Implementation of Balanced Scorecard for Clean Seas Seafood Ltd Report

This report provides a comprehensive analysis of Clean Seas Seafood Ltd's performance and proposes the implementation of a Balanced Scorecard (BSC) as a performance measurement system. The report begins with an executive summary and an introduction to performance measurement systems, followed by an overview of Clean Seas Seafood Ltd, its financial performance, and the calculation of its Return on Investment (ROI). It identifies the company's current ROI as low and suggests strategies to improve it, including increasing profits and decreasing total assets. The core of the report focuses on the BSC, explaining its components (financial, internal business processes, customer, and learning and growth perspectives) and how they can be applied to Clean Seas Seafood Ltd to enhance its competitive advantages. The report concludes that the BSC is a beneficial tool for the company to control business operations and improve overall performance. The report also provides a detailed analysis of the four key areas of the Balanced Scorecard and how they apply to Clean Seas Seafood Ltd, including specific metrics and measures that the company could use to evaluate its performance in each area. The report is structured to provide a clear understanding of how the BSC can be used to align the company's performance with its strategic goals. This report also contains an analysis of the company's financial position and suggests strategies to improve its profitability and efficiency.

Performance Measurement
System - Implementation of the
Balanced Score Card (BSC)

EXECUTIVE SUMMARY
This report is presented on the topic performance management system by
implementing balanced scorecard in the Clean Seas Seafood Ltd organization. The
report carries out the in-depth evaluation of the topic along with the analysis of the
return on investment of the company. Based on the findings, it is concluded that
implementing balanced scorecard would be beneficial for the company in keeping
control of its business operation and enhance its performance.

TABLE OF CONTENTS
INTRODUCTION.....................................................................................................................4
MAIN BODY.............................................................................................................................4
Company overview..............................................................................................................4
Computation of return on investment and ways to improve it......................................4
Balanced Scorecard and its components........................................................................6
Ways in which BSC can improve the competitive advantages of the company........9
CONCLUSION.......................................................................................................................11
REFERENCES......................................................................................................................13

INTRODUCTION
The performance measurement system (PMS) is a system which is used for
the purpose of improving the performance of the business. The PMS is characterized
as the strategic system through which the business organization observe and
measure the performance of its intangible elements which can be in the form of
quantitative and qualitative assessment. It is the brief set of measures that assist the
businesses in decision making processes. In this report, Clean Seas Seafood Ltd is
taken as an organization. This report presents about the suitability of the balanced
scorecard system for evaluating the performance of the company and the ways in
which it can be implemented for improving the competitive advantage of the
company.
MAIN BODY
Company overview
The Clean Seas Seafood Ltd is an Australian based seafood production
company having a specialization in sea-cage aquaculture of yellowtail kingfish. It
was founded in the year 2000 and was list on ASX in 2005. The company has
focussed it efforts towards the sustainable production of the Hiramasa Kingfish. It is
the global leader in respect to the full cycle breeding, production and sale of the
Yellowtail Kingfish and is also known for its high quality fish and has become the
largest producer of the same outside Japan. It provides fresh fish all over the world
across 52 weeks of the year.
Computation of return on investment and ways to improve it
Return on investment: It is the performance measurement tool which is used
to analyse the efficiency of the business in utilizing its amount invested. It is used to
directly measure the return on the amount invested. It is the most popular metric
because of its simplicity. If the return on investment is positive, it would be
considered to be worthwhile but if it is negative, then it implies a net loss (Ernayani
and Sari, 2017). From the investors perspective it is more favourable to have a
higher rate of return which will indicate that the company is efficiently managing its
total assets which is generating greater amount of net income. It is mostly useful in
comparing the companies within the same industries. This ratio mainly helps in the

