Balanced Scorecard: Principles, Process, And Implementation

The Main Vision of Balanced Scorecard

Balance scorecard is an effective controlling tool that can be used to control various operations (financial and non-financial aspects) of an organization. Before the implementation of Balanced Scorecard in any organization, it is necessary to develop a thorough understanding of the process and principles involved in Balanced Scorecard, the working associated with its implementation, resources required and its evaluation as a new approach of measuring performance. This topicattempts to give explanations to some of these issues.

According to the views of Gibbons and Kaplan (2015), the main vision of the company under the BSC must be establishing areas that form the key performance areas. To start with, the most important role of the Kaplan and Norton’s Balanced Scorecard is the element of ‘Scorecard’ i.e. the “Company Boot it in United” must document and clearly identify the total number of key measurements or areas that allow the company’s senior executives to evaluate the operations being conducted in some of the KPIs of their organization. However, if the management wants to exaggerate the benefits of Balanced Scorecard more than this description into an innovative approach of measuring performance, it has to create a strategy that focuses more than just scoring various operations or the mechanism of recording results.

The majorreflection of the word ‘Balanced’ is that the foundation of the Scorecard must be based on balanced goals including both the short term objectives and long-term goals.

Many business leaders and academics have recognized the need of including long-term goals for the measurement of performance. This is because, the short-termfocus on financial or budgetary issues often lead to insufficient attention to other importantlong-term goals like customer development, dynamic market conditions, standards of service to be provided by the organization and training, development and learning to be conducted in the long term (Coe and Letza, 2014). All these measures cannot be neglected altogether, since these factors determine the growth of business in the long run.

STRATEGIC OBJECTIVES Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	MEASURES	TARGETS	INITIATIVES
Financial
Achieving increased return on investment	To oversee the areas in which investment is made so far.	Increase ROI by at least 10% in order to increase the reducing profit.	Reducing the cost associated with various programs and eliminating unnecessary expenditures on theadvertisement. Proper allocation of expenses in overheads and devising other expenses reduction opportunities.
Seeking revenue from new launches	Selecting programmes that fetch adequate revenue for the company.	Revenues must be increased by 20% for recovering from the phase of reduced profits.	As per the views of Sainaghi, Phillips and Corti (2013), new series must be introduced at the club that must focus on quality and not on quantity.
Maximizing profitability from each game series	The cost associated with each series must be reduced	Each series must seek a profit of a minimum of 25% of the total expenditure done.	Efforts must be taken to increase the profit by ensuring the series are well responded by thepublic.
Minimize cost of obtaining fund	Effective credit rating must be done in this regard.	According to the opinion of Lin and etal., (2013), funds must be obtained from the sources that are least expensive.	Through credit rating, the company has to find out the sources that are less costly as compared to others.
Delighting the shareholders	The measure must be adopted that maximize the shareholder’s wealth.	Retaining a minimum of 50% earnings.	Dividend policy must be revised.
Improving cash flow	As per the opinion of Ivanovand Avasilc?i (2014), creditor days are to be focused for any improvements in this regard.	The collection of credit must be done on time to ensure minimum bad debts.	The terms of Credit policy of the company must be evaluated to identify maximum days to which the company can issue credit.
Internal Business Process
Challenging the operations of competitor clubs	Market research for formulating new techniques to increase profit	One step ahead approach	In accordance with Olson and etal. (2016), each and every activity of the market must be evaluated to avoid any unforeseen circumstances that reduce profit(Martello, Watsonand Fischer, 2016)..
Increasing club reliability	In accordance with the words of Spender (2014) failure rates must be kept a check	Reducing the number of times a particular series of games fails to seek theattention of fans and thereby increasing club reliability.	The club must gain thetrust of the public in general (Gibbons and Kaplan, 2015).
Capturing a unique supply chain	Percentage of revenue of the supplier of the company must be focused.	In accordance with the views of Johnson (2017), unnecessary overcharging must be checked.	The company must overview that the suppliers of various products needed by the club do not overcharge.
Reinventing value creation system	Benchmarking index for outsourced activity.	In accordance with the opinion of Szymanski, (2015), the company must aim to create quality and sustainability in each of its operations.	Each activity which outsourced like advertisements must be checked on the basis of benchmark created.
Learning and Growth
Valuation of staff	Employee retention index	The club must aim to retain employees as much as possible in order to reduce cost associated with hiring new staff (Allan, 2017)	The retention index must regularly be overseenand reasons for employee exit must be reduced(Martello, Watsonand Fischer, 2016)..
Providing internal information	Information survey index	Every staff must be well informed of the objectives of the club	Efforts must be taken to improve information index so that no objectives is lapsed by the staff. (Johnson, 2017)
Creating organizational alignment	Evaluation measure within different teams.	Cultivating core competencies in staff.	Skill and technology must be imparted to the staff for creating thedesired competency.
Customers
Dominating major club market	Market share to be focused.	Minimum of 45% of market share must be grasped	Efforts must be devised to create loyalty among the visitors of the club like offering preferential booking for those who are regular visitor of the club(Allan, 2017)
Growth in target area	Customer acquisition	Attracting customers from other clubs	Providing better belongingness to the customer as compared to other local clubs.
Adding to brand image	Percentage of share in the market	Building customer recognition	Initiating brand image polls and corporate image improvement by supporting noble causes (Martello, Watsonand Fischer, 2016).

