Management Accounting Report: Balanced Scorecard for Blackmores Ltd

This report provides a comprehensive analysis of Blackmores Ltd, a leading natural health solutions company, focusing on the application of the Balanced Scorecard (BSC) as a performance management tool. The assignment begins with an overview of Blackmores Ltd, its history, and its market position, emphasizing its commitment to quality and innovation. The core of the report explores the concept of the BSC, outlining its essential features and how it can be effectively utilized by Blackmores Ltd. A detailed comparison is made between the BSC and traditional performance measurement systems, highlighting the advantages of the BSC in capturing both financial and non-financial aspects of business performance. The report delves into the four key perspectives of the BSC: financial, customer, internal business processes, and learning and growth, providing insights into how Blackmores Ltd can leverage these perspectives to improve its internal processes, strategic alignment, and overall performance. The report concludes by emphasizing the benefits of implementing a BSC for Blackmores Ltd, including enhanced strategic decision-making, improved communication, and better alignment of employee efforts with the company's goals. The report references various academic sources to support its analysis and recommendations.

Running head: MANAGEMENT ACCOUNTING
MANAGEMENT ACCOUNTING
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
The main purpose of this assignment is to analyze a company’s internal structure of a company.
The company which is selected for this assignment is Blackmores ltd which operates in
Australia. The assignment will be discussing the concept of Balanced Scorecard and also its
essential features and how the same is useful for black mores ltd. The assignment will also be
making a comparison as to how Balanced scorecard is better than traditional performance
management systems. The assignment will be concluding as to how the implementation of
Balanced Scorecard can be beneficial for the business of Blackmores ltd.

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Table of Contents
Introduction......................................................................................................................................3
Overview of the Company...............................................................................................................3
Balanced Scorecard and Features of Balanced Scorecard...............................................................4
Difference Between Balanced Scorecard and Traditional Performance Measurement System......6
Suitable of BSC to Blackmores ltd................................................................................................11
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14

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Introduction
The main purpose of this assignment is to conduct an analysis on Blackmores ltd so as to
establishes how the business internal process and performance will be improving if the
management incorporate Balanced Scorecard as a performance management tool. The analysis
will be identifying the business process of the company and also the internal strengths and
weaknesses of the business (Hoque 2014).
Overview of the Company
The company which is selected for this assignment is Blackmores ltd which is engaged in
manufacture of medical supplements. The company is one of the leading brands which produces
Natural health solution. The company was established by Maurice Blackmore in the year 1932.
The company is one of the few companies which uses naturopathic expertise and combines the
same with the scientific formulas to manufacture the bests products related to health and
hygiene. In addition to this, the company is committed towards following innovative practices so
that the business can bring about positive change in the natural health sector and provide the
customers of the business products which are distinguished to have highest
quality (Blackmores.com.au. 2018). The company has wide market reach and the company is
able to reach the customers from 17 different markets.
The extensive range of vitamins, herbal products and mineral supplements makes up for
the medicines which are to be manufactured by the business. Moreover, the business has the
practice of sustainable development and is committed to be sustainable in the operations of day
to day business of the company. The focus of the management is to ensure that the business is

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able to generate growth and continuous improvements so that the business can maintain theirs
positions as market leaders.
Balanced Scorecard and Features of Balanced Scorecard
Balanced Scorecard is a management tool which is used by an organization to evaluate
performance of an organization. The balanced scorecard of the company measures multiple
features of an organization. In other words, Balanced Scorecard is a performance metric which is
used by businesses in strategic management which is used by businesses to improve the internal
functions and also their related external outcomes (Tjader et al. 2014). With the help of balanced
scorecard, a company can measure different features of a business and establish a standard
performance of the business. A balanced Scorecard can be prepared on the basis of needs of the
organization and thereby more features can be added to a balance scorecard easily (Bhattacharya
et al. 2014). An effective balanced scorecard should be having the following features:
 Balanced Scorecard must be prepared in such a manner that the same highlights the
strengths of the company and also the corporate strategy of the business. Suppose a
business aims to have lower costs but at the same time have accelerated growth. The
balance scorecard should effectively identify the specific objectives of the business
(Sainaghi, Phillips and Corti 2013). In addition to this, the learning and growth
perspective of the management prepared in such a way that its improves the internal
business process of the company.
 Balanced Scorecard should help the business in communicating the strategy which is
formulated by the business to different departments in an understandable manner (Reefke
and Trocchi 2013). The employees and the departmental head take necessary steps which

