A Balanced Scorecard Report to the CEO of Weston Foods Limited

A description of George Weston Foods (GWF) George Weston Foods limited is large food company operating in Australia and New Zealand with over 6000 employees spread across over 58 sites. Balances scorecard can be defined by the below highlighted critical features; It gives weight to the strategic agendas of the concerned firm It involves a selection of a small sample of data to monitor The data involved in the balanced scorecard evaluation is a mixture of financial and non-financial data sets (Muralidharan, 2004).

1
Running head: Managerial Accounting Trimester 1 2018
Managerial Accounting Trimester 1 2018
Institution Name
Student Name
Date

2
Managerial Accounting Trimester 1 2018
Introduction
As an employees of Jersey management consultancy, I was tasked with preparing a
report to the CEO of George Weston Foods limited. The firm is currently reviewing its
budgeting system with the CEO having an interest in the Balanced Scorecard. Having
attended a seminar regarding a balanced scorecard, the CEO of the George Weston Foods
requested our firm to evaluate the suitability of the balanced scorecard to their
organisation.
This report thereby gives an overview of the George Weston Foods as well as the
BSC system. Afterwards will evaluate the uniqueness of the BSC to other management
systems. Finally, the suitability of the balanced scorecard will be analysed, and a
recommendation made to the CEO on the way forward.
A description of George Weston Foods (GWF)
George Weston Foods limited is large food company operating in Australia and New
Zealand with over 6000 employees spread across over 58 sites. The firm is a wholly owned
subsidiary of Associated British Foods plc (ABF). ABF is a diversified food retailer who deals
with sugar, agriculture, grocery and ingredients. The firm has over 10,000 employees who
are spread across 46 countries. GWFs have been in operation for over 50 years of which the
firm have grown to be one of the largest Australian and New Zealand’s food processor. The
enterprise is structured into four businesses; Don, Mauri, Jasol and Tip Top. These
businesses are responsible for several diverse activities which includes marketing, selling,
distributing, innovating and manufacturing (George Weston Foods Limited, 2018).
A description of BSC and its features
The balanced scorecard is a strategic performance management tool, a mini
standard structured report that can be applied by managers to keep a record of the staff
execution of activities. This enables the management to monitor the staff actions and be
able to control the consequences that may arise from the staff actions. The term balanced
scorecard was primarily used to refer to management performance reports that were
applied by the managers in implementing the organization’s strategies and operational
activities (Ouchi, 1977).

3
Managerial Accounting Trimester 1 2018
The scorecard can also be applied by individuals in tracking their personal performance.
This though is not commonly practised. The BSC can be applied in informing personal goal
setting and calculating incentives. Balances scorecard can be defined by the below
highlighted critical features;
o It gives weight to the strategic agendas of the concerned firm
o It involves a selection of a small sample of data to monitor
o The data involved in the balanced scorecard evaluation is a mixture of financial and
non-financial data sets (Muralidharan, 2004).
Balanced score card is an example of a closed loop controller that the management put
in place during strategy implementation. Here the actual performance is measured, the
obtained value is thereafter compared to a reference value. The difference between the two
will determine the corrective measures that the management need to put in place to
optimise the performance of the enterprise. For the control measures to be effective there
is need to accommodate three aspects;
 Selection of data to be measured
 Setting of the data reference values
 Capacity to make corrective intervention
From the strategy management perspective, all the three features of closed loop control
elements should be derived from the firm’s strategies and should reflect the capacity of the
observer to analyse performance and make appropriate interventions where necessary.
Initially the use of balanced scorecard was promoted as a general-purpose performance
management system, it was later promoted uniquely as a technique for evaluating strategic
performance (Kaplan & Norton, 1992). The system has of recently been adopted by several
organisations in their approach to measure and control strategic performance.
The two factors which still hinder the application of balanced score card designs are ease
of selecting and observing the necessary data as well as ensuring data selection is in
accordance with the observer’s capacity to intervene.
Features of balanced score card