companies in knowing how efficiently its is utilizing its assets for achieving higher
profits and greater income.
The computation of return on investment of Clean Seas Seafood Ltd is done below.
Return on investment Amount in $
Formula: Net profit /
Total Assets
= 1446 / 93935
= 0.015 or 1.5%
The return on investment of the company is not good as for every dollar
invested in the assets, it is getting a return of $0.015 which indicates a very
unhealthy rate of return.
Ways for improving the return on investment
Although, the good return from investment varies from industry to industry but
there are only two ways to improve the performance which are, increase in profits or
decrease on total assets. A detailed description is given below.
Increasing Profits
 The cost of goods sold is the major factor in that affects the net profit of the
company and keeping the direct cost in control is the only way to and the
most effective strategy to that will help in improving the gross profit margin of
the company along with the net income.
 The company can choose to increase it production volume which will help in
reducing the direct cost of the product (Clean Seas Story. 2020). Increasing
the production may cause the risk of letting the inventory remain on the
shelves in case the supply outweighs the demand.
 Clean Seas Seafood Ltd should also review and monitor its operating costs in
order to ensure that the cost is spending effectively. There are various ways
to reduce operating cost such as downsizing the facilities to only essentials,
eliminating the employees or reducing the pay and so forth. Decreasing the
cost of material may result into making a lower quality product which may lead
to losing sales to the competitors. Also downsizing the staff also has a huge
impact on the work and reputation of the company as well.

 Another way is to increase the revenue of the business which can be done by
increasing the price of the product which will help gaining higher income and
revenue but it has its other consequences as well. This strategy may cause
alienating the customers.
Decreasing Total Assets
 Total asset is the combination of fixed assets and current assets and the
account receivables are the most important current assets that if the company
can efficiently manage it then it will help in improving its return on investment
when the receivables are lower and short outstanding.
 Implementing good credit policy and effective and strong accounts receivable
collection team will also provide help in improving the situation (El-Halwagi,
2017).
 The company is required to examine all its holdings which will assist it in
identifying the assets which is not contributing to the operational efficiency of
the business.
 Also, another effective way is to sell out the fixed assets such as vehicles and
equipment which are no longer used or can also lease these items will also
help in reducing the equipment cost in terms of maintenance and other
expenses.
 The inventory is also a significant part of the total assets, thus, by maintaining
the production level in accordance with the sales will assist the company in
ensuring that the unnecessary inventory is not inflating the total assets.
Thus, these are few ways through which Clean Seas Seafood Ltd can improve its
return on investment but along with that it is very essential for the company to
effectively analyse the consequences of the same as these steps seems to be easy
on paper but requires careful analysis.
Balanced Scorecard and its components
It is the tool which is used by the organization for bringing the company’s
performance in line with the objectives of the business and its vision. The balance
scorecard is used to develop communication between the management and the
employees of the organization for monitoring the goals of the organization (Nikkhah,
Nikkhah and Afsahi, 2017). It is not only used in evaluating the performance of the

business but also in analysing the determining the other aspects as well such as
customers problems, augmentation of the learning tools and so forth.
In order to create a balanced scorecard, Clean Seas Seafood Ltd needs to
start with its strategic goals and then bifurcate them into the key areas. There are
four key areas which were used by Kalpan and Norton which are described below.
Four Key Areas of a Balanced Scorecard
Figure 1: Four Key Areas of a Balanced Scorecard. (Source:
https://opentextbc.ca/principlesofaccountingv2openstax/chapter/describe-the-balanced-scorecard-and-explain-
how-it-is-used/. 2020)
These areas are chosen because the success of the business is dependent
upon the how the organization is financially performing which has a direct relation
with the internal operations of the business and how the customers of the
organization perceives and interacts with the business organization. The use of
balanced scorecard lets the organization in taking into account the stakeholder’s
perspective rather than the stockholder perspective (Sánchez-Márquez, 2018). As
the stockholders are mainly concerned with the profitability of the company mainly
focusses on the financial results. On the other hand, the stakeholders are those
people who are affected by the company’s decision which includes investors,
customers, suppliers, employees and others having interest in the business. This

