Strategic Management Accounting: Coles Balanced Scorecard

This report provides a detailed analysis of Coles' adoption and implementation of the Balanced Scorecard approach. It begins by outlining Coles' long-term goals, which include supporting suppliers, offering better products, and reducing environmental impacts. The report identifies key stakeholders like shareholders, customers, and employees. It then explores suitable perspectives for the Balanced Scorecard, including financial, customer, internal business process, and growth and learning perspectives, along with specific objectives for each. A strategy map illustrates the relationships between these objectives, and lead and lag indicators are defined. The report also critically analyzes issues related to the Balanced Scorecard's implementation, such as poorly defined metrics and a lack of formal review structures. The analysis is based on academic literature and provides insights into the practical application and challenges of the Balanced Scorecard in a retail context.

Running head: STRATEGIC MANAGEMENT ACCOUNTING
Strategic Management Accounting
Name of the Student:
Name of the University:
Author Note:

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Executive Summary:
The report aims at providing an insight into strategic management accounting in perspective of
the adoption and implementation of the Balance Scorecard Approach by Coles, a retail chain in
Australia. The report commences with a description of the adoption and implementation of the
Balance Scorecard approach of Coles. The report also described the long term goals of the firm
along with a mention of its clients and stakeholders. The report also puts forward the suitable
perspectives for the approach along with the mention of the objectives for each of the
perspectives. There is also a strategy map describing the relationship between the objectives
along with the mention of the lag and lead indicators. The report also provides an analysis of the
issues related to the balanced scorecard approach.

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Table of Contents
Introduction:....................................................................................................................................3
1. Company that Adopted and Implemented Balanced Scorecard.................................................3
2. Long term Goals of the Company, Group of Stakeholders and Clients.....................................4
3. Suitable Perspectives for a Balanced Scorecard and Objectives for Each Perspective..............6
4. Strategy Map Showing Relationship between Different Objectives..........................................8
5. The Lag and the Lead Indicators.................................................................................................8
6. Analysis of the Issues Concerning the Issues of Balanced Scorecard........................................9
Conclusion:......................................................................................................................................9
References:....................................................................................................................................10

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Introduction:
The aim of the report is to provide an analysis of strategic management accounting in
perspective of the balanced scorecard approach adopted and implemented by a firm. The firm
chosen here is Coles, an Australian retail firm. It was found in the year 1914 by George Coles in
Collingwood Melbourne (colesgroup.com.au 2019). The retail chain operated in close to 807
supermarkets throughout the Australia including various re-branded Bi-Lo supermarket. The
report also focused on the long term goals of the company along with a mention of the
stakeholders and the clients. The report also discusses about the suitable perspectives of the
approach along with a mention of the specific objectives. The report also puts forward a strategic
map, lead and lags indicators along with analysis of the issues concerning implementation of the
approach.
1. Company that Adopted and Implemented Balanced Scorecard
Coles is an Australian supermarket, customer service and retail chain with headquarters
in Melbourne that adopted and implemented the Balanced Scorecard Approach It has been found
that adoption of balanced scorecard approach of Coles for transforming it into an agile
organization enabled in balancing the top down direction with the bottom up flexibility and
diversity.
However the balanced scorecard performance measurement system of Coles comprised
of sixteen measures split with the four groups (Sainaghi, Phillips and Corti 2013). These groups
include:

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 Customers: They always come first with measures such as the stock availability
and queuing time. The average cue time has reduced to 1.5 minutes from eight
minutes two years ago.
 People: Including measures such as the team member turnover and ratio of the
permanent to the casual team members and number of people in the
developmental plan.
 Operations of Stores: It is measured by the metrics such as safety, wastage and
mark downs
 Commercial: This involves the sales, profit and cost.
2. Long term Goals of the Company, Group of Stakeholders and Clients
The long term goals of Coles are as follows (colescareers.com.au 2019):
1. Supporting the suppliers, farmers, team members and the community
 It aims at supporting the Australian producers, growers and the farmers
 It aims at partnering with community
 It ensures strengthening the inclusion and diversity
 It involves prioritization of their safety, well being and health
 Providing a rewarding and secure workplace for the team members.
2. Offering greater products to the customers are as follows :
 It ensures ethical sourcing through focus on the human rights
 It involves responsible sourcing with the focus on the animal welfare and environment
 Ensuring safe and quality products
 Ensuring promotion of nutrition and health

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3. Reduction of the environmental impacts is as follows:
 It involves minimization of the waste and the promotes the recycling process
 It champions the process of sustainable packaging
 Ensure efficient use of energy and reduction of the greenhouse emissions.
The Stakeholders of Coles includes:
Shareholders: They not only hold a share in the company but play a crucial role in decision
making.
Customers: This refers to the person responsible for buying the goods
Employees: This indicates the people who operate the Coles stores and receive wage or salary
Government: The government represents the system or the group of the people responsible for
governing the organized community known as state
Community: This represents a network of economic and social relationships and places where
they interact.
Clients of Coles:
The clients of Coles are categorized by industries which are as follows:
 Automotive
 Communication
 Education
 Financial services
 Government
 Manufacturing
 Not for profit
 Restaurant
 Retail estate
 Retail
 Sports

