Performance Measurement: Balanced Score Card and Tesco Plc Analysis

This report provides a comprehensive analysis of Tesco Plc's business performance, focusing on the application of the Balanced Scorecard (BSC) and Key Performance Indicators (KPIs). The report begins with an introduction to performance measurement and its significance for organizational decision-making and strategy formulation. It then delves into the BSC approach, outlining its four key perspectives: financial, customer, internal process, and learning and growth, and how these relate to Tesco's operations. The report further examines the existing KPIs used by Tesco, evaluating their effectiveness and suggesting additional KPIs, particularly in the financial domain, to enhance performance measurement. Finally, the report critically evaluates the problems and limitations associated with the BSC approach within the context of Tesco Plc, offering insights into potential improvements and alternative measurement strategies. The analysis highlights the importance of aligning performance metrics with strategic objectives and the need for a holistic approach to performance management.

MANAGING BUSINESS
PERFORMANCE

INTRODUCTION
Measuring performance is the very important part of each and every organisation which
supports to the management in order to take several business decisions. Apart from this, on the
basis of business performance, entity able to make strategies for achieving objectives and goals.
In order to assess performance of the firm different measurements are used by the enterprise. The
present case study focuses on the Balanced Score Card (BSC) approach as well as Key
Performance Indicators (KPIs) in context to the Tesco Plc retailer company. It shows about the
basic four types of perspectives or aspects of the BSC along with its relation with the cited firm.
Apart from this, regrading to the KPIs which are implemented by the selected retailer are also
discussed at the current project. At the end of report, problems and limitations of the
performance measurement tool like BSC are explained.
TASK A
Balanced Score Card (BSC) approach along with its usefulness
According to Duarte and Cruz-Machado (2015) performance is an element which plays
crucial role in each and every sector of businesses because it shows that, in which direction
entity performs within industry. If the firm easily able to determine its performance trend as well
as level then able to make strategies in order to meet with the agreed goals and purposes.
Through this, if management founds that it performs poor then easily able to take effectual
business decisions. Moreover, Perlman (2013) states that different kinds of approaches and tools
are used by the firms in order to assess or measure its presentation in the relevant market sector
where it operates. The measurement techniques are like key performance indicators, balanced
score card, 360 degree performance appraisal tool, checklists, graphic and rating scales etc. The
present report is based on the only two approaches like BSC as well as KPIs. Balanced score
card is one of the highly used approach and technique by majority of the firms as it is more
effective. It has several kinds of benefits and useful which are discussed below:
In contrary to this Lin and et.al., (2013) says that, very basic and general use of the BSC
is that, it is highly supportive for the company in order to know that which kind of trend is there
of it in terms of performance in the market. It uses in order to assess that business performs
whether in the positive ways or negative and on the basis of this further tactics are to be
prepared.
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It provides very clear structure and per-forma of the firm's strategy by which leader able to assess
that in the further business techniques any kind of changes and modifications are required or not.
Moreover, Karpagam and Suganthi (2012) states that through this Tesco entity able to keep its
objectives and aims in the centre and achieve in proper manner. It is useful in order to measure
several features and criteria of the chosen firm which are like financial, learning and growth,
business process relating to internal as well as customers.
In the opinion of Perkins, Grey and Remmers (2014) BSC is supportive in terms of
communication with the team members and subordinates regarding to the objectives as well as
framed schedules to achieve it. It helps to make clear the strategies in front of employees which
lead to meet with the objectives in proper manner along with at the deadlines. Moreover,
Pimentel and Major (2014) says that alignment among various departments, functions and
divisions can be done with the help of BSC in fruitful manner which is sign of raising overall
performance. In addition to this, workforce easily able to link or connect their personal goals
with the strategies and tactics framed by the organisation.
Four basic perspectives of the Balanced Score Card
Coe and Letza (2014) mentioned that Balanced score card is the concept which is used by
the businesses for assessing and measuring their performance in the industry. Among various
available performance measurement tools it is one of the highly important and appropriate
approach. It helps to the firm in order to measure basically four aspects. Moreover, four
perspectives of the BSC are explained below:
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Illustration 1: Balanced Score Card
Financial Perspective
Agarwal (2016) states that very first business aspect which is measured by the BSC is
financial which shows performance of the firm in terms of monetary elements. Expenses, profit,
net yield, asset value, cash position revenue etc. are analysed with this kind of technique in the
proper manner and then performance is reviewed. Furthet, Kumru (2012) argues that the
respective perspective involves generally cost, profit, net income, revenue, cash position, asset
value etc. Along with analysing historical data and performance the financial perspective is
assistive in terms of analysing current as well as forecasted information.