4
Managerial Accounting Trimester 1 2018
The BSC is a management tool applied in evaluating an organisation. Rather than
evaluate single features of the frim, the BSC takes in to consideration numerous features of
the firm. From the late 1980s to early 1990 when the idea of BSC was first proposed, the
idea has undergone evolutions with a recommended improvement. The system has become
more flexible and is currently applicable to a variety of firms from several sectors (Epstein &
Manzoni). The effectiveness, ease of use and designing of the systems have also been made
easy. By using the balance scorecard, several features can be evaluated with equal weight.
This way the success of a firm is evaluated based on its success on all the features. Even
though several features can be added to the BSC based on the managers intention a good
balance scorecard should accommodate at least the four features described below.
Evaluation of finances: this is one of the most ancient t feature that the balanced
score was designed to measure. Finance plays a direct role in a firm’s profitability and no
manager will show any interest in a tool which can not evaluate profitability. One of the
objectives of the shareholders is to see the profitability of the firm improves (Kaplan &
Norton, 1996). The managers being agents of the shareholders are expected to follow in the
footsteps of the shareholders. Measurements of aspects such as return to equity, return to
asset and profitability margins are crucial to the future strategies of the firm. This make this
aspect of the BSC to be given more weight than all the other areas that the scorecard may
be used to measure.
Gauging consumer perception; consumers defines the success of the organisation.
Profitability is defined by sales which can only rise when the firm is able to seek and retain
more and more consumers. The use of the BSC should therefore be able to measure the
perception of the consumers regarding the firm. This way the manager will be able to
evaluate the level of contention among the consumers and areas that need to be reviewed
to make the consumers happier with the products of the firm. The measurement of
consumer is a bit straightforward when compared to the financial evaluation as it lacks
similar static performance indicators. Customer perception of a firm can normally be
obtained through surveys which are designed to seek consumers opinion regarding the
quality of the organisations’ products, their preference to the business brands and their
willingness to be associated with the firm (Abernethy, Horne, Lillis, Malina, & Selto, 2005).

5
Managerial Accounting Trimester 1 2018
Identification of the firm’s internal business procedures; for a company to thrive it needs to
have a good understanding of its competencies. The BSC can be applied to identify the
internal business processes. This involve but is not limited to processes that are crucial, to
the success of the firm and analysing the firm’s performance in these areas. With this the
BSC can be used to gauge the efficiency of the organizations operations. Some of the areas
that may be of importance are manufacturing, marketing and distribution (Shulver &
Antarkar, 2001).
Growth and learning; the only way firms can constantly retain their market share is
through constant development and technological advancement. It is therefore vital for the
balance scorecard to be able to measure growth of the organisation by analysing the
development progress. The BSC can be used to measure ways in which a firm is developing
new innovations and the efficiency with which the growth can be converted to profitability
of the firm. More dynamic firms do score higher in the BSC evaluations.
Design of BSC
The design of the BSC is concerned with identifying a sample of a small section of the
financial and non-financial measures and incorporating targets beside them. this way
through reviewing the measures the firm can gauge whether the current performance of
the firm is as per the expected standards. The BSC will alert the managers to sections where
deviations are significant and are out of the expectations’ bracket. Pointing out such areas
allows the managers to focus their attention on them, this may trigger positive performance
from the leadership of the enterprise (Moulin, 2017).
Originally BSC was designed to concentrate focus on information that relates to the
strategies implementation, with time this boundary has been crossed and currently its being
applied to cover both the control activities as well as the conventional strategic planning.
The four steps below needed to design BSC will give a further illustration of this concept as
per (Kaplan and Norton, 1990).
i. Vision translation into operation goals
ii. Vision communication and link to performance of individuals
iii. Business planning (setting index)

6
Managerial Accounting Trimester 1 2018
iv. Feedback, learning and proper strategic adjustments
These steps are not just restricted to the identification of a small sample of financial and
non-financial measures, they need to give an illustration of the design requirements in the
process that will be applied to fit the result of the BSC to the overall business management
procedures. Despite helping focus managers attention on strategic issues and the strategic
managements implementation, we should take in to account that BSC plays no role in
strategy formation and can even co-exist with the strategic planning systems as well as
other tools (Ahn, 2001).
Ways in which BSC is different from traditional performance measurement systems
The traditional performance measurement systems
The traditional performance measurements systems are only concerned with
tracking the firm’s financial performance measurements. The focus in this case is primarily
in internal accounting reports pertaining to cashflows, earnings per share, revenue,
profitability, return on asset as well economic value addition. These measures are referred
to as lag indicators since they only reflect historical data performance. Despite the measures
significance in assisting make decisions, relying on them may lead to incorrect steps that
may end up curtailing the performance of the firm in the long run.
The over-relying on the financial metrics might be harmful as the managers may be
misled in to making decisions that sacrifice the enterprise long term gains for the benefit of
the short-term period. For instance, cost minimisation may appear to improve the firm’s
profitability only to derail quality and lead to loss of business clients in the long term. The
traditional measures were designed and applied in the industrial age. At that moment the
use of historical data was sufficient to make production decisions. In the present business
environment production have evolved from the past mass-production based to knowledge
based. With this transformation relying solely on the measurement of tangible assets is no
longer enough. Firms must go an extra mile to evaluate intangible assets like consumer
relationship, intellectual and human capital (Irwin, 2002). The competitive environment
that surround the current organisations make overreliance of measuring tangible assets
performance to make decisions to be insufficient. There is need for firms to measure

