Introduction

The intent of this study is to measure the utility of the balanced scorecard ( BSC ) theoretical account within a concern and strategic direction accounting. To get such information. the theoretical account will be applied to a company and so critiqued giving both the benefits and any practical deductions sing the usage of the BSC. The BSC was introduced by Kaplan and Norton ( 1992 ) as a new attack to strategic direction accounting. ‘The intent of the balanced scorecard is to steer. control and dispute an full administration towards gaining a shared construct of the future’ ( Chavan. 2009. p398 ) . It involves measuring over four positions each defined by Kaplan and Norton ( 1992. p72 ) as:

‘Financial – How should we look to our stockholder?
Customer – How should we look to our clients?

Internal concern Processes – What concern processes must we stand out at Learning and growing – How will we prolong our ability to alter and better? ’ The aims of the BSC should associate straight to the vision and scheme of the concern.

The instance survey company is the BMW Group ( BMWG ) . It is an car fabrication company offering mobility merchandises over three trade names. BMW. MINI and Rolls Royce. It is a world-wide organisation that presently has 23 production and assembly workss in 13 different states ( BMW Education Programme. 2012 ) . They besides have over 107. 000 ( in 2011 ) employees bring forthing a sum of 1. 738. 160 vehicles and had a gross of ?68. 821 million for the fiscal twelvemonth stoping 2011 ( BMW Group Annual Report. 2011 ) .

Their rivals are concerns in the premium car market. such as Mercedes-Benz and the Volkswagen Group. which owns premium trade names Audi and Porsche. The mark client base for the BMWG is within the upper in-between category sector – professional employees high in the corporate universe.

The Group’s ultimate aim is to be the world’s taking provider of premium merchandises and services through to 2020 ( BMW Group Annual Report. 2010 ) . This vision has been translated into strategic aims within the BSC which all work towards the same end of sustainability which has been outlined in Appendix A. The aims will now be explained as to why the steps were chosen.

The balance scorecard applied to BMW ( Appendix A )
Fiscal Position:

Measuring market portion is straight in line with the vision as it clearly shows if the concern is taking the industry and indicates if quality is above their rivals. Another method to co-occur with the profitableness aim is utilizing ROCE. This allows for the company to maximize stockholder value by keeping a certain return expected on invested capital. In conformity with BMW’s sustainability study ( 2010 ) this mark was set at 26 % .

A practical deduction of this is if heavy investing is made which will have future income. the consequences will be below mark therefore it may discourage directors to undergo expensive investings that may be extremely profitable in the hereafter. Harmonizing to Dow Jones Sustainability Index Report ( 2012 ) . BMW are taking the universe with their sustainability theoretical account. and besides have consolidated their place as market leaders within the luxury auto section. Therefore to farther pursue this aim through 2020. the mark is to go on to hold/improve upon its current market portion.

Customer Perspective:

Customer satisfaction would be measured via questionnaires given to clients to rate the service or merchandise received. This would prosecute the aim of supplying quality merchandises and services as the clients use the goods and finally justice whether the company are presenting on these aims. This could so be compared against rivals to guarantee they are executing in front of the market. However there could be trouble in achieving information that is free from prejudice.

If the company take a group of clients who have merely of all time owned their merchandises. so the consequences would be skewed in the favor of the BMW group therefore non supplying accurate information. A measuring of the client acquisition attained by the concern is besides used. This non merely allows the BMW Group to keep portion and be market leaders. but besides is a strong index that they are supplying goods and services at a degree above what their rivals are presently offering as new consumers are puting merchandises from the company.

Internal Business Perspective:

To mensurate the aim. better resource efficiency and environmental impact. the BMW Group need to hold a merchandise which has zero carbon dioxide emanations. The company are presently in the procedure of let go ofing an all-electric auto which will finish this end therefore this has been chosen as a end. This purpose allows the concern to prosecute the vision of offering premium merchandises to clients. The 2nd measuring is the sum of non-recyclable wastage per vehicle produced.