causes inclusion of social responsibility factors in the balanced scorecards. A
detailed analysis of the four categories are stated below.
Financial perspective
It refers to the financial objectives or metrics that has been set up for
evaluating the performance of the company. The particular metrics that are used in
the balanced scorecard varies from the company to company and industry to
industry. Metrics such as return on investment (ROI), EVA can be used for
evaluating the performance but there are other financial measures as well such as
earnings per share, revenue growth rate, inventory turnover ratios and many others
as per the requirement. These measures are used to determine the components of
decision making process with respect to the persons beings evaluated. These
measures are very easy to calculated and is general like sales revenue but can be
even more specific like seat revenue. In case of Clean Seas Seafood Ltd, financial
measures could be product cost, revenue growth rate etc.
Internal Business Perspective
It accounts for the objectives and measures that helps in determining how well
the business is operating and whether the product and services conform to the
requirement of its customers. A successful company is required to monitor it internal
business operation and processes effectively and evaluate them on a timely basis to
ensure that they are meeting the strategic business requirements and the objectives.
There are various factors that can be considered or used as the internal business
measures such as the number of defective or spoiled products, transaction
efficiency, number of products produced in a day by each employee. In a more
detailed way, measures that can be implemented are percentage time planes are on
the ground, ensuring the proper number of stocks maintained, amount of wastage
etc. Thus, Clean Seas Seafood Ltd needs to consider it for the purpose of
implementing the balance scorecard.
Customer Perspectives
The customer perspective deals with the objectives and measures that has a
direct connection with the customers in terms of customer satisfaction. Every
business organization have the customers or the clients as without them the

business is cease to operate. Thus, it becomes very important for the company to
measure the how well the business is doing in respect to the customers. Some
common variables that can be used to measure the customers perspectives are
evaluating the customer satisfaction level, number of repeated customers, number of
new customers and the market share of the company. For Clean Seas Seafood Ltd,
the important measures would be customer satisfaction level, number of new
customers, mode of promotion or engagement of new customers like through
referrals.
Learning and Growth
It is very well known that the business operates in a dynamic environment
where business requires to continuously evolve in order to remain, survive and grow.
For achieving its set targets the business organizations are required to put more
focus on the ways through which it wants to grow and achieve success. The learning
and growth measures refers to the means through which the company assess how
the employees is working along with the management in order to grow the business
along with the growth of the employees as well (Ievdokymov and Zavalii, 2020). The
measures that can be used under this category are – number of times employee’s
suggestions are being adopted, employee turnover rate, number of hours of training,
number of new products being introduced and so forth. Clean Seas Seafood Ltd can
use these learning and growth measures, which are, hours of customer service
training, hours on workforce relationship training etc.
Combining all these four Components of a Balanced Scorecard
The balanced scorecard can be created for any type of business organization
and at any level but is based on the strategic goal of the business. These goals can
restate as per the requirement. It can be created at the individual employee level as
an evaluation system with the purpose of evaluating the employees. After the
strategic goal is set, the balanced scorecard is created for each of these categories
as defined above. All, it is required to be sure that the variables set have to
attainable as well as measurable. Also, the measures used should be actually
informative and should form a basis for comparison along with other measurements
which can be beneficial to the company as this can be used for motivating the
employees along with providing a clear framework about how the employee will fit

into the set strategic business plan. This, all these components are interlinked to
each other.
Ways in which BSC can improve the competitive advantages of the company
As defined by Kalpana and Norton, there are certain number of stages that
should be followed for successfully implementing the balanced scorecard. If these
steps are seriously followed then it will help the Clean Seas Seafood Ltd in grabbing
competitive advantage against its competitors. The main steps are stated below.
Clear organizational strategy and objectives
The creation of the balanced scorecard is linked to the business strategy
which the foremost requirement. Therefore, before any actions can be planned, it is
very important to understand the strategy, the key objectives to be achieved few
critical success factors that are significant for the accomplishment of the major goal.
This step helps the company in avoiding doing anything wrong and unnecessary.
Develop a strategy map
Strategy mapping is the tool that is used for translating the strategy into the
operational terms. This the graphical representation of the objectives of the company
in terms of cause and effect and also indicates how the organization is creating value
for its customers and the other stakeholders (Quesado, Aibar Guzmán and Lima
Rodrigues, 2018). Also, improving the performance under the learning and growth
objectives will enable the company to improve its performance in its internal
processes. All this will enable the organization for achieving the desired outcomes in
the customer and financial perspectives.
Decide what to measure
After deciding the strategic objectives, set of measures is developed which
ensures that the chosen measures reflect the objectives set and also helps in
aligning the actions to the strategy. There is advisable to have 15 to 20 measures
with respect to the goals as the fewer measures may not be able to give a balanced
view of the plan.
Amend the Scorecard if required