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 Tourism
 Transportation and technology.
3. Suitable Perspectives for a Balanced Scorecard and Objectives for Each Perspective
The perspectives for Balanced Scorecard are as follows (Keyes 2016):
1. Financial Perspective: It helps in providing a measure of the past thereby putting
forward an aggregate view of the success of the organization
The objectives of Financial Perspectives are as follows:
 Creating higher long term value for the shareholders
 Enhanced productivity achieved through improvement in asset utilization and
cost structure
 Improved asset utilization
2. Customer Perspective: This enables the unit managers of the business in articulating
customer and the market based strategy in delivering superior returns financially
The objectives of the customer perspective are as follows:
 Figuring out what the customers have been looking for
 Describing the objectives from the point of view of the customers.
 Identifying the difference between what the customer speak and what they want
3. Internal Business Process Perspective: Here managers are able to identify the
internal process where organizations must excel.

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The objectives of the Internal Business Process Perspective are as follows:
 Identification of customer process management: It helps the organization in
growth and strengthening the relationship with the targeted customers.
 Innovation Process: Helps in focusing on creating new process, products and
service that helps a firm in infiltrating customer segments and newer market
 Social and Regulatory Process: Enables the firm in operating in countries and in
communities.
4. Growth and the Learning Perspective: Helps in focusing on capabilities of the
people.
The objectives of the growth and the learning perspective are as follows
 Helps the people in gaining better understanding of the sales and the marketing
 Helping in exploring the information system that individual might require for executing
strategy
 Addressing alignment and motivation issues that explain strategy to employees.

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4. Strategy Map Showing Relationship between Different Objectives.
Figure 1: The Balance card Showing Relationship between Different Objectives
Source: By Author
5. The Lag and the Lead Indicators
The lag indicators are after event measurement necessary for charting the progress but
acts useless in influencing the future (Wu and Liao 2014). The accidents taking place in the floor
of the departmental store of Coles are the lag indicators. The lead indicator is predictive
measures that help in enhancing the sales calls and take care of marketing campaign are the lead
indicators (Bento, Bento and White 2013). Predictions about decreasing the number of accidents
on the floors of the departmental store would indicate mandatory safety training for employees.

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6. Analysis of the Issues Concerning the Issues of Balanced Scorecard
According to Awadh and Alyahya (2013), one of the issues of balance scorecard is the
poorly defined metrics. It is to be noted that metrics should not only be clear but also relevant.
This because a system with inconsistent and sloppy metrics that would remain vulnerable for
criticism by the people who aims at avoiding the accountability of the results. The balance
scorecard also results in lack of efficiency in reporting and data collection and result in the lack
of the formal review structure. There also exists no process improvement strategy for
methodology. Cooper, Ezzamel and Qu (2017) put forward that this can be achieved through
time tested procedures in combination of the methodologies related to problem solving. The
balance scorecard encourages internal focus which is considered as one of its criticisms. This can
be overcome by beginning with external focus in view of the super system of the organization.
Conclusion:
On a concluding note, it can be said that Coles used the Balanced Scorecard Approach for
transforming it into an agile organizations. Taking into account the long term goals of the
company, there are various perspectives which the company use as a part of the balanced
scorecard approach through adoption of various objectives. The strategic map shows a
relationship between objectives along with an indication of lag and lead indicators. The report
also puts forward issues related to implementation of balanced scorecard approach.

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References:
Awadh, A.M. and Alyahya, M.S., 2013. Impact of organizational culture on employee
performance. International Review of Management and Business Research, 2(1), p.168.
Bento, A., Bento, R. and White, L.F., 2013. Validating Cause-and-Effect Relationships in the
Balanced Scorecard. Academy of Accounting & Financial Studies Journal, 17(3).
colescareers.com.au 2019. Available at: https://www.colescareers.com.au/about-us/our-brands
[Accessed 5 Feb. 2019].
colesgroup.com.au 2019. [online] Available at: https://www.colesgroup.com.au/home/ [Accessed
5 Feb. 2019].
Cooper, D.J., Ezzamel, M. and Qu, S.Q., 2017. Popularizing a management accounting idea: The
case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
Keyes, J., 2016. Implementing the IT balanced scorecard: Aligning IT with corporate strategy.
Auerbach Publications.
Sainaghi, R., Phillips, P. and Corti, V., 2013. Measuring hotel performance: Using a balanced
scorecard perspectives’ approach. International Journal of Hospitality Management, 34, pp.150-
159.
Wu, W.Y. and Liao, Y.K., 2014. A balanced scorecard envelopment approach to assess airlines'
performance. Industrial Management & Data Systems, 114(1), pp.123-143.