. 2014). The learning and
development point of view of the business is additionally identified with the advancements
which are directed in a business to improve the internal structure of the business and
furthermore recognizing a manner by which the business can increase the value of the
products which are provided to the clients. The measures which are selected for such a
perspective are job satisfaction, employee turnover, training of employees and the rate in
which the business is conducting research and development for innovation purposes
(Bhattacharya et al. 2014). The primary concentration in this point of view is advancement
and the perspective that is related with the long term business development and survival in
the competitive market. At last comes the perspective of internal procedure of the company
that the business needs to accomplish to survive in the dynamic business condition. It exhibits
a reasonable thought with respect to how well the business is working and what are the
exercises of the business which make a prospective value for the clients. In the event that a

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business has a viable internal process structure than the costs which is related with items
produced will be less and the business income which the business creates will be more. The
administration of the organization needs to create appropriate strategies and methods to
enhance the internal procedure of the business and spotlight on making a value for the clients
of the business. These measures incorporate procedures, for example, efficiency level, value
analysis of unit costs and process alignment. Thus, one might say that the BSC is comprised
of the four points of view which have been examined above and it can likewise be seen that
BSC covers a tremendous region in performance estimation of an organization which
conventional performance estimation framework obviously lacks (Keyes2016). Therefore,
from the above examination, one might say that BSC is better than Traditional arrangement
of performance estimation.
Answer to Question D-Suitability of Balance score card in Woolworths Limited
The chosen company of Woolworths Limited which is the largest retail business in
Australia.That deals with the super market, petrol, liquor ad hotel divisions if adapts the
Balance score card in the business can efficientlyadapt the tool of managementthat would be
advantageous to the business. The company of Woolworths ltd will be following the BSC on
the basis of the four perspectives of the BSC that has been discussed previously.
From the Woolworth limited point of view, the company is doing excellent in terms
of financial performance of the business and is regarded to be one of the largest retail
company in Australia. The introduction of Balance score card in the organisation there will
be a better supervision of the process ofmanagement in terms of finance metrics.The financial
perspective includes theoperating profit, the dividends which are offered by the company, the
cash inflows of the business and all forms under the financial perspective category of the
organisation (Krechovská and Procházková 2014).

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When it comes to the consumer perspective of the balance score card the performance
of the business and the reputation which the business enjoys in the market is being considered
(Bergand Kilambi, Siebel Systems 2014). The Woolworths Company is regarded to be one of
the leading retail brandof Australia that deals with variety of products and services. In case
the business management implements the Balance score card then the management will be
able to analyse the satisfaction of thecustomerand the rate of customer retention in the
business.
The Perspective of internal control of Woolworths the company’s management can
enable improvisation and effectively develop the internal process of the entitythat includes
the operations, costs management of finances and other various related factors. In case the
management of Woolworths ltd can improvise the internal business factors then the
performance standard of the company will progress more and can lead to further growth and
business development. In the context of growth anddevelopment perspective of Woolworths
limited, with the help of balance score card it can focus on innovation approach in the
management in the business process of the company(Van Der Aalst, La Rosa and Santoro
2016). Since the companyis committed towards implementing various effective innovative
practices so that there is a positive change in the retail sector in Australia and provide the
consumerswith business products that can be distinguished with highest quality.
Conclusion
It can be said from the study that the management of Woolworths limited must adapt
the Balance score card as a tool for measuring the managementperformanceof the business.
The above study also make it evident that Balance score card as atool for performance
management is much better than the Traditional performance measurement tool as it
considers the business strategic goals. The four perspectives of the BSC are also discussed in

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brief in the above paragraph. Therefore, it is being concluded that BSC is one of the finest
tools for managementthat the business must adaptto survive in the recent global dynamic
market.

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