Qantas and Balanced Scorecard: A Management Accounting Perspective

This report discusses the importance of Balanced Scorecard in Qantas Airlines and how it can help in attaining the goals and strategies of the business. It also highlights the difference between traditional performance measurement system and balanced scorecard. The report covers the financial evaluation, customer perspective, internal business processes, and learning and growth perspective of Balanced Scorecard. It also includes the Balance Scorecard of Qantas Airlines and its suitability for the company.

Running Head: QANTAS AND BALANCE SCORE CARD
Qantas and balance score card

QANTAS AND BALANCE SCORE CARD
Table of Contents
Introduction................................................................................................................................2
Overview....................................................................................................................................2
Mission and Vision.................................................................................................................5
Optimal Capital Structure.......................................................................................................5
Balance score card Approach.....................................................................................................5
Details of the four perspectives of Balanced Scorecard.........................................................7
Financial Evaluation...........................................................................................................7
Customer Perspective.........................................................................................................7
Internal Business Processes................................................................................................8
Learning and Growth..........................................................................................................8
Features of Balanced Scorecard.............................................................................................8
Balance Scorecard of Qantas Airlines......................................................................................11
Difference between traditional performance measurement system and balanced scorecard
system.......................................................................................................................................12
Balance Score Card Suitability for Qantas Airways................................................................13
Coverage of Operational Activities......................................................................................13
Analysis of Performance......................................................................................................13
Refining of metrics...............................................................................................................14
Communication of mission and vision.................................................................................14
Transparent objectives..........................................................................................................14
Conclusion................................................................................................................................14
References................................................................................................................................16

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Introduction
Management accounting is the procedure of creating accounts and management
reports that offer precise and timely statistical and financial information to administrator to
take long-term and short-term decisions. . It recognizes, evaluates, examines, understands and
transfers data to allow a company to follow its goals. Management accounting is also known
as cost accounting. This report is being prepared in order to highlight the importance of
management accounting in the business and how it helps in attaining the goals and strategies
of the business. The report will discuss about one of the important tools of management
accounting i.e. Balanced Scorecard and its features. Besides this, the report will discuss
whether the balanced scorecard will be feasible for the organization to implement or not. The
company that has been selected is Qantas Airlines which is one of the famous airlines of
Australia. Difference between traditional performance measurement system and balanced
scorecard will be presented. Further, the report will answer whether this tool of management
accounting i.e. balanced scorecard will be suitable for the company or not.
Overview
Qantas is the national airline and one of the largest airline by fleet size. It is third
oldest airline in the world after KLM and Avianca. Founded in 1920, and started the
international passenger flights in May 1935. Originally the name was in the form of an
acronym “Queensland and Northern Territory Aerial Services”. It is also known as “The
flying kangaroo”. The airline is based in the suburbs of Sydney. It has a subsidiary company
which namely Jetconnect provides services between Australia and New Zealand operating
under the name of Qantas brand. Jet star Airways a low cost airline (Qantas, 2017).

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The fleet size is 124 with 85 destinations. The company is operating with the
employee count of about 30000. The information over the years of the revenue and the assets
of Qantas is depicted in the table below.
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Turnover
(A$m)
15,62
7
14,55
2
13,77
2
14,89
4
15,72
4
15,90
2
15,35
2
15,81
6
15,68
9
15,56
6
Profits
(Statutory
profit/los
s after
tax)
(A$m)
970 123 116 249 −244 6
−2,84
3
560 985 793
Number
of
employee
s (FTE)
33,67
0
33,96
6
32,48
9
33,16
9
33,58
4
33,26
5
30,75
1
28,62
2
29,20
4
29,59
6
Number
of
passenger
38.6 38.4 41.4 44.5 46.7 48.2 48.8 49.2 52.7 53.7

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s (m)
Passenger
load
factor
(%)
80.7 79.6 80.8 80.1 80.1 79.3 77.4 79.1 80.1 80.6
Number
of aircraft
(at year
end)
224 229 254 283 308 312 308 299 303 309