Sometimes the format of Kaplan and Norton fails to meet with the needs of
the organization, therefore, it is advisable to modify the format which align with the
goals of the organization.
Finalise the implementation plan
The organization should conduct meetings, discussions and workshops for
agreeing with the strategies and the goal set (Hamid, 2018). Also, the measuring
variables that will be used for measuring the performance before the final
implementation.
Implement the system
The complete implementation plan should be produced and communicated to
the employees so that everyone in the organization is well informed about the plan
and the progress. Explaining the purpose and benefits of it will make sure that
everyone is aware of their job roles in accomplishing the set objectives. The proper
system of recording and monitoring the metrics should put in place and well tested.
Publicise the results
The outcomes of the measurements should be monitored on a daily basis or
as an when it feels appropriate (Gomes and Romão, 2019). Also, there will be a
large amount of complex data for which it is essential to decide who will have access
to it and how the outcome will be communicated or publicised.
Utilise the results
The outcome can be used as the guidance to the organization for evaluating
its performance and also identifying the areas of improvement. Based on this,
actions are taken to improve the situation.
Review and revise the system
After the completion of the first cycle of the system, a review should be
conducted with the purpose of assessing the success and other relevant aspects
(Wright, 2019). This helps in identifying whether any par or process requires the any
medication or not.

All these steps are actually ways for successfully implementing the balanced
scorecard and each step of it is having the benefit of competitive advantage that the
Clean Seas Seafood Ltd can grab which will help in the growth of the company.
Thus, the company is suitable for the implementation of balanced scorecard.
CONCLUSION
It can be summarized from the above that performance measurement tools
are very essential for analysing the performance of the business. The return on
investment with respect to the total assets of the company is very less thus, the
company is required to implement certain actions for improving its performance such
as increasing the net profit or decreasing the total assets. The balanced scorecard is
a very useful tool for evaluating the performance of the business as it takes into
consideration the various perspectives such as financial, customer, learning and
growth and business perspectives. For effectively implementing the balanced
scorecard it is essential to follow certain ways in step that will help in achieving the
desired results in the desired manner. Based on the complete analysis carried out it
can be said that the Clean Seas Seafood Ltd can adopt balanced scorecard in the
organization which will help in effectively managing and evaluating its performance.

REFERENCES
Books and Journals
El-Halwagi, M. M., 2017. A return on investment metric for incorporating
sustainability in process integration and improvement projects. Clean
Technologies and Environmental Policy. 19(2). pp.611-617.
Ernayani, R. and Sari, O., 2017. The effect of return on investment, cash ratio, and
debt to total assets towards dividend payout ratio (a study towards
manufacturing companies listed in Indonesia stock exchange). Advanced
Science Letters. 23(8). pp.7196-7199.
Gomes, J. and Romão, M. J. B., 2019. Sustainable Competitive Advantage With the
Balanced Scorecard Approach. In Advanced Methodologies and Technologies
in Business Operations and Management (pp. 1415-1428). IGI Global.
Hamid, N., 2018. Factor analysis for balanced scorecard as measuring competitive
advantage of infrastructure assets of owned state ports in
Indonesia. International Journal of Law and Management.
Ievdokymov, V. and Zavalii, T., 2020. Conceptual framework of a balanced
scorecard: a value-oriented approach. Fundamental and applied researches in
practice of leading scientific schools. 37(1). pp.17-26.
Nikkhah, M., Nikkhah, A. and Afsahi, A., 2017. Evaluating the Implementation of
Strategies in Plants Using Balanced Scorecard (BSC): A Case
Study. International Journal of Research in Industrial Engineering. 6(1). pp.39-
50.
Quesado, P. R., Aibar Guzmán, B. and Lima Rodrigues, L., 2018. Advantages and
contributions in the balanced scorecard implementation. Intangible
capital. 14(1). pp.186-201.
Sánchez-Márquez, R., 2018. A statistical system management method to tackle data
uncertainty when using key performance indicators of the balanced
scorecard. Journal of Manufacturing Systems. 48. pp.166-179.
Online
Clean Seas Story. 2020. [Online]. Available
through:<http://www.cleanseas.com.au/about/clean-seas-story/>.
Wright, T., 2019. How to Implement the Balanced Scorecard. [Online]. Available
Through:< https://www.executestrategy.net/blog/how-to-implement-the-balanced-
scorecard >.