Managerial Accounting: Balanced Scorecard for British American Tobacco

This report provides a comprehensive analysis of the balanced scorecard and its application in managerial accounting, specifically focusing on British American Tobacco (BAT). It outlines the four key perspectives of the balanced scorecard—financial, customer, internal business processes, and learning and growth—and sets strategic objectives for each perspective relevant to BAT. The report identifies key performance indicators (KPIs) for each strategic objective, such as profitability growth, customer base increase, and improved cross-functional cooperation. It also suggests initiatives for achieving these objectives, like market expansion, customer loyalty programs, and staff training. The balanced scorecard framework is tailored to BAT's context, considering the restrictions on tobacco advertising and the need for innovation in product offerings. This analysis aims to provide a strategic tool for BAT to enhance its performance and maintain a competitive edge in the tobacco industry. Desklib provides this document along with numerous other solved assignments for students.

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Managerial Accounting
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1MANAGERIAL ACCOUNTING
Table of Contents
Implications and discussion of findings: Balanced scorecard.........................................................2
References:......................................................................................................................................8

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Implications and discussion of findings: Balanced scorecard
Balanced scorecard could be defined as a performance metric, which is utilised in
strategic management for detecting and enhancing different internal business functions and their
resulting external outcomes. More specifically, it is used for gauging and providing feedback to
the business organisations (Antonsen, 2014). In balanced scorecard, information is accumulated
and analysed from four business aspects, which are described as follows:
Learning and growth:
This is analysed by investigating training and knowledge resources. It manages the
effectiveness of capturing information and the efficiency of the staffs in using information for
converting the same to a competitive edge over the sector (Hoque, 2014).
Internal business processes:
These processes are analysed by examining the efficiency of the manufacturing process
of an organisation. Operational management is assessed for identifying delays, shortages,
bottlenecks, gaps, waste and shortages.
Customers:
The customer perspectives are obtained for measuring customer satisfaction with price,
quality and product or service availability (Busco & Quattrone, 2015). The customers provide
feedback regarding their satisfaction with the existing products.
Financial data:
Financial data like expenses, sales and income are utilised for gaining an overview of
financial performance. Such financial metrics might constitute of dollar values, budget variances,
income targets or financial ratios (Cooper, Ezzamel & Qu, 2017).
Strategic objectives of BAT in balanced scorecard:

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In case of British American Tobacco (BAT), balanced scorecard could be applied as well.
Initially, for each perspective, two strategic objectives have been set that align with the Porter’s
generic strategies designed for the organisation. These are discussed in details as follows:
Financial perspective:
In terms of financial perspective, the strategic objectives crucial for BAT include
profitability, growth in sales revenue and increase in optimal product promotion. Despite the
declining sales revenue in the UK tobacco industry over the recent years, the major players
operating in the industry have managed to earn considerable amount of profit for running their
business operations and BAT is one of them (Bat.com, 2019). It has been observed from the
internal analysis that BAT has strong financial position in the UK market and maintaining the
same is vital to ensure sustainability of business operations and competitive advantage. On the
other hand, optimal product promotion is selected, as it mainly deals with tobacco and nicotine
products, which face restrictions in advertisement and marketing activities in many nations.
Therefore, BAT needs to concentrate on these three strategic objectives in its financial
perspective for maintaining its market share in the UK tobacco industry.
Customer perspective:
Customers are pivotal to any business organisation and the main objective of the
organisation is to maximise its customer base (Hansen & Schaltegger, 2016). BAT is not an
exception to this situation as well. In addition, it needs to focus on enhancing its brand image and
reputation in the market so that it could maximise its overall sales revenue. Finally, it needs to
come with new products like smokeless cigarettes and electronic cigarettes due to the restrictions
on sales of tobacco and nicotine products so that profit level could be boosted in future.
Internal business processes perspective:
For this perspective, the main strategic objectives to be included for BAT are ensuring
cross-functional cooperation, aligning with the organisational guidelines, defining pricing
strategy and planning and supporting marketing activities. When the staffs of various
departments in BAT work together, it is possible to achieve the desired outcomes by complying
with the necessary guidelines. In addition, such participation would assist the organisation in

4MANAGERIAL ACCOUNTING
undertaking its pricing strategy and accordingly, suitable marketing strategies could be planned
for increasing product popularity among the customers (Keyes, 2016).
Learning and growth perspective:
In this perspective, BAT needs to consider shaping its culture, providing training,
ensuring people development and growing talent to provide best services to its customers. A
sound organisational culture would assist in meeting departmental as well as company goals.
However, for maintaining such culture, time-to-time training is essential. Moreover, BAT needs
to concentrate on the development of its staffs, as motivated staffs would work towards the
fulfilment of the business goals and customer satisfaction (Lin, 2015).
Key performance indicators of BAT for strategic objectives in balanced scorecard:
After the identification of relevant strategic objectives for BAT, the following
performance indicators are deemed to be critical to accomplish those objectives:
Financial perspective:
Based on the strategic objectives, BAT could expect 3% compound yearly growth rate in
profitability, 15% growth in revenue and streamlining of portfolio for rise in optimal product
promotion. By considering these performance indicators, when any product has below 0.4%
optimal product promotion, analysis needs to be conducted and corrective actions have to be
undertaken (Madsen & Slåtten, 2015). However, in order to accomplish its financial target, BAT
could expand its market in African nations and India, as these markets offer immense
opportunities for generation of sales revenue to boost overall profitability.
Customer perspective:
In terms of this perspective, the performance indicators to be considered by BAT include
number of customers, market surveys and successful product launch with above 0.4% optimal
product promotion within the first year. By penetrating into the new markets, BAT could be able
to experience an increase in number of customers by 1% every year, which would be possible
with the initiation of customer loyalty program in these markets. Moreover, it needs to appoint
market research team that would collect feedback from the customers. Based on such feedback,