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Mission and Vision
The major mission of the Qantas Airlines is to be a leading company in the Australia
dedicated to become the best company. The aim of the company is to fulfil the expectations
of the customers to an extent that they invest in their services (Li & Q, 2017).
The vision of the company is to operate the world’s best and largest premium airline
services, keeping in mind the key drivers such as priority of safety, a sense of direction,
excellence in customer services and to achieve a growth in the revenue by 23%. The foremost
concern is the safety of the passengers in the aviation industry. To increase the customer
value there is diverse range of options for example the packaged trips, facility of lounge, the
strategy of making alliances can build the customer satisfaction and loyalty. The CEO of the
Qantas believes that the two airline strategy is the ultimate driver of the success of the
company (Qantas, 2017)
Optimal Capital Structure
In 2016/2017 the group further strengthened its capital position and the core
objectives of the company are as follows. To maintain such kind of capital structure that can
minimise the cost of the capital. To achieve the return on capital employed beyond 10%
throughout the cycle. Lastly to grow the invested capital with the investment that can
generate surplus for the shareholders.
Balance score card Approach
The balance score card is a system which is involved in the strategic planning and
management of the system which the organisations use to align the daily activities, to
prioritize the project and services, to communicate the right information and to achieve the
target and to measure and monitor the strategic targets and progress. The balance scorecard is

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used to measure the feedback and on the basis of it a review is created (Mone & London,
2018). The major purpose behind the balance score card is to insulate the sound behaviour in
the organisation by introducing the four separate areas which needs an in-depth analysis. The
main evidence of the system of the balance score card is that they are distributed under the
four categories which is the financial perspective, the perspective from the customer’s point
of view, the internal process perspective and lastly the learning and the growth perspective
(Dolan & Shahbaznezhad, 2017). The balanced scorecard is said to be a strategic tool which
was developed by Norton and Kaplan (1996) as a reply to those who assumed that companies
only survive in the market to satisfy stockholders. According to Kaplan and Nortan the
balance score card is used to translate the missions and the strategies into the goals and the
objectives and creates a balance between the short term and the long term objectives (Whyte
& Lohmann, 2015).
The balanced scorecard is said to be a dynamic tool that can be utilized to execute a
strategy of the company. According to Nortan and Kaplan, the balanced scorecard comprises
variety of measures that permit the managers to have a frequent but complete view of the
company (Rao, Wang & Huang, 2016).
(Souce: Qantas, 2017)

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(Source: Hoque, 2014)
Details of the four perspectives of Balanced Scorecard
Financial Evaluation
Financial evaluation is said to be the important perspective of balanced scorecard. Not
a single manager of the company will get interested in the BSC if does not consider the
financial perspective as it involves the information of profits, which is the main part of the
goal for creating stakeholder value. The financial analysis comprises of the factors like
growth of the sales, return on investment and the operating income.
Customer Perspective
Evaluating customer perspective enables to know more about the company as it is
observed by the customers, who are said to the king of the market (Lucarelli, 2014). The
customer perspective generally considers the satisfaction as well as the retention of the
customers.

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Internal Business Processes
In order to survive in the market, company has to know more about its key
competencies. A balanced scorecard recognizes the internal procedure of business. This
comprises the understanding of the procedure of the company which are very important to get
success and analysing how the company is performing. The internal analysis focuses on how
the business processes are connected with the strategic goals of the organisation.
Learning and Growth
Company should regularly develop and do innovations to survive. Therefore, it is
included in the BSC system. Lastly the learning and the growth analysis is all about
measuring the satisfaction of the employees and the workers and the retention along with the
information system procedure.
Features of Balanced Scorecard
 Balanced scorecard discusses about the strategies of the company by concentrating on
the cause and effect relationship. It pinpoints particular measures and objectives in the
perspective of learning and growth which can enhance the internal process of business
(Charter Management Institute, 2018).
 Balanced scorecard supports in communicating the policies and strategies created by
the administrators of the company by decoding the strategy into clear and related set
of comprehensible and quantifiable operative targets.
 A decent balance scorecard executes as an apparatus for correspondence that just
characterizes that objective of the organization and vital goals to each representative.
With the help of this, every individual perceives their obligations in the association.
Moreover, this adjusted scorecard must have an overseeing light for each individual
from administration when they get caught in an unpractised condition or when the
target winds up till defined (Olberding & Frambes, 2016).

