HA2011 Managerial Accounting: Balanced Scorecard at CSR Ltd, 2018

This report provides a comprehensive analysis of CSR Ltd, an Australian building materials company, using the Balanced Scorecard framework. It explores the essential features of a Balanced Scorecard and its potential benefits for CSR Ltd, differentiating it from traditional performance management systems. The report details how implementing a Balanced Scorecard can enhance CSR Ltd's strategic management by considering financial, customer, internal process, and learning & growth perspectives. The analysis highlights the importance of aligning business activities with the company's vision and strategy, ultimately leading to improved performance and sustainable growth. It emphasizes the shift from traditional financial-focused metrics to a more holistic approach that incorporates non-financial aspects for a comprehensive view of the company's performance.

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 the internal structure of a company. The
company which is selected for this assignment is CSR ltd which operates in Australia. The
assignment would be dealing with the concepts of Balanced Scorecard and what are the essential
features. The usefulness of Balanced Scorecard approach for the business of CSR ltd will be
pointed out and how the same can be implemented as well. The assignment will also be
differentiating between Balanced scorecard and traditional performance management systems.
The assignment will be concluding as to how the implementation of Balanced Scorecard can be
beneficial for the business of CSR ltd.

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Table of Contents
Introduction......................................................................................................................................3
Background of the Company...........................................................................................................3
Balanced Scorecard and Features of Balanced Scorecard...............................................................4
Distinction Between Balanced Scorecard and Traditional Performance Measurement System.....6
Suitable of BSC to CSR ltd...........................................................................................................10
Conclusion.....................................................................................................................................12
Reference.......................................................................................................................................13

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Introduction
The assignment will be focusing on the management tool which CSR ltd uses for the
purpose of performance management of the business. The performance management tools is
useful for the business to analyze the internal business process and management of the business.
The assignment will be discussing the features and how a Balanced Scorecard can be used by the
business in performance management of the business.
Background of the Company
The company which is selected for the purpose of this assignment is CSR ltd which
operates in Australia and also has its business spread out in New Zealand. The company is
engaged in manufacture of building materials which are used in construction of buildings and
houses. The company has its headquarters which is situated in Sydney, Australia and the
company is also listed in Australian stock exchange (ASX). The company is regarded as one of
the leading companies in manufacture and supply of building materials for construction
purposes. The company had started off as a colonial Sugar Refining Company and from there the
company slowly diversified in buildings and manufacture of building materials such as roofs,
bricks. The business has certain important undertaking which provides the business with
competitive advantage. The associates of the CSR ltd which works in a collaboration with the
company are Viridian which is the largest glass supplier in Australia and is involved in
innovation, Monier is an experienced business which specializes in making roofs for buildings,
Bradford is used for insulations in buildings and other commercial property. The company brings
together industries of similar nature and in collaboration builds efficient buildings for residential
and commercial purposes.

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The company is regarded to be a developing company and the company as per the
financial statement has achieved growth in the profits of the business for consecutive fours years
in a row. The profitability of the business has also increased during the year by 11%.
Balanced Scorecard and Features of Balanced Scorecard
Balanced Scorecard is one of the most popular tools which is used in business for the
purpose of performance management of the business. Balanced Scorecard can be used by any
business for measurement of multiple factors affecting the overall success of the business.
(Zizlavsky 2014) In other words, Balanced Scorecard is used by businesses in strategic
management so as to improve the internal functions of the business and also the externals factors
of the business. A balanced Scorecard can be made as per the need and requirement of the
management of the company and also as per the suitability of the internal process of the business
(Sainaghi, Phillips and Corti 2013). The following feature should be possessed by a balanced
scorecard so as to facilitate effective management.
 The strengths of the company should be clearly displayed by a balanced scorecard as well
as the corporate strategy which the business is planning to implement. For example, in
case a business aa business aims to minimize costs of a product but not reduce the
production volume of the product. The balanced scorecard should identify any strategies
which the business implements (Wu and Liao 2014).
 An Ideal Balanced Scorecard should be such that it helps businesses to communicate the
strategy which is formulated by the board of directors of the company to different
departments in a Simplified manner (Johnson, Reckers and Bartlett 2013). The significant
departments of the business such as sales department, marketing department, finance