Customer Perspective
Reefke and Trocchi (2013) says that under the perspective of consumers the Tesco Plc
able to know that users are up to which level attract towards the firm from previous to the present
year. If any aspect of the customers grows and enhances then it can be said that, company
performs well in the industry. In this different groups about the consumers are included for
determine performance of the entity in adequate ways. Further, as per the Dias Jordão and Casas
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Novas (2013) those groups of customers measurement includes in this perspective are such as
market share, retention of users, acquisition, profitability of the clients, level of satisfaction etc.
Internal Process Perspective
According to Behrouzi, Shaharoun and Ma’aram (2014) this aspect of BSC talks about
the internal business part rather than considering to the external elements. In this several kinds of
indicators are taken into account for measuring performance of Tesco Plc in the retail industry.
The tools undertaken in internal business perspective are like production cycle time, orders,
stock level, quality of standard of the goods and services, stock level, resource allocation system,
resources utilisation etc.
Learning and Growth Perspective
In the opinion of Ardekani and et.al., (2013) apart from above perspective last and fourth
is learning and growth of the employees and workforce. This aspect of BSC relates with the
workers in which different indicators are included which are like their skills, retention,
satisfaction, productivity, efficiency, turnover, qualification etc.
TASK B
Relation of BSC's perspectives with the Tesco Plc retail company
At the time of measuring business performance of the company there are different
perspectives of BSC are to be included by Tesco Plc. Such all the BSC's perspectives are related
with the firm in order to review its performance which are stated below:
Financial Perspective
According to the views of Pimentel and Major (2014) it is related with the firm in order
to assess its financial performance and presents its capability to meet with the financial
objectives and purposes. Through this, the company like Teco Plc can measure its efficiency in
terms of generating sales, revenue, profit, expenses, net income etc. Within workplace if revenue
raises from last accounting period along with profitability values then, it can be determined that
its performance is level is in the increasing trend. On the other hand side Alhyari and et.al.,
(2013) says that expenses increase and net income reduce then performance will be considered as
poor in the retail segment.
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Customer Perspective
According to Perlman (2013) when talking about the consumers, then indicators are like
sustainable, satisfaction, attraction etc. comes into consideration. As the number of customers
along with their satisfaction enhances within some time period, then performance will be said
that it is in terms of increasing trend. Through this, if Tesco Plc founds that market share
increased at the current era as compare to previous period then it can be said that company
performs well in the retail sector.
Internal Process Perspective
Duarte and Cruz-Machado (2015) says that It is applied in the Tesco Plc in terms of
internal part of the firm like production procedure, stock extent, quality of goods, operating cycle
time, resources etc. If level of inventory sold in more number and reduce from previous then
business performance goes up. Along with this Hwa, Sharpe and Wachter (2013) argues that, as
the resources utilised by the employees in optimum manner and provide higher output with same
inputs then it can be measured that, performance is very well within industry. Moreover, internal
performance depends on the system of resources allocation of Tesco where it must be better and
adequately.
Learning and Growth Perspective
Hoque (2014) that under this perspective, employees and workforce are to be indicated
and on the basis of them business performance is to be analysed. Several indicators and tools are
used in relation to the workers which are their retention, satisfaction, skills, qualification,
efficiency etc. If any of the element among mentioned raises and enhances within workplace,
then it can be evaluated that Tesco Plc performs well in retail sector. For instance: as the
efficiency and skills of the employees increase and enhance from the past condition then Tesco
Plc becomes more productive. Further, it is symbol of enhancing business performance in the
industry of retail.
Analysis of existing KPIs of the enterprise
As per the views of Lin and et.al., (2014) in order to measure performance of the firm,
there are various number of key performance indicators are to be used in proper manner. The
present study focuses on those KPIs which are used by the Tesco Plc in its workplace. The
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existing company use basically two kinds of aspects to analyse and determine its performance
within market sector which are such as customers and employees. At the majority times, the
Tesco Plc analyses its market share because main motive behind operating in worldwide of it is
to raise market share. Along with this Jairak and Praneetpolgrang (2013) contradict that, Tesco
looks upon the retention or sustainability of the consumers towards it. When more users retain in
the Tesco Plc then management considers then it able to raise its performance in the overall
market segment. Apart from this, it compares performance from past year in terms of employee
efficiency and skills in adequate manner. As the workforce become more and highly qualified,
skilled and efficient for generating products and sales then it is indicator of improving business
performance for the Tesco Plc.
