Strategic Management Accounting

This assessment analyzes the financial performance of Philips Electronics using the balanced scorecard approach. It examines the long-term goals, stakeholders, suitable objectives, and issues related to implementation. The assessment also includes a strategy map and key performance indicators.

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STRATEGIC MANAGEMENT ACCOUNTING
Strategic Management Accounting
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Table of Contents
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Long term Goals and Stakeholders of the Business....................................................................2
Perspective and Suitable Objectives of the Business..................................................................5
Strategic Map...............................................................................................................................7
KPI and KPD of the Business......................................................................................................8
Issues Relating to Implementation of Balanced Scorecard.........................................................8
Conclusion.......................................................................................................................................8
Reference.......................................................................................................................................10

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Introduction
The main purpose of assessment is to analyse the financial performance of a business
which has adopted balanced scorecard approach for the purpose of measuring the performance of
the business and also controlling the activities of the business. The company which is selected
for this assessment is Philips Electronics company and the same is considered to have adopted
balanced scorecard approach. The assessment would be conducting a review of various
performance indicators of the business and analyse whether the business is lagging or leading in
terms of the performance indicators of the business. The assessment would also be showing
application of a strategy map for the purpose of effectively representing the process (Hoque
2014). The assessment would also be identifying the key financial lead and lag factors which can
affect the business.
Discussion
The company which is selected for this assessment is Philips Electronic Ltd which is
engaged in the business of manufacturing personal electronic item, home appliances and
personal care product. The company has adopted an approach which allows the management of
the business to appropriately apply Balanced Scorecard approach so as to optimize and manage
the activities and operations of the business in an effective manner.
Long term Goals and Stakeholders of the Business
The long-term goals of the stakeholders are formulated by the management of the
business for ensuring that the business is trying to achieve growth in the operations of the
business and also trying to enhance the profitability of the business. The management as per the
balance scorecard has portrayed four major areas which are to be considered which are

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competence, financial processes and customers for the purpose of generating and developing the
business (Reefke and Trocchi 2013). As per the business, the main stakeholders which should be
considered by the management of the company are customers, employees, shareholders of the
business. In addition to this, the management also needs to consider the needs of the community
at large.
The chart which is shown below shows some of the key performance estimates of the
business of Philip Electronics.
Figure 1: (Chart Showing net profit for the business over last five year)
Source: (Philips 2017 Annual Results)

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Figure 2: (Chart Showing Sales for the business over last five year)
Source: (Philips 2017 Annual Results)
Figure 3: (Chart Showing Shareholder’s equity for the business over last five year)

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Source: (Philips 2017 Annual Results)
Figure 4: (Chart Showing Total employee for the business over last five year)
Source: (Philips 2017 Annual Results)
The above chart shows the key areas which are considered by the management of the
business as indicators of the performance of the business (Perkins, Grey and Remmers 2014).
The plan of the management was to enhance the results which was attained by the business
during the previous year and thereby ensure that there is growth in the operations of the business.
Perspective and Suitable Objectives of the Business
The management of the company has incorporated the balanced scorecard approach so
that the business is able to identify the different perspectives of the business and formulate
appropriate strategy for the purpose of meeting the objectives of the business (Medcalf 2014).

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This management accounting also allows the management to link the corporate strategy of the
business with the balanced scorecard. The different perspective which are identified along with
their objectives are listed below in details:
Financial Perspective
 Business would be enhancing the profitability of the business over the years
 Increase the total sales of the business and enhance the scale of operations of the business
Customer Perspective
 Building Customer loyalty and brand equity
 Customer Satisfaction
Internal Process Perspective
 Incorporation of control measures and Supervision in the operations of the business
 Training and development of skilled human resources of the business
Learning and Growth Perspective
 Enhancing the technological level in the business
 Increasing the research and development expenses so that business can apply innovative
processes

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Strategic Map
Maximise the Value of Shareholders
Building Brand Image and Loyalty
Conduct Proper Supervison and ControlMaximise efficiency of Human Resources
Customer Satisfaction
Create Quality products
Recuritment of Quality StaffTrain and Develop Skills of Employee
FINANCIAL
CUSTOMER
INTERNAL
BUSINESS PROCESS
LEARNING AND
GROWTH

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KPI and KPD of the Business
The KPI and KPD of the business are set judging from the goals and objectives which are
established by the business. Figure 1 which is presented above shows that the management is
able to enhance the profitability of the business which suggest that this is a leading indicator for
the business. In figure 2, the management of the business has considered sales and the same is
also be a leading business indicator for success. Figure 3, shows the value of shareholders which
has decreased as presented in the graph above and the same shows that the management is unable
to meet the standards set and therefore it can be said that the management is lagging in this
aspect (Hansen and Schaltegger 2016). From the perspective of internal management, the
employee turnover has increased which suggest that the management is unable to meet standards
set and is also lagging in this respect.
Issues Relating to Implementation of Balanced Scorecard
There are various issues which are associated with the implementation of balanced
scorecard in a business and the same is mainly related to the cost of implementation of the same.
The balance scorecard is a control measure and therefore the management needs to appropriately
follow the same in order to ensure than the control over the activities is effectively maintained
but the same requires significant amount of time and efforts which is in most cases not possible.
Conclusion
The above discussion shows the impact of implementation of Balanced Scorecard in the
business and how the same helps the business in setting objectives and achieving control over the

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business. The above discussion effectively shows the lead and lag success indicators which can
have an impact on the decisions making process of the business. The above discussion also
demonstrates the strategy maps showing policies of the business.

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Reference
Hansen, E.G. and Schaltegger, S., 2016. The sustainability balanced scorecard: A systematic
review of architectures. Journal of Business Ethics, 133(2), pp.193-221.
Hoque, Z., 2014. 20 years of studies on the balanced scorecard: trends, accomplishments, gaps
and opportunities for future research. The British accounting review, 46(1), pp.33-59.
Medcalf, R., 2014. In defence of the Indo-Pacific: Australia's new strategic map. Australian
Journal of International Affairs, 68(4), pp.470-483.
Perkins, M., Grey, A. and Remmers, H., 2014. What do we really mean by “Balanced
Scorecard”?. International Journal of Productivity and Performance Management, 63(2),
pp.148-169.
Philips 2017 Annual Results. [online] Philips Annual Report 2017. Available at:
https://www.results.philips.com/publications/ar17#/interactive-charts/iag=chartemployees
[Accessed 7 Feb. 2019].
Reefke, H. and Trocchi, M., 2013. Balanced scorecard for sustainable supply chains: design and
development guidelines. International Journal of Productivity and Performance
Management, 62(8), pp.805.