Reducing this figure allows for the efficiency within the BMW Group to increase. ensuing in less wasted outgo. Less pecuniary wastage means more hard currency can be reinvested in the company to better its services and merchandises. A restriction of this is the cause-and-effect nexus ( Norreklit. 2000 ) . This betterment could be due to employees’ suggestions on how to better efficiency therefore the relationship can be hard to set up and may non be clear and could be due to other factors such as investing in preparation. This makes the BSC a stiff tool by non successfully associating steps together ( Sven et al. 2006 )

Learning and Growth Perspective:

The first aim would be to guarantee staffs are sufficiently trained in order to supply premium services and merchandises. This is measured by how much money is invested in the preparation of the Group’s employees. This figure should be maintained or improved upon depending on merchandise releases. A practical deduction of the step is if the figure is looked upon entirely. For illustration if less preparation is given. does this mean that they are neglecting at the aims? It could merely be due to the high accomplishment degree of current staff which are bettering efficiency without the demand for excess preparation.

The concluding step ensures employees are sufficiently motivated and satisfied within their on the job environments by how attractive the concern is as an employer among engineers/economists and besides the sum saved from suggestions by employees. Staying the highest within the car market ( Universumglobal. 2012 ) be a end for the company. to stay as industry leaders.

Benefits of the BSC

The BSC theoretical account overcomes restrictions of traditional measuring systems that do non include operations taken by directors which increase stockholder value and merely include their disbursals ( Kaplan. 1994 ) . The fiscal position remains a cardinal facet of the BSC as fiscal public presentation steps indicate whether both the scheme and executing are lending to the business’ pecuniary place ( Kaplan and Norton. 1992 ) . The Customer position shows how they are executing in countries such as client keeping. Business processes shows steps that most impact the client ( Kaplan and Norton. 1992 ) . leting the company to keep a competitory advantage within the market by distinguishing themselves ( Bowhill. 2008 ) .

Learning and growing allows employees and IT systems to be measured for how good they achieve the company’s ends. Harmonizing to surveies carried out by De Geuser et Al. ( 2009 ) . that both the scheme and feedback was improved upon one time the BSC was applied accordingly guaranting the concern is working towards its vision. BSC besides improved the communicating of the corporate scheme to employees on all degrees therefore leting them to execute undertakings towards the company’s ends ( Shutibhinyo. W. 2013 ) .

Restrictions of the BSC

In conformity with Atkinson et Al ( 1997 ) that the BSC fails to the full adhere with the stakeholder attack to strategic direction as it fails to see critical stakeholders such as providers and the community. This means that the BSC does non to the full provide to the full strategic attack directors will set about. For illustration. sourcing dependable providers would be a critical constituent of the firm’s scheme nevertheless the BSC does non near this. To better the theoretical account. farther positions ( e. g. providers and corporate administration ) should be undertaken to guarantee all facets of sustainability is actively pursued and measured.

A 2nd restriction of the BSC. is that the theoretical account is non catered to all typed of concerns such as smaller houses ( Johanson et al. 2006 ) . In a survey by Speckbacher et Al ( 2003 ) . 26 % of houses used the BSC and most had merely limited usage for the theoretical account. This is due to many smaller companies runing on a ‘day to day’ footing and make non concentrate on facets such as acquisition and growing ( Johanson et al. 2006 ) . Besides. non-profit administrations do non concentrate on fiscal informations. and financial information is cardinal to the BSC. the model’s utility is reduced within strategic direction ( Johanson et al. 2006 ) .

Decision

In reappraisal of the study. it has been concluded that the BSC can be a utile tool within strategic direction. It has shown to better companies’ corporate scheme and communicating therefore bettering organizational construction. Conversely. there is still farther research to be done on the BSC as there are clear restrictions of its usage and this demand to be improved upon for the theoretical account to be deemed as the unequivocal strategic direction attack.