In contrary to this, Ferreira (2013) criticised that, Tesco Plc ignores the financial
perspective and indicators which are related to this particular aspect. It not takes to the revenue,
sales, profit etc. indicators in serious way, due to which its profitability reduce from last two
accounting periods. Along with this, production process is focused up to the certain level by
which its competitor like Lidl, Aldi etc. create competition issues for it. On the basis of analysis
of adopted KPIs within Tesco Plc Lin and et.al., (2016) said that, these are supportive and
adequate up to some extent. Further, such KPIs are not highly effective and gives the proper
performance sheet to it by which these are not adequate. It must consider and implement other
more number of indicators for measuring business performance in the relevant industry.
Suggestions about other KPIs to the Tesco retailer
By considering the above analysis of used KPIs by Tesco Plc, it can be suggested that it
should use the financial indicators also which lead to assess adequate performance. From the past
two years, profitability position of Tesco reduces in the retail sector which can be overcome with
the help of net income, revenue and expense indicators. Along with this, quality of product is
also required to combat the rivals and for that Tesco needs to adopt quality and standard KPIs as
well. Moreover, defect products also should encounter to the firm within workplace which will
be supportive to measure quality aspect of the goods and services. Due to this, product standard
will be measured in adequate manner and improve also, as it is sign of performance improvement
in the retail sector.
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TASK C
Critical evaluation of those problems which arisen in the firm while implementing BSC
The Tesco Plc faces several kinds of issues at the time of adopting and executing BSC at
the workplace. Due to such problems and obstacles the company not able to implement the
approach in proper ways and derive adequate business performance. Moreover, issues and
obstacles comes into consideration while adopting BSC are discussed below:
As per the opinion of Boj, Rodriguez-Rodriguez and Alfaro-Saiz (2014) when the firm
uses BSC, then it is mandatory that employees and organisational members must have adequate
knowledge about it. Moreover, due to lack of awareness and broad understanding about the BSC
approach the Tesco Plc face problems in order to implement and assess performance in the retail
segment. As per the Chen and Tzeng (2014) other problem is regarding to the executive
sponsorship support, as it is one of the very significant for the firm. In the Tesco Plc, executives
and top level of employees or managers having very less or few supports and sponsorship by
which the management not able to implement BSC within performance process in adequate
manner.
In contrary to this, Perlman (2013) argues that, involvement of the overall organisation
and its members is also highly required while implementing any kind of policy, approach or
rules. In the Tesco Plc, overall members are not involved in the BSC approach due to which it
faces the major issues. Apart from this Kumru (2012) says that, use of KPIs in adequate manner
is also one of the significant part of the BSC while adopting at the workplace. Moreover, as
explained above KPIs of Tesco, it ignores financial and production concept which lead to incur
problems and not provide adequate information of the performance.
Limitations or drawbacks of BSC
There are several kinds of benefits and uses of the BSC which are discussed and
explained in the above task. On the other side, respective measurement approach has some
limitation and problems also which affects to the Tesco Plc which are such as follows:
According to Jackson (2017) BSC supports to measure basis four perspectives but not set
the standard measurements by which business performance cannot evaluate in the proper and
adequate ways. In the company several numbers of aspects and indicators included which are
like quality of products and services, process etc. which are ignored by the BSC. Further,
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Karpagam and Suganthi (2012) argues that it focuses on only four perspectives through which
Tesco Plc cannot derive performance of that kind of aspects. It shows that firm whether performs
in better or poor condition but not gives any kind of suggestions as well as advices in order to
overcome negative situations or resolve the problems. Until and unless the management not
knows that what should be done to raise business performance then cannot meet with the
objectives properly.
Moreover, Hoque (2014) criticise that Along with this, when the company adopts the
BSC in order to reviewing its performance then support of very strong leadership needed up to
the higher level. In case, the leader not able to lead the group in proper and strong manner then
cannot assess its performance level in the industry. Ardekani and et.al., (2013) argues that
balanced score card is the very broad concept and can be sometimes overwhelm for the Tesco
Plc. Due to this, each and every employee cannot make broad understanding about BSC which
lead to create adverse impact on the firm.
CONCLUSION
From the current report of managing business performance it can be articulated that,
Balanced Score Card (BSC) is one of the highly effectual and significant approach in order to
determining performance of entity within industry. BSC includes generally four perspective to
measure entity's performance which are like financial, customer, internal process as well as
learning and growth. It can be said that Tesco Plc uses KPIs which are related with customer and
employees which are not enough and adequate. It can be concluded that, while adopting the BSC
within workplace of Tesco Plc there are some obstacles and issues encountered and hamper
performance evaluation procedures. It can be advised to the firm that, it needs to use production
and financial related KPIs in order to increase its performance within whole retail sector.
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