Balanced scorecard as a strategic planning tool

 

Part A

1-

A balanced scorecard is a strategic planning tool to help organizations evaluate their activities and performance according to .their vision and strategy..

Financial Hub: Contains purely financial objectives, such as return on investment, economic value added, product cost, profitability, cash flow, etc. Customer Hub: Customer is concerned with aspects related to customer service quality, market share, loyalty, and customer satisfaction, such as fulfilling their wishes by offering new products and services, or by improving service and responding to customer complaints and needs, etc. Internal Business Process: It is concerned with aspects of internal processes, such as the development of administrative business systems, cooperation between different departments and departments. Learning & Growth (Innovation) : Identifies the capabilities in which the organization must grow to achieve high-level internal processes that create value for customers and shareholders. (Bhimani,2010).

BSC serves as the cornerstone of the organization's current and future success, reversing financial metrics that report what happened in the past and does not indicate how to use it to improve future performance. It Link the organization's long-term strategy with its short-term activities. It enables the practical diagnosis and identification of new areas that should be characterized by the organization to achieve the objectives of the consumer and the organization. Demonstrates strategic vision,  and improves performance.

2-

BSC  helps Tesco monitor their development and their ability to innovate and innovate compared to other competitors. The four card activities are mutually supportive. Learning and development support internal processes and affect the quality of service and customer satisfaction, as well as the internal processes in turn affect the quality of service and customer satisfaction, all of which affect financial indicators. It is a communication tool to make the strategy clear to all employees of the Tesco. BSC is an organization-wide performance management system, more comprehensive than monitoring individual performance measurement and productivity. BSC balance  financial and non-financial aspects of Tesco. It achieve periodic performance reviews and learning to improve Tesco,  Introducing sustainability into the Tesco's operational processes, Enables the Tesco to manage the requirements of related parties , improves information flows, communicating and realizing  business objectives for all levels of the organization,  and Helps to apply effective HRM .

 

3-

The main concern of  the  Financial performance  measures is on  year-to-year or short-run rendering  according to the  accounting principles. Financial performance  measures don’t allow to deal with growth of customer requirements or competitors . Non-financial measures  able to back or reinforce  indirect, quantitative measures  of untouchable assets of the firm , for example ;  innovation, management capability , employee relationships , quality, and others , and these matters  can determine  the value of the firm . Non-financial measures provide supportive   showings  of coming financial performance . Moreover ,  the latest goal is maximizing   monetary  performance , present  monetary  measures wouldn’t  not get long-terms benefits   from specific decisions  . Non-financial information provide the wasted link between these successful activities  and monetary results by  providing  deep information on accounting or performance of shares  . it  face lower risks .Non-financial measures receive  Fewer external  noise, help in improving  performance of managers through providing precise assessment . In page  15 in strategic report,  the growth in the in the customer satisfaction  has increased by 0.3% to become  85.7%. Tesco is  a strong  driver  of social mobility.  The high dedication, and relentless of employees in Tesco leaded to support customer satisfaction . they developed its innovation such as Tesco app.  The designed  app which enable  employee to know their shifts, organize overtime and holiday.

4-

The strategic plan of Tesco creates presumptions  connecting to : the current economic climate and international economy; the organizational  defies  ; rival activities ; dynamics in market ; altering in customer conducts ; and the expenses of delivering the plan. There are  four scenarios have been set . there was assumption  in these scenarios  that repayment will be done for  outer debt in the  due time that contains consolidation of the Booker and related synergies. The scenarios have been put in order to overcome  the risks  that threaten the viability of Tesco.  There are  many opportunities  are obtainable to the Tesco for maintaining liquidity for going ahead in its business such as: reaching to new outer funding prematurely; more progressive short-run cost minimizing activities ; and minimizing capital expenditure.  According to  scenarios, the managers  have a plausible  predications that the Tesco will go ahead to process and pay its debts .

 

Part B

Budgets help the business to access their goals . it manage  and arrange processes in various divisions.(Alkaraan ,2006).Budgets interpret strategy of  the executives  into actual activities  . They allocate and define the resources, revenue, and needed operations to implement   the strategy  . It is vital  provide amazing  record of different  processes  of the firm. It  improve communication with employees. Budgets improve  resources allocating  . It  provide a instrument  for corrective procedures through reapportionment . furthermore  , budgets  have many limitations such as : when the manager implement  budgets in   automatically way   the employees will leave the work  because of   low of  involvement. If   the  managers put budgets in indiscriminately top down, employees cannot realize the purposes for budgeted costs, and will not be adhered to them. Budgets result in  realizing   the cause of inequity  . budget create competition  for resources. A powerful  system of  budget result in reduce creativity and innovation, making  it impossible  to obtain cash for new ideas. The issue of implementing the goals can be negatively affected by  interfering  sides  of budgets system.  In line with GAAP , the effective budgeting make the achieving of goals as difficult but not impossible  . therefore  , the strategic  managers who realize budgets and how to use them own powerful control tool for fulfilling  departmental and divisional goals. Inaccuracy is limitation of budgets. Budgeting  rely on various  assumptions to expect  the expenses and revenues that enable the manager to take precautions  such as changing in desires in   market. It provide manager with information about  with the chances and risks . changes in the macroeconomic condition like inflation   can increase  the expenses that are greater than  the expenses in budget  . It  consume more time and efforts.  Another disadvantage of it is  Rigidity as  there is specific numbers and amounts can’t be changed  as there is no flexibility   and this lead to  manipulation 

Part c

Capital budgeting is considered as the operations a company make in order to assess prospect basic projects or investments such as establishing new factory  that must be analyzed before accepting  or rejecting it because it need huge capital. (Horngren,2008). there are four steps  that relate to the capital budgeting process in order to accept or reject to the idea of the project.  The first step  is  Capital Project Ideas in order to generate  idea of project that can said  by the administration or workers  or strangers . the second step is assessing every venture proposal for lucrativeness as the profitability is considered as the basis  that push the finance director to accept or reject the project through calculating  NPV/IRR. The third step is  Prioritizing  lucrative ventures  according to the Firm-wide venture  as the company can start specific project  and delay another profitable project according to its strategy . the feedback and evolution is the fourth step  , when the take decision of  capital budgeting  , they should monitor their performance .

References

Bhimani, A. and Bromwich, M. (2010) Management accounting: retrospect and prospect, CIMA Publishing, London.

Horngren, C., Datar, S. and Foster, G. (2008) Management and Cost Accounting, 4th edn, Prentice Hall, Harlow.

Alkaraan, F. and Northcott, D. (2006)  ‘ Strategic capital investment decision  making: a role for emergent analysis tools? , The British Accounting Review, vol. 38,  pp. 149 – 173.