7
Managerial Accounting Trimester 1 2018
intangible assets and address the issue of business rivalry, this is not made possible by the
traditional performance measurements systems since they are backward looking and may
not assist the managers identify future problems that may threaten the profitability of the
organisation.
Secondly, there is no link between the traditional performance measurements with
the strategies of the organisation. Strategy is what defined a firm’s long-term success, scope
of operations, matching firm’s activities to its available resources as well as accommodating
the values and expectations of the firm’s stakeholders. The traditional performance
measurements systems concentrate on the short terms profitability hence fails to connect
the organizations long terms goals with the short-term decision making. For a firm to be
successful there is need to make decisions that not only appreciate the past positive
outcomes but also ensures positive future outcomes. Currently businesses face intense
competition and therefore need to be flexible and adaptable to sustain and gain from
competitive advantage. Firms need to strive to perform better in key critical areas such as
organizational flexibility, customer relationship, supplier’s relationship, product and service
quality, employees’ relationship, technical know-how among others. This makes the need to
invest in the intangible assets to be a vital part of a firm’s strategy.
The intangible assets have capacity to create value and determine the long-term
success of the organisation making them a serious source of competitive advantage
(Kellermans, Floyd, Veiga, & Matherne, 2013). It is therefore necessary to measure the
intangible assets to act as indicators to the management. Traditional performance systems
do not cater for such measurements as they are non-financial. Focusing on the lag indicators
at the expense of lead indicators brings the problem of short sightedness to the managers.
For this reason, the traditional performance evaluation systems are no longer
relevant to the currently fast changing and dynamic environment. Using only one type of
performance metric cannot be adequate to illustrate the entire performance, firms need to
interrelate their strategies with the performance measurement metrics. With this both the
nonfinancial as well as the financial measurements metrics need to be accounted for. The
linking of the short-term decisions to the organization’s strategies and long terms
expectations is what define a business success.

8
Managerial Accounting Trimester 1 2018
Balanced scorecard
The BSC is a performance measurement tool that was designed to address some of
the weaknesses that have been noted in the traditional performance evaluation system. Its
use considers strategic non-financial performance metrics, something which the traditional
system failed to consider. With the measurements of both the financial as well as the non-
financial aspects of the organization’s operations the BSC provides a balance view of the
entire performance. The system indicates changes in the modern business environment
which have becomes more competitive and dynamic through the evaluation of the
intangible assets performance.
The system is integrated in a way that the business activities are aligned to the
organization’s strategy. The performance is linked with the strategic targets of the firm. This
gives a highway through which the firms strategic goals can be translated to unique
quantifiable performance targets which can be measured thereafter. The performance
objectives are evaluated using four-interconnected perspectives;
 Financial perspective, this focus primarily on the forms financial targets. Here the
BSC deals with tracking and observing financial success and the company’s
appearance in the eyes of the shareholders. The measures undertaken include
revenue, return on capital, cashflows etc. this is the only area that the traditional
performance evaluation systems were designed to measure.
 Consumer perspective, this angle of evaluation is concerned by the way consumers
view the firm. The focus here is the satisfaction of the clients and their retention. The
aspect relates to the long-term stability of the organization. Through measuring
consumer perspective, the firm can plan for the company’s long-term targets. The
areas measured here include; consumer retention rate, satisfaction rate, delivery of
quality, existing market share as well as percentage of sales to new clients among
others.
 Growth and learning perspective, this aspect focuses on the intangible drivers of
future growth examples being human and operational capital. the issues of interest
in this area include capability of the firm to maintain growth, improve and create
value. Due to the competitive and dynamic business environment there is need for

9
Managerial Accounting Trimester 1 2018
firms to constantly adapt, change, learn, improve and innovate to create future value
for survival purposes. Some of the measures given weight in this aspect include
employee turnover, training, development rate of innovation among others (Clark,
2018).
 Internal business processes perspective. This aspect focuses primarily on the
internal performance that the firm should attain to remain afloat. This assist defines
how well the firm is operating and highlight the activities that are necessary to meet
the needs of the consumers. For a firm to be competitive there is need to excel in
areas that are key to delivering needs of the clients such as value addition to services
and products, effective internal resources and assets utilisation among others. Some
of the measures here include efficiency levels, unit costs value analysis as well as
alignment of processes.
BSC stress the analysis of the four using the above described four perspectives from
where the performance metrics are designed, collected and analysed accordance with each
of the perspectives. The measurements and analysis of the aspects are correlated. By
stressing on learning and growth aspects the firm will eventually be able to provide high
quality internal processes which in turn means achieving the consumer needs and gaining
more market share and clients loyalty necessary for future business success. The satisfaction
of consumers will eventually transfer to better financial performance. The interrelation
between the perspectives means that should a firm be able to excel in all of them then the
firm will be assured of better long term financial success (Vaishak, 2018).
Suitability of BSC to George Weston Foods
The suitability of the BSC to George Weston Foods will be analysed based on how
the aspects fit into the firm’s operations as well as future targets. From the alignment model
of George Weston Foods, the firm aspire to diversify its businesses by working towards a
common purpose, values and vision. It targets defining behaviours and capabilities that are
necessary for future success. By 2020 the firm target to crate a world where consumers
value and desire their products, services and expertise. The purpose of the organization
clearly indicates that meeting the consumer demands and preference come first (George
Weston Foods Limited, 2018).

