TEAM A2 Bo Kongthaisereekul Janet Ho Veronica Mwikwabhi Edelen Melo Ortega Cresna Ponthy James Byrne 2 b Winning strategies part 1 WaveRiders BSC Deployment Fundamental Theory of BSC ID: 583139
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Slide1
BALANCED SCORECARD
TEAM A2Bo KongthaisereekulJanet HoVeronica MwikwabhiEdelen Melo-OrtegaCresna PonthyJames Byrne
2 b. Winning strategies part 1Slide2
WaveRider’s
BSC Deployment
Fundamental Theory of BSC
Advantages and Disadvantages (Mitigating actions)
Comparison of other deployment method
Assumptions (people & operation way)
Wave Rider’s Vision
Deployment Plan recommendation (Five years)
ConclusionSlide3
Balanced ScoreCard – BSC
(1990)BSC is tool for leader to communicate strategy to employee and external stakeholders the outcome and performance drives by which the organization will achieve its mission & strategy objectivesMeasure Performance and Set Strategy:Effective organizational performance management
Effective
implementation strategies
(Removing barriers for Financial measurement and Strategy Execution)
Niven, P. (2002). Balanced Scorecard Maximizing Performance and Maintaining Results. New York: Jonh Wiley & Sons, Inc.
Kaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work.
HARVARD BUSINESS REVIEW
, p.5.Slide4
Learning & growth perspective. As enablers
to other 3 perspectives (fundamental vehicle). It helps to close the gap to ensure sustainable performance in the future. Employee skills 2. Employee satisfactions 3. Availability of information 4. Alignment Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdfKaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work. HARVARD BUSINESS REVIEW , p.5.
BSC
–
LEARNING AND GROWTH PERSPECTIVE Slide5
Internal business process. Efficient the process via:
Product development 2. Production excellence 3. On time delivery 4. After sales services Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdfKaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work. HARVARD BUSINESS REVIEW , p.5.
BSC
–
INTERNAL BUSINESSS PROCESS PERSPECTIVE Slide6
Operation excellence
2. Product leadership 3. Customer intimacy (Customer satisfaction, customer loyalty, market share & customer acquisition) Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdfKaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work. HARVARD BUSINESS REVIEW , p.5.
BSC
–
CUSTOMER PERSPECTIVE Slide7
Financial measures. Result focus on bottom-line, indicators:
Profitability 2. Revenue growth 3. Economic value added.Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdfKaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work. HARVARD BUSINESS REVIEW , p.5.
BSC
–
FINANCIAL PERSPECTIVE Slide8
Advantages
Strategy alignment with 3 primary stakeholders: Shareholders, Customers and EmployeesBoth financial and non-financial criteriaAllows review the past financial situation in an ongoing consistent manner.Engagement of employee voice through learning and growth able to assess whether any strategic action implemented will match desired outcome
Acts
as an excellent education tool
for staff
Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdf
Kaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work.
HARVARD BUSINESS REVIEW
, p.5.Slide9
Disadvantages
The concentration on three primary stakeholders has the converse effect of neglecting other stakeholderRequires a long thought process to developTrade-offs between different measures is ignored even when in direct conflictionShould not be taken as full comprehensive delineation of the companyPal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdf
Kaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work.
HARVARD BUSINESS REVIEW
, p.5.Slide10
Mitigating the negative effects
Primary stakeholder must be clearly recognisedEmpowerment to the team members (flexible and freedom to achieve strategic priorities)Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdfKaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work. HARVARD BUSINESS REVIEW , p.5.Slide11
Comparison of
other deployment methodHoshin & BSC (Main differences)Witcher, B.J. and Butterworth, R. (2001), “Hoshin kanri: policy management in Japanese-owned UK subsidiaries”, Journal of Management Studies, Vol. 38 No. 5, pp. 651-74.Yang, T.M. and Su, C. T., (2007), “ Application of hoshin kanri for productivity improvement in a semiconductor manufacturing company.”, Journal of Manufacturing Technology Management, Vol. 18 (6), pp.761-775Witcher, B., (2002), ”Hoshin kanri: a study of practice in the UK”, Managerial Auditing Journal, Vol. 17(7), pp.390-396
Hoshin
focuses on selecting and monitoring the
right measure to drive change
(an “ends justifying the means” approach)
BSC
centered primarily on the capability of company’s process for delivering value to customer (means contributing toward end)
FlexibilityBSC strongly emphasized the goal must to be achieved (does not provide clearly approach of how) Hoshin does with short (annual)/middle (3-5y.) and long-term plan (5-10y.) Change
BSC does not cover review and monitoring system (closed-loop) to modify plan (change)
Hoshin emphasized PDCA cycle. Hoshin deployment method sometimes neither delayed nor allowed the process(review)
Communication
Hoshin integrates people together from top-down and bottom-up deployment.
Although, it is difficult to achieve the involvement of everyone.
Slide12
Assumptions…
The research Market is not yet concluded , but the correct approach seems to be to open the distribution channels to the European market.Better negotiation strategy in terms of sourcing to foster competitive advantages. Slide13
ViSiON
(Direction)(Niven, 2002), The vision statement provides a word picture of what the organization intends ultimately to become in next 5,10,or 15 years.By not having appropriate vision statement, organization might has a problem to guide the actions of employees which result lack direction and eventually unable to take benefits from any strategy that put on place. Thus there are several key points in order to create effective vision:Slide14
ViSiON
Key points(Niven, 2002), · Concise (should be simple, powerful and compiling)· Appeals to all stakeholders· Consistent to mission and values· Verifiable· Feasible· Inspirational Slide15
WaveRider’s
Strategic ObjectivesThe VISION
Strategy 6
(Key Words)
Customers Delightment
Safety
Innovation (R&D)
Continuous Improvement
Service
To
be the preferred
boats provider in our market(s) achieving a large market share by providing:
Exceptional value-Safe and Innovative products
Customer Service Post-sale
A
fun, positive and profitable experience for all stakeholders
Pal's Sudden Service. (2001 ). Retrieved February 10, 2011, from http://www.baldrige.nist.gov/PDF_files/Pals_Application_Summary.pdf
Kaplan , R., & Norton, D. (1993, September-October). Putting the Balanced Scorecard to Work.