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the organisation could formulate sound marketing and promotion activities for maintaining the
leader position in the global market. Furthermore, by launching electronic and smokeless
cigarettes in the market, BAT could attain leadership status in the new markets, as these products
are not available easily in the same (Martello, Watson & Fischer, 2016).
Internal business processes perspective:
For this perspective, the major performance indicators for BAT include internal survey
and alignment of projects within stipulated time, compliance with business policies, optimum
pricing regarding competitors and number of customer contacts. By conducting internal surveys,
it would be possible to improve the rate of cooperation among the staffs and this would eliminate
the compliance issues completely. Moreover, there would be reduction of customer complaints
when BAT starts following competitive pricing strategy and this would assist the organisation in
increasing the number of contacts along with ensuring maximum level of customer satisfaction
(Niven, 2014). However, for achieving the set targets, BAT is required to involve its staffs
actively in functional meetings, arrange training sessions for them, conduct market research,
provide timely feedback and undertake corrective actions along with field force accurate
reporting.
Learning and growth perspective:
The significant performance indicators for learning and growth perspective of BAT
include shaping culture, providing training, developing staffs and nurturing talent. BAT needs to
strengthen its cultural elements like workplace diversity, racial and gender discrimination and
other policies. By maintaining sound cultural workplace, it would become easy for the staffs with
different backgrounds and religions to work in collaboration for meeting the desired sales and
profit targets (Perkins, Grey & Remmers, 2014). For ensuring that all staffs participate in
training courses, it is necessary to conduct staff engagement survey and interdepartmental
communications via quarterly team bonding events as well as business updates. As a result, the
development goals could be achieved through execution of training programs. Finally, for
retaining the top talents, BAT needs to ensure fair compensation, development opportunities and
continual motivation to the staffs. This implies that the organisation has to maintain sound

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human resource policies for maintaining the staff satisfaction level in order to generate the
desired productivity and profitability levels.
By considering all the above-discussed aspects, the proposed balanced scorecard for BAT
is designed as follows:
Perspectives Objectives Performance Indicators Targets Initiatives
Financial Profitability 3% compound annual
growth rate
Products below
0.4% optimal
product
promotion need
to be analysed
Market
expansion in
Africa and
India
Growth in
revenue
15% growth
Increase in
optimal product
promotion
Streamlining portfolio
Customers Increase in
customer base
Number of customers Growth of 1%
each year and
each brand
Customer
loyalty program
Enhancement in
brand image and
market reputation
Market surveys Retaining
leadership
position
Effective and
pertinent
promotion
activities
Preparation of
launching
electronic
cigarettes and
smokeless
cigarettes
Successful launch with
0,4% optimal product
promotion within the first
year
Attaining
leadership
status in
innovation
Internal business
processes
Assurance of
cross-functional
cooperation
Internal survey and
timely alignment of
projects
Improvement in
cooperation rate
by 5%
Active
involvement in
functional
meetings
Alignment with Adherence to business Zero Training

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guidelines policies and guidelines compliance
issues
Defining pricing
strategy
Optimal pricing regarding
competitors
Complaint
minimisation by
15%
Market
research, timely
feedback and
corrective
measures
Planning and
supporting
marketing
activities
Number of contacts and
point of sale
Increase in
contact numbers
by 15%
Field force
accurate
reporting
Learning and
growth
Shaping culture Full alignment on cultural
elements
Frequent inter-
departmental
communications
and staff
engagement
survey
Quarterly team
bonding events
and business
updates
Training Complete participation in
training courses
Execution of
training
programs
Training
courses
People
development
Accomplishment of
development goals
100% talent
retention
Fair
compensation,
continual
motivation
Growth in talent Attracting and nurturing
top market talents
Opportunities
for future
development

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References:
Antonsen, Y. (2014). The downside of the Balanced Scorecard: A case study from
Norway. Scandinavian Journal of Management, 30(1), 40-50.
Bat.com. (2019). British American Tobacco - British American Tobacco. Retrieved 5 April 2019,
from https://www.bat.com/
Busco, C., & Quattrone, P. (2015). Exploring how the balanced scorecard engages and unfolds:
articulating the visual power of accounting inscriptions. Contemporary Accounting
Research, 32(3), 1236-1262.
Cooper, D. J., Ezzamel, M., & Qu, S. Q. (2017). Popularizing a management accounting idea:
The case of the balanced scorecard. Contemporary Accounting Research, 34(2), 991-
1025.
Hansen, E. G., & Schaltegger, S. (2016). The sustainability balanced scorecard: A systematic
review of architectures. Journal of Business Ethics, 133(2), 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), 33-59.
Keyes, J. (2016). Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
Auerbach Publications.
Lin, H. F. (2015). Linking knowledge management orientation to balanced scorecard
outcomes. Journal of Knowledge Management, 19(6), 1224-1249.
Madsen, D., & Slåtten, K. (2015). The balanced scorecard: Fashion or virus?. Administrative
Sciences, 5(2), 90-124.
Martello, M., Watson, J. G., & Fischer, M. J. (2016). Implementing a balanced scorecard in a
not-for-profit organization. Journal of Business & Economics Research (Online), 14(3),
61.

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Niven, P. R. (2014). Balanced scorecard evolution: A dynamic approach to strategy execution.
John Wiley & Sons.
Perkins, M., Grey, A., & Remmers, H. (2014). What do we really mean by “Balanced
Scorecard”?. International Journal of Productivity and Performance Management, 63(2),
148-169.