10
Managerial Accounting Trimester 1 2018
To attain this target, the firm need to link the performance measurement criteria to
the strategies put in place towards achieving the company purpose. Strategic decisions take
place at various points of management, its therefore crucial that the firm’s objectives of
business units are linked with the performance measurement system. The use of the
traditional performance measurements that only concentrate on the financial performance
is not relevant to the targets of George Weston Foods. The food industry is competitive and
constantly changes as cultures mix and people come up with new preferences. The
competitiveness requires the firm to innovate advance storage and transport facilities to
maintain freshness. In addition to coming up with new recipes that meets the consumers
preferences and tastes, this cannot be attained by solely relying on the traditional
performance measurement system. There is need for performance to be in line with the
firm’s purpose while at the same time taking measurements that encourage growth and
positive future results which can replicate the historical positive performances.
The BSC is an integrated strategic management system that has addressed the
vacancies which were previously present in the traditional performance measurement
systems. The use of BSC will provide a balanced view to the managers of the GWF in that
they are able to make decisions that are in line with their long-term aspirations. Since the
firm’s objectives are targeted at future success the BSC seems to be the appropriate tool as
it is future oriented giving a view of what the firm wants and what it needs to do to achieve
this. Using the system avails avenues for testing the success of the firm towards achieving
the set future targets hence the management will be able to make appropriate changes
where necessary. By applying the use of BSC to the firm GWF’s managers will be able to
transform their approaches from reactive to proactive. With this the firm will be able to
think ahead and tackle future issues with much success. It is therefore recommended that
the CEO of GWF consider implementing the BSC as tool to fend off competition through
monitoring the future and taking advance steps towards achieving future targets.
References

11
Managerial Accounting Trimester 1 2018
Abernethy, M. A., Horne, M., Lillis, A., Malina, M., & Selto, F. (2005). A multi-method
approach to building causal performance maps from expert knowledge.
Management accounting research, 135–155.
Ahn, H. (2001). Applying the Balanced Scorecard Concept: An Experience Report. Long
Range Planning, 441–461.
Clark, W. (2018, May 20). Features of a Good Balanced . Retrieved from bizfluent:
https://bizfluent.com/list-6731029-features-good-balanced-scorecard.html
Epstein, M., & Manzoni, J. (n.d.). The balanced scorecard and tableau de bord: Translating
strategy into action. Management Accounting, 28–36.
George Weston Foods Limited. (2018, May 20). Who we are. Retrieved from George Weston
Foods Limited: http://www.gwfbaking.co.nz/who.html
Irwin, D. (2002). Strategy Mapping in the Public Sector. International Journal of Strategic
Management, 563–672.
Kaplan, R. S., & Norton, D. P. (1992). The Balanced Scorecard – Measures That Drive
Performance. Harvard Business Review (January–February): , 71–79.
Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into
Action. Boston: Harvard Business School Press.
Kellermans, W. J., Floyd, F. W., Veiga, S. W., & Matherne, C. (2013). Strategic Alignment: A
missing link in the relationship between strategic consensus and organisational
performance. Strategic Organization, 304–328.
Moulin, M. (2017). Improving and evaluating performance with the Public Sector Scorecard.
International Journal of Productivity and Performance Management, 442–458.
Muralidharan, R. (2004). A framework for designing strategy content controls. International
Journal of Productivity and Performance Management, 590–601.
Ouchi, W. G. (1977). The relationship between organisational structure and organisational
control. Administrative Science Quarterly, 95–113.

12
Managerial Accounting Trimester 1 2018
Shulver, M. J., & Antarkar, N. (2001). The Balanced Scorecard as a Communication Protocol
for Managing Across Intra-Organizational Borders". Proceedings from the 12th
Annual Conference of the Production and Operations Management Society. Orlando,
Florida: Production and Operations Management Society.
Vaishak, V. S. (2018, May 20). Comparing Balanced Scorecard(BSC) with Traditional
Performance Measurement. Retrieved from My BISSSCRIBES: http://vaishaksuvarna-
bizzscribes.blogspot.co.ke/2012/12/comparing-balanced-scorecardbsc-with.html