Appendix A
Perspective| Objective| Measure| Target|

Financial| Be the Market leader of premium mobilityHighly profitable | % of Market portion within this areaReturn on capital employed ( ROCE ) | Higher % of market portion over competitorsAchieve over 26 % twelvemonth stoping 2013| Customer| Provide clients with highest quality merchandises and servicesCustomer Acquisition| Measuring the client satisfaction degree via questionnaires/surveys The figure or % of new customers| Exceed Market criterion in supplying merchandises and services to customersImprovement twelvemonth on year| Internal Business Process| Improve resource efficiency and environmental impact from the automobilesImprove efficiency in production of their products| Having a auto with nothing carbon dioxide emanations amongst their merchandise line

The sum of wastage that is non-recyclable per vehicle produced| Worldwide market launch of the all-electric BMW i3 by the twelvemonth terminal 2013Lower non-recyclable figure ( kilogram ) to under 5kg| Learning and Growth| Ensuring employees have the accomplishment set to supply exceeding service and productsEnsuring the satisfaction and motive of employees | The sum of money invested in developing schemesMeasurement of how attractive an employer the group are harmonizing to applied scientists and economic experts and the sum saved from these suggestions| Achieve growth/maintain at current degree of money invested in trainingRemain/improve on the top 3 position amongst applied scientists and economic experts. Besides bettering efficiency within the concern from staff suggestions|

Mentions
Aidemark. L. -G. ( 2001 ) . “The significance of balanced scorecards in the wellness attention organisation” . Financial Accountability & A ; Management. Vol. 17 No. 1. pp. 23-40.

Atkinson. A. A. . Waterhouse. J. H. and Well. R. B. ( 1997 ) . “A stakeholder attack to strategic public presentation measurement” . Sloan Management Review. Vol. 38 No. 3. pp. 25-37.

Bowhill. B. ( 2008 ) Business Planning and Control: Integrating Accounting. Strategy and People. Chichester: John Wiley & A ; Sons Ltd.

hypertext transfer protocol: //www. bmweducation. co. uk/coFacts/view. asp? docID=88

Dow Jones Sustainability Index Report ( 2012

De Geuser. F. . Mooraj. S. and Oyon. D. ( 2009 ) . ‘Does the balanced scorecard add value? Empirical grounds on its effects on performance’ . European Accounting Review. 93-122.

Kaplan. R. S. ) 1994 ) “Devising a balanced scorecard matched to concern strategy” . Strategy & A ; Leadership. Vol. 22 Iodine: 5 pp. 15 – 48

Kaplan. R. S. and Norton. D. P. ( 1992 ) ‘The balanced scorecard steps that drive performance’ . Harvard Business Review. 70 ( Jan-Feb ) : 71-9. Norreklit. H. ( 2000 ) ‘The balance on the balanced scorecard – a critical analysis of some of its assumptions’ . Management Accounting Research. 11: 65-88.

Meena Chavan. ( 2009 ) “The balanced scorecard: a new challenge” . Journal of Management Development. Vol. 28 Iodine: 5. pp. 393 – 406

Shutibhinyo. W ( 2013 ) ‘BALANCED SCORECARD ATTRIBUTES: KEY DETERMINANT AND PERCEIVED BENEFITS’ . Global Journal Of Business Research ( GJBR ) . 7. 2. pp. 1-8.

Sven C. Voelpel. Marius Leibold. Robert A. Eckhoff. ( 2006 ) . ”The dictatorship of the Balanced Scorecard in the invention economy” . Journal of Intellectual Capital. ( 7 ) Iodine: 1 pp. 43 -60

Speckbacher. G. . Bischof. J. . Pfeiffer. T. ( 2003 ) . “A descriptive analysis on
the execution of balanced scorecards in German-speaking countries” . Management Accounting Research. Vol. 14 No. 4. pp. 361-88.

Johanson. Ulf. Skoog. Matt. Backlund. Andreas. Almqvist. Roland ( 2006 ) “Balancing quandary of the balanced scorecard” . Accounting. Auditing & A ; Accountability Journal. Vol. 19 Iodine: 6. pp. 842 – 857

hypertext transfer protocol: //www. universumglobal. com/IDEAL-Employer-Rankings/Global-Top-50