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department on the basis of the plan set out by the board of directors in balanced
scorecard, take actions for achieving the targets as set by the board of directors. In many
businesses in order to facilitate fast and quick decision, the various departments of the
business prepare balanced scorecard in order to review the current performance of the
business.
 Balanced Scorecard can be used to focus on the financial aspects of the business in case
the company is following the profit maximization principle. The main advantage of
balance scorecard which sets it aside from traditional performance measurement tool is
that balanced scorecard approach considers the non-financial aspects of the business
which can be used by the business to effectively measure and estimate the financial
aspects of the business (Kallás and Sauaia 2014). The non-financial aspects of the
business in many cases can be identified as financial indicators of the business.
 Another advantage of using balanced scored card in the business is to help the business
identify the significant problems which the business is facing and also helps businesses to
formulate counter strategies so that the business is able to reverse the situation.
 The scorecard tends to give more emphasis on the long term objectives of the business
rather than short term business goals. For example. Certain business would want to
achieve short term success as per the plan while at the same time ignoring their long-term
perspective of the business. In such a case an efficient balanced scorecard would prefer a
long-term business success more than short term business success (Lueg and Carvalho e
Silva 2013).
Thus, from the features which are available to the management of the company, balanced
scored can be considered as an important tool for the purpose of performance management of the

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business and can also be used by businesses for the purpose of planning of activities of the
business (Dudin and Frolova 2015). The four perspective of the business which is shown in the
Balanced Scorecard are Financial Perspective, Customer’s Perspective, Learning and growth
perspective and Internal process perspective. The different perspective covers different areas of
the business such as customer satisfaction, level of efficiency of the business, internal business
process of the business.
Distinction Between Balanced Scorecard and Traditional Performance Measurement
System
In order to grasp the concept of Balanced scorecard and the areas where the difference
lies, the first things which is needed to be understood is the concept of Traditional performance
measurement system. Traditional Performance measurement system which was previously
followed by business focused on only the measurement of the financial aspects of the business
such as profitability of the business. Therefore any business who follow traditional performance
measurement practices need to review certain financial reports which are available within the
business such as financial reports, performance reports, trends analysis reports which provide
business with financial data which are also known as lag data which reflects the historical
performance of the business (Taticchi, Tonelli and Pasqualino 2013). The data which is used 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 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.

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A business not only plans for the short-run but also for the long-runs business activities
of the business. Thus, the business has to plan for both short-run and long-run conditions
(Melnyk et al. 2013). A research shows that when a company becomes too much concerned with
the financial metrics of the business than the long-term business objectives are being affected
and thereby the business losses the long-term benefits which the company could have derived.
An example can be given of a business who reduces can for earning profits in the short-run but
not considering the long-term business goals. If the business wants to focus on the long-term
goals of the business then it must completely transfer the cost structure of the business. a
research which was conducted showed that traditional performance measurement system was
introduced almost 50 years ago during the time of industrial revelation and the focus during such
a period was just on the maximization of the financial performance standard which was profit
and non-financial aspects which also affect the business were complete ignored (Kelly and
Rivenbark 2014). However, it is to be noted that the world has changed ever since. The markets
of today are more dynamic and the level of competition in such a market is immense. Every
business in such modern era is trying to gain competitive advantage so as to earn more profits for
the business. In addition to this, the traditional performance measurement model was used by
businesses in earlier days when businesses believed in mass production so as to improve the
profitability of the business. The traditional method completely ignores the non-financial aspects
of the business which forms an important factor for the overall success of the business in modern
times (Harrison and Wicks 2013). It is also seen that companies nowadays have moved from
mass production to qualitative approach towards production which include the intangible aspects
of the business such as reputation, trademarks which also paly a vital role in the overall
profitability of the business.

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In addition to this, traditional performance measurement system does not facilitate the
corporate strategies of the business. In other words, traditional performance measurement tool is
not connected to the long terms strategies which the business formulates. This allows businesses
to ensure that the policies which are formulated focuses on the performance of the business or
not and the same cannot be linked to traditional performance management tool. Hence it is clear
that traditional performance measurement system measures the short-term performance of the
business.
Balanced Scorecard can be defined as a performance metric tool which measures the
performance of the business. it is considered to be a very important tools for the overall
management of the business and nowadays most of the company have implemented such an
approach (Andjelkovic Pesic and Dahlgaard 2013). There are four perspective which forms part
of balanced scorecard:
1. Financial Perspective: The main purpose of this perspective in a business is mainly
concerned with the accomplishment of the financial objectives of a business. The
financial perspective of the business is used for the purpose of analyzing the performance
of the business for current year as well as comparison can be made with the previous year
as well. The financial perspectives are achieved by the businesses to satisfy the needs of
the shareholders of the business. The commonly used financial measures are profit
generated by the business, overall sales revenue of the company, return on investment
and return of equity of the business. The items which are a measure for financial
perspective mostly consists of the financial indicators of the business.
2. Customer Perspective: The main purpose of including the customer perspective in the
business is to reflect the view point of the investors or what are the expectation of the