HARVARD BUSINESS REVIEW
, p.5.Slide16
Wave Rider - BSC
FinancialIB ProcessCustomer
L & G
VISIONSlide17
Learning & Growth Deployment
ObjectsMeasuresTargetsInitiatives
Y1
Y2
Y3
Y4
Y5
Staff training
length of time for training (hours)
150
150
120
120
120
Training Program
Employee
satisfaction
% of satisfied employee
60%
70%
80%
90%
95%
Welfare & Benefits
collect by interviews and surveys
R & D and Innovation
number of patents compared with competitors
2
3
3
4
5
Research on
new product
Slide18
Internal Business Process Deployment
ObjectsMeasuresTargets
Initiatives
Y1
Y2
Y3
Y4
Y5
Production efficiency of New Product
Lead time
Staff Training
Production Level
SeaHorse ↓
20%
20%
15%
15%
12%
Reorganise Production Plan
SeaSpray ↓
60%
50%
45%
35%
33%
SailAway ↑
20%
30%
40%
50%
55%
(% of each product)
Reduce stock level of Current Products
stock/ amount of total products produced
27%
25%
20%
18%
15%
Reorganise Production Plan
Improve Finance and HR Departments
Reorganise
Finance
and HR DepartmentSlide19
Customer Deployment
ObjectsMeasuresTargetsInitiatives
Y1
Y2
Y3
Y4
Y5
Quality of new product (Sailaway)
DPMO
No. of Defects relative to total products produced
5.00%
2.00%
1.00%
0.5%
0.1%
Six Sigma
Customer Delightment
% complaints relative to total sales unit
10%
10%
8%
5%
2%
Membership Program
Increase No. of Customers
% number of new customers relative to total current customer
10%
15%
20%
30%
40%
Marketing Campaign
Competitive price
compare with competitors
8%
8%
8%
5%
5%
Benchmark
Shipment
(Delivery to Customers)
Sale Growth
10%
12%
12%
15%
18%
Promotion, Discount
Increase Market share of New Product
% of market share
5%
10%
15%
20%
30%
Find more distribution channels and customer baseSlide20
Financial Deployment
ObjectsMeasuresTargets
Y1
Y2
Y3
Y4
Y5
Profitable
growth
Gross Margin
46.47%
48%
49%
50%
51%
Return on Sales
5.46%
6%
6.50%
8%
10%
Maximise returns
ROCE
7.99%
8%
9%
11%
14%
Manage operating costs
Administration
costs
(admin. cost/GP)
57%
57%
55%
53%
50%
Material costs
51%
50%
49%
46%
45%Slide21
Cause & Effect
Financial PerspectiveGross MarginReturn on SalesReturn on Capital EmployedAdministration CostsMaterial Costs
Customer Perspective
New product Quality-Sail Away
Customers
Delightment
Increase No. of Customers
Competitive price
Shipment (Delivery)
Increase Market Share
Internal Business Process
Productivity Efficiency
Production
Level
Marketing-Sales (Efficiency)
Reduce Stock Levels of Current Products
NPI New Product Introduction
Improve Finance and HR Departments
Learning & Growth
Staff training Education
Improve Employee Satisfaction
R&D (Innovation )
Slide22
CONCLUSIONS
BSC provides a linkage between strategy and vision through four perspectives to achieve organization shared objectives. Yet, it has potential issues in terms of in review mechanism during deployment phase. Therefore, it requires adjustment to maximize its benefits. Slide23
Witcher, B.J. and Butterworth, R. (2001), “Hoshin kanri: policy management in Japanese-owned UK subsidiaries”, Journal of Management Studies, Vol. 38 No. 5, pp. 651-74.
Yang, T.M. and Su, C. T., (2007), “ Application of hoshin kanri for productivity improvement in a semiconductor manufacturing company.”, Journal of Manufacturing Technology Management, Vol. 18 (6), pp.761-775Witcher, B., (2002), ”Hoshin kanri: a study of practice in the UK”, Managerial Auditing Journal, Vol. 17(7), pp.390-396Norreklit H. (2000), The balance on the balanced scorecard - a critical analysis of some of its assumptions, Management Accounting Research, 11, pp. 65–88. Kaplan R S and Norton D P (1996) “Balanced Scorecard: Translating Strategy into Action” Harvard Business School Press Marquardt, E.P., (1997), "Aligning Strategy and Performance with the Balances Scorecard," ACA Journal: 18-27.Yeung A. and B. Berman. (1997) Adding value through human resources: Reorienting human resource measurement to drive business performance. Human Resource Management 36 (3): 321Nair, M. (2004). Essentials of balanced scorecard. Hoboken, N.J: John Wiley & Sons. Andon, P., Baxter J., Mahama H. (2005). ‘The Balanced Scorecard: Slogans, Seduction, And State Of Play’. Australian Accounting Review, Vol.15, No.1, pp.29-38. Olve, N. G., Petri, C. J., Roy, J., and Roy, S. (2004). Twelve years later: Understanding and realizing the value of balanced scorecards. Ivey Business Journal online.[http://www.qa.au.edu/page2/research/BSC12YearsLater.pdf]
Reference