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 An effective balance scorecard is exceptionally adaptable. It doesn't outline firm
limits close-by the key targets. In its place, it allows the administration of the
organization to do the fundamental changes each time the need gets up.
 A sound balance score-card decides the circumstances and end results relationship of
various purposes to its employees and partners. The clarification of the goal of the
organization and its objective must be essentially disclosed as to diminish the
probabilities of any future conflicts.
 A passable balance scorecard must be sufficiently fit to discuss the injury because of
here and now choices on the potential advancement of the business. As some of the
time the conditions emerge that couple of administrators are unfit to have the
prescience and they wind up spending or putting resources into the short-run designs.
In any case, a great balance scorecard gives them a basic and clear perspective of
circumstances and end results relationship that help them in knowing the outcomes of
their activities (Duggan, 2018).
 The finest piece of a sound balance scorecard is that it doesn't keep up the officials'
frequently includes in various measures. Truth be told, authorities can include other
fundamental capacities, for example, organizing individuals, staffing, arranging, and
checking hazard factors (Balanced Scorecard Institute, 2017).
 The balance scorecard lessens the quantity of measures used by perceiving just the
basic ones. Sidestepping a spread of measures accentuations the consideration of the
administration on the key parts of the execution system (Buckingham & Goodall,
2015).
 The organizations that are significantly concerned about the benefit, the balance
scorecard approach gives a solid impact on the budgetary measures and targets. Now
and again officials give excessively immensity to the quality, fulfilment of the client,

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development yet they won't make substantial advantages. An adequately balance
scorecard observes non-budgetary measures as a noteworthy bit of the program or
system to accomplish and upgrade future monetary execution (Agarwal, 2018). At the
point when non-budgetary and monetary measures of execution are effectively related
in the balance scorecards, a few non-money related measures help as first pointers of
forthcoming money related execution (Seufert, 2014).

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Balance Scorecard of Qantas Airlines
Ideology Purposes Aim Evaluation
Perspective of the
Customers
Customer
Satisfaction.
Most on time
domestic Carrier:
Qantas domestic.
Improvement of
quality and easy
access to the
customers of the
services.
Customers are
enrolling the
membership with the
airlines.
Business Perspective
Internally
Convenience and
easy mechanisms of
payment availed for
the customers
(Hoque, 2014).
To increase the sales
as well as revenue
volume.
$ 1.1 billion cost and
revenue benefits have
been realised
Ex Fuel Revenue
have been decreased
by 6%.
Learning and
Innovation
To acknowledge the
contribution of the
employee and build a
strong team.
To keep the
employees motivated
and trained.
Employee’s
satisfaction and the
retention ratio have
improved by the
12%.
Financial Ideology Sales leadership in
airline services and
to ensure the
financial stability.
Higher returns and
cost-cutting to save
the funds for future
investments.
Operating margin
ratio and return on
investment. The net
income $1401
million, and is about
to increase it by 25%.

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Difference between traditional performance measurement system and balanced
scorecard system
Traditional Performance system of the management is used to track the financial
performance of the organisation in association with earnings collected from selling of the
capital. The major focus is on financial measures which are based on reports of internal
accounting, revenue, cash flows and earning per share, return on assets and economic value
added. Due to reflection of the past data only the measures are termed as lag indicators. Even
though the performance and the quantitative metrics can control the discretions yet at time sit
can result in unusual decision making for the long term purposes (Malgwi & Dahiru, 2014).
On the other hand the balance score card approach is created on the basis on the basis
of the forward thinking measurement by keeping a knot between “What the organisations
want to achieve and how they want to reach a particular position. In order to successfully
execute vision and strategy of the organisation must control all the business units, functional
units, groups and the individuals are all pursuing strategic goals.