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investors of the company. The main principles which are included in the customer
perspective of the business is concerned with customer satisfaction and retention of the
customers of the business (Alhyari et al. 2013). Any business which operates, works for
profit and increasing sales revenue which is only possible if the customers of the business
are satisfied with the product or service which is on offer. In order to survive in the
competitive market every business needs to retain customers. Businesses tend to retain
the old customers or frequent customers so that business can build a brand loyalty for
itself in the market. The measures form a part of such a perspective are the rate of
satisfied customers, ratio of the retained customers, percentage of sales achieved by the
business. The feedbacks from the customers helps business to identify whether the
services rendered or product sold meets the satisfaction level of the consumers and
moreover, how the business can enhance the same.
3. Learning and Growth Perspective: This perspective deals with learning an growth
potentials in a business and is concerned with intangibles such as human capital and
operational capital. This perspective identifies the innovative activities which are
undertaken by businesses for the purpose of development of the business (Jakobsen and
Lueg 2014). The innovative practices which are undertaken by the business is to ensure
that the products or services which are offered by the business can be enhanced in terms
of value. Innovative practices are also directed towards gaining competitive advantage
over the rivals of the business and attract more customers for the business. Employees
turnover, innovation are the major measures which are included in learning and growth
perspective.

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4. Internal Process Perspective: This perspective focuses on the internal business
management of the company and also provides an idea as to how well the business is
operating from the view point of the management and customers. The internal business
process of any company determines the overall revenue of the business. if the internal
management is strong then there would be efficient work done with no wastage of
resources. The management of the company is responsible for setting policies which are
to be followed and also to ensure that strict control is maintained in the operations of the
business. The efficiency level of the departments and the product wise cost forms
important measures under this perspective.
From the above discussions, it is clear that BSC has a wider approach as it is applicable for
both short-run and long-run period which is not the case with traditional performance
measurement system. In addition to this, BSC can be linked to the long term corporate strategies
of the business which is not possible for traditional performance management system
(Shutibhinyo 2013). Thus it can be clearly identified that BSC makes ups for the limitations
faced by traditional performance measurement tool and is regarded as one of the best choices for
measuring performance in most of the businesses today.
Suitable of BSC to CSR ltd
CSR ltd is engaged in manufacture of building materials which are used in construction
of buildings and houses. The company is regarded as one of the leading companies in
manufacture and supply of building materials for construction purposes. The company has
achieved a growth for a continuous period of 4 years which suggest that the company is a
developing company and the company has the potential to develop further in future.

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With the introduction of Balanced Scorecard, the business can effectively manage the
operations of the business and more importantly improve the performance management of the
company. This will not only improve the operations of the business but also overall profitability
of the company will also increase as per the estimates of the management. BSC is an efficient
tool which is used by most of the companies nowadays for the purpose of performance
management and in some cases this is also used as a tool for supervision as well as planning for
activities of the business. If the management of CSR ltd is able to effectively implement BSC
management planning tool then the business will greatly benefit from the same. The benefits
which are associated with the implementation of Balance scorecard are given below on the basis
of the four perspectives of Balanced Scorecard:
1. Financial Perspective: As per the financial statement of the CSR ltd, the company is
performing very well. The company is able to achieve growth for the continuous four
years in a flow and the growth in profitability of the business which the company is able
to achieve is around 11% which is above the previous year’s profit. The finance
perspective of the business measures the ability of the business in financials terms which
is portrayed by certain measures like profit, eps, certain financial ratios and similar other
factors as well. If the management adopts balanced scored card then it will be able to
have better measure of the performance of the business.
2. Customers Perspective: The market price per share and the demand for the company
shows that the customers are satisfied with the level of services which is offered by the
business, however such can be further improved if the management of CSR ltd adopts
BSC which will be able to tell the management the customer satisfaction and retention

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rate of the business. This is considered to be an important measure for the business and
needs to be measured effectively.
3. Learning and Growth perspective: This reflects the growth and development which the
business is able to achieve in the last five years. This principle focuses on the innovative
approach which is taken by a management in the business process of the company. The
management of CSR ltd have taken initiative towards innovation and further
development of business as per the financial statement of the business. This shows that
the business can effectively implement BSC as a performance management tool which
can further improve the business.
4. Internal Process Perspective: The management of the company can improve the internal
process of the business which can be operations, management of finances and costs and
other similar factors effectively. This can be effectively done with the help of Balanced
Scorecard.
Conclusion
Thus, from the above analysis, it can be said that CSR ltd needs to implement BSC in the
business as a performance management tool. BSC has a lot of advantages as explained in the
above paragraphs and therefore it can be effectively anticipated that the business will greatly
benefit from the same. Thus, the assignment can be concluded that implementation of BSC in the
business of CSR ltd is the right approach for development and growth of the business.

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