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are required for their performance and also to achieve the goal of the business which
should be based on the balanced scorecard (Nikolaou and Tsalis 2013). In many
businesses in order to facilitate fast and quick decision, balanced scorecards are prepared
by the businesses at departmental level.
 In a business which follows the policy of profit maximization, the balanced scorecard
plays a vital role and focuses more on the financial objectives and measures. A good
balance scorecard should always consider the non-financial aspects of the business and
improve the same so that the business can achieve the financial aspect which is profit
maximization (Ghamkhari and Mohsenian-Rad 2013). In many cases businesses are able
to achieve a decent balance between financial and non-financial aspects of a balanced
scorecard and many of such non-financial scorecards can be identified as indicators of the
financial performance of the business (Gibbons and Kaplan 2015).
 The balanced Scorecard limits the number of measures used for identification of the
critical issues which the businesses faces. Balanced Scorecard brings the attention of the
management to the most critical problem which the business faces and also helps in
implementing an appropriate strategy to tackle the problem (Cooper, Ezzamel and Qu
2017).
 The scorecard highlights suboptimal tradeoffs that the management may make when they
fail to consider the operational and financial measures together. For example a business
may be tempted to increase the financial performance of the business in the short run by
reducing the funds which were allowed for research and development (Perkins, Grey and
Remmers 2014). In such a case an appropriate balanced scorecard would be able to
advise the management that they are increasing the financial performance in short run by

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hurting the chances of the business to make a decent financial performance in the long
run.
The balanced scorecard is a very useful tool which the management has which can measure
the performance of the business as well as help in planning process of the business. There are
four components in a balanced scorecard which are Financial perspective which defines the
financial goal of the business, Customer Perspective which defines the products which the
business is providing to the customers of the business, Internal business process which defines
the internal processes 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 future development of the business (Tjader et al. 2014).
Difference Between Balanced Scorecard and Traditional Performance Measurement
System
In order to understand the difference between traditional performance measurement
system and Balanced Scorecard, it is important to get an understanding of Traditional
Performance Measurement System. Traditional Performance measurement system is solely
focused in measuring the financial performance of the business which the business generates by
selling the products of the company. Such a practice measures on the basis of internal accounting
reports such as profitability, revenue, cash, earning per shares and similar other financial
indicators of the business. Such type of data is also known as lag data as they are known to only
reflect the past data and historical performance of the business (Van Dooren and Van de Walle
2016). The data which is provided in such type of measurement are mostly quantitative data and
such can be used for improving the financial performance of the business but such data will be of

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no help when the management wants to take a decision which is regarding long run business
conditions. Such data if taken for long term decision making will results in incorrect decision-
making process.
As per Porter, if the business solely relies on the financial metrics than the business will
be sacrificing long term benefits which the business can achieve. For example, cost reduction
will only help the business to gain profits in the short run but permanent transformation of the
cost structure of the business will help the business in achieving the long term profitability for
the business. A research show that the traditional performance measurement system was
introduced during the industrial age which is almost 50 years or so ago for measuring the
profitability of the business. The world has changes ever since and has become more competitive
in nature. The business is ever changing and the market is becoming more and more dynamic in
nature. With the level of technological changes and innovations which are taking place even in
present market, business have to formulate strategies so as to competitive and survive in such a
market (Melnyk et al. 2014). Therefore, it is clear that in such a market, only by focusing on the
financial aspect of the business, the company will not be successful. The company needs to focus
on all important aspects which may be financial or non-financial in nature. The modern business
has moved from mass production and therefore cannot rely on just the financial data of the
business and has put more emphasis on the intangible assets which are either made by the
business or purchased such as goodwill, customer relationship, human and intellectual capital. In
todays world it is unadvisable to completely rely on the financial data of the business there are
other factors which a business must consider before taking appropriate decisions.
In addition to this, traditional performance measurement system is not in any way liked to
the core strategies of the business. The strategies of the business focus on the long term business