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Balance Score Card Suitability for Qantas Airways
Balance Scorecard can be built up by Qantas Airlines Company in its business tasks
with a specific end goal to adjust every one of the exercises. This arrangement of execution
administration will enhance the non-money related measures of Qantas Airlines to
conventional monetary measurements and will make the organization the market pioneer. In
the event that the organization takes after adjusted scorecard approach then it will bolster in
following the non-monetary measures, for example, relationship assessment between
workers, clients, providers and friends, and the capacity of the organization to deal with a
maintainable business (Zizlavsky, 2014). Components that express the reasonableness of
Balance scorecard in Qantas Airlines are
Coverage of Operational Activities
The Balance scorecard approach will support Qantas Airlines in making decisions its
fundamental procedures and foreseen results. These sectors will help representatives in
understanding what they need to do and what ought to be kept aside. Denied the mechanized
information accumulation and detailing methods that are connected with scorecard age each
office would have taken after their own procedure. An adjusted scorecard joins together and
rules the tasks of the organization (Giannopoulos & Holt, 2013).
Analysis of Performance
Doing the right thing at the right time with the right individual takes expertise and
experience. Making a balance scorecard assists the business entity to control how
representatives are executing the present designs. By applying a SWOT investigation, a
business can perceive its qualities to create and the chances to investigate. It might likewise
uncover the shortcomings and dangers to the organization (Yilmaz, 2013). Making a

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scorecard and apportioning each movement can be a change. It presents and develops links
with the qualities, vision, and mission of the organization.
Refining of metrics
Analysing a balance scorecard as a portion of the methodology of strategic
management might interpret whether the business is drawing wrong thing or right.
Communication of mission and vision
A balance scorecard approach assists the managing authorities of the organization to
convey the vision and mission of the entire organization at each level. Prioritization and basic
leadership ends up more straightforward in light of the fact that the scorecard presents the
criteria for proper projects.
Transparent objectives
A balance scorecard approach aids in developing the techniques of the association by
figuring out what is basic for the organization. Program tasks, benefit conveyance, and
announcing generation measurements supports organization to gauge how well it is
performing and where there is have to give careful consideration, contingent upon the
mission and vision of the organization. For example, if the fulfilment of the client is a
noteworthy need then systems should be improved (Suvarna, 2012).
Conclusion
After summing up the above executed analysis it has been inferred that one might say
that balance scorecard is one of the cutting edge execution estimation frameworks which
bolster organizations in estimating it’s non-budgetary and money related exercises which are
imperative for the present business condition. The above report is involved different
viewpoints which will be extremely gainful for the future point of view of the business. The

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report includes the review of the Qantas Airlines Company which mirrors that the business
organization is one of the best entity offerings of high quality. Qantas Airlines include
different exercises in its business task that can be sorted into non-money related and
budgetary exercises. Accordingly, to keep up every one of the exercises and pick up an upper
hand in the market Qantas Airlines need to embrace adjusted scorecard approach in its
business activities. In addition, the report additionally features the idea of the adjusted
scorecard and its essential highlights. Alongside this execution of the adjusted scorecard has
been done on Qantas Airlines Company. Further, a clarification has been given about how
adjusted scorecard is not quite the same as conventional execution estimation framework and
how it is appropriate for Qantas Airlines Company.

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References
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Balanced Scorecard Institute (2017). Deployment of the Balanced Scorecard Measurement
System [online]. Retrieved from
http://www.balancedscorecard.org/BSC-Basics/Cascading-Creating-Alignment/
Applications
Buckingham, M., & Goodall, A. (2015). Reinventing performance management. Harvard
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154%20Implementing%20the%20balanced%20scorecard.pdf
Dolan, R., & Shahbaznezhad, H. (2017). Social Media Strategy in Services: The Effect of
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Hoque, Z. (2014). 20 years of studies on the balanced scorecard: trends, accomplishments,
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