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development policies of the company and also related to the resource availability and the
opportunities which the business has in the long run. Hence it is clear that traditional
performance measurement system measures the short term performance of the business (Yadav
and Sagar 2013). This is another fault in the system as an ideal management tool would measure
the performance of the business in terms of past performance but also anticipate the performance
of the business for future.
Balanced Scorecard on the other hand is a performance measurement tool which
addresses the weakness in the traditional performance measurement system. Balance scorecard
has added the non-financial metrics to the traditional performance measurement system thus
providing an balanced view of the performance of the business (Giannopoulos et al. 2013). Thus,
it is clear that BSC incorporates both financial and non-financial aspects which can affect the
business. In addition to this, BSC reflects the changes which takes place in the modern
environment which is highly competitive in nature. The management tool takes into
consideration the intangible assets of the business which have become an important source for
competitive advantage in the present world.
BSC is an integrated management tool which also helps in strategic management of the
business. The management tool links the strategic objectives of the business with the
performance measurement of the business. The management tool provides a framework which
can translate the strategic objectives of the business in terms of quantifiable performance
objectives which the business can measure effectively. There are four perspectives which are
discussed below:

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1. Financial Perspective: The financial perspective of the business is concerned with thr
financial objectives and goals of the business. The financial perspectives analyze the
financial performance of the business for the current year as well as the past years. The
purpose is to measure the financial success of the business and also track how the
business look to the needs of the shareholders of the company (Bento, Bento and White
2013). The mostly used financial measures which can be commonly seen in a balanced
scorecard are profitability of the business, revenue which is earned by the business, return
on investments of the company, return on capital employed of the business, cash flow and
sales growth of the business (De Visscher 2016). The financial indicators which are
related to the overall success of the business are represented in the Balanced scorecard
which is prepared by the business. The financial perspective is also quite useful in
defining the financial goals of the business.
2. Customer Perspective: The customers perspective which is included in the balanced
scorecard reflects the view point of the customers of the business as to how they see the
company. The perspective is mainly concerned with customer satisfaction and retenion of
customers as well. This is because the customers are the life blood of a business and
without their continuous support businesses will not be able to survive. The retention of
potential customer is essential for long term business growth and survival. This
perspective forms a part of the long term planning process of the business. This
perspective makes it clear that the goal of the business should be fulfilling the demands
of the customers and ensuring that the product which is provided to the customers have
value (Martello, Watson and Fischer 2016). The measures which are included in such a
perspective are customer satisfaction rate, customer retention ratio, quality performance,

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percentage of sales which is achieved and the feedbacks which are received from the
customers. The feedbacks which are received from the customers are important source of
identifying whether the customer is satisfied with the services which is provided by the
business.
3. Learning and Growth Perspective: As per this perspective, the focus of the business is
mainly on the intangible components of the business which are human capital and
operational capital. This perspective identifies whether there is a possibility for the
business to grow any further, improve the business structure and create value for the
customers. The learning and growth perspective of the business is also related to the
innovations which are conducted in a business for the purpose of improving the internal
structure of the business and also identifying a way in which the business can add more
value to the products which are supplied to the customers. 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. The main focus in this perspective is innovation and the perspective
are related to the long term business growth and survival in the competitive environment.
4. Internal Process Perspective: This refers to the internal process area of the business
which the business needs to achieve in order to survive in the everchanging business
environment. The perspective gives a clear idea as to how well the business is operating
and what are the activities of the business which create value for the customers. If a
business has an effective internal process structure than the costs which is associated with
product manufactured will be less and the sales revenue which the business generates will
be more. The management of the company needs to develop proper strategies so as to

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improve the internal process of the business and focus on creating value for the customers
of the business. These measures include processes such as efficiency level, value analysis
of unit costs and process alignment.
Thus, from the above discussion it is clear that the BSC is made up of the four perspective
which have been discussed above and it can also be seen that BSC covers a vast area in
performance measurement of a company which traditional performance measurement system
clearly lacks. In addition to this, BSC is linked to the organizational strategy which means it
cover both short run and long run perspective of the business which is not the case with
traditional performance management system which only measures short term perspective of the
business. Thus, from the above analysis, it can be said that BSC is superior to Traditional system
of performance measurement.
Suitable of BSC to Blackmores ltd
Blackmores ltd is engaged in manufacturing business of medical supplements and for the
purpose of performance management of the business and also strategic planning, the
management of Blackmores ltd should implement BSC in the business. The business can
effectively implement the management tool which will be surely beneficial to the business. The
business of Blackmores ltd will be following the BSC on the basis of the four perspectives of the
BSC which are discussed below:
 Financial perspective: From the viewpoint of Blackmores limited, the company is doing
excellent in terms of financial performance of the business and is regarded to be one of
the leading medical accessories companies in Australia. However, with the introduction
of BSC in the business, the management will be able to better monitor the performance of