The Balanced Scorecard devised by Kaplan and Norton is a concept which is still widely used and applicable in today’s business environment. After implementation of this Balance scorecard to the respective company, a proper guidance was provided that was entirely focused on reducing cost and increasing profits. For the implementation of a BSC in the organizations which plans to introduce a system of Scorecard in their operations like the Boot it in United, this scorecard can prove to be a great success, since it highlights the strategic objective, its associated measures, targets and initiatives.  (Gibbons and Kaplan, 2015) The scorecard can also be implemented in scenarios which already have a BSC incorporated in their operations, but want to extend its influence.  It can be applied to both public and commercial enterprises. This model can be viewed in contrast with other models that give more emphasis on short-term measures and basically restrict to financial and budgetary issues. Benefit of this model for entity is in terms of financial of human aspects and it assists in continuing monitoring of goals and objectives. However; it can adversely affect overall functioning as encouragement towards individual performance can be lost. Further; it has mere focus on employee monitoring tool instead of working as a performance tool.

Importance of Balanced Goals in Scorecard

Thus, as a response to these concerns related to the implementation of BSC, Kaplan and Norton introduced a cohesive model which comprised of four quadrants aimed at representing and focusing attention on what they felt were the key components, timescales and other important aspects of organization’s strategy (Cooper, Ezzamel and Qu, 2017). The most important aspect to be noted before the implementation of these four quadrants is that each of them may not be applicable to every organization; however, each organization may use this model at their discretion in whichever way they find best.

Although it is unknown as to what strategy of BSC is followed by Manchester, however, an attempt has been made to classify the activities into the four elements of the BSC, which are described below-

QUADRANTS	MEASURES	TARGET AND INITIATIVES
Financial	Creating financial goals that are simpler, consistent and long-term.	· The vision of their BSC was aimed at exploiting the overall commercial potential of the club in order to maximize the strategy for implementation of various measures of BSC and to achieve the ultimate goal of being the premier club globally. (Paramio-Salcines, Downs and Grady, 2016.)
Internal Business Processes	Profound understanding of the environment in order to create effective internal business processes.	· Expanding portfolio of sponsors; · Developing business related to retailing, merchandising, and product licensing; · Exploiting media opportunities; · Diversifying margins of  revenue; · Enhancing customer reach and · Distribution of broadcasting rights. (Chris, 2014)
Financial goals	Appraisal of resources	· Borrowing money effectively for various activities and controlling the amount of the debt on the club. The prospective revenues of Manchester United are aimed to be utilized for financing their own activities (Gibbons and Kaplan, 2015). Keeping in mind, that Manchester United has a reputation for zero debts, this measure was an important change.
Staff	Planning, organizing, leading and controlling all activities.	· Each and every process is thoroughly crafted by the staff and then implemented. · Strict responsibilities are allotted so that each and every action is carried out by professionals in the club (Martello, Watson and Fischer, 2016). · The owner of the Manchester club was a dynamic business leader, and the company has followed the same trend till now.

	United Club	Arsenal Holdings
	2017	2016	2017
Total Turnover	128500	103600	424m
Operating Profit	15500	22700	137.5 m
	(Operating profit/sales * 100)
	(15500/128500)*100	(22700/103600)*100	(137.5 m/424m)*100
OPM	12.06%	21.91%	32.42%

The Boot it in United club provides its employees with salaries that are far beyond the revenue of the Company thus they are required to consider strategies of Arsenal Holdings and make improvement in their current strategies:

• Arsenal Holdings had applied Target costing for better management. It is an approach which is applied by the company for price points, product cost and margins which they want to attain for the new product (Sharaf-Addin, Omar and Sulaima 2014).  
• Boot it in United Club can apply the same for ascertaining the preferred percentage of cost. By applying the same, management will be able to monitor the cost in an efficient manner throughout the period (Seuring and Goldbach, 2013). The approach assists in price making as well as reducing the cost. The club will ascertain the target cost required to be achieved and will attain the same through reducing current cost. (Kumar, 2014)

Particular			Boot it in United
		2017		2016
	Amount		% of sales	Amount		% of sales
Remuneration	80000	(8000/128500)*100	62.2%	55000	(55000/103600)*100	53.08%
Other Cost	31000	(31000//128500)*100	24.12%	21000	(21000/103600)*100	20.27%
Administrative Expenses	9000	(9000//128500)*100	7%	2000	(2000/103600)*100	1.93%
Stadium Expenses	3000	(3000//128500)*100	2.33%	3000	(3000/103600)*100	2.89%
Total Expenses	123000			81000
Total Turnover	128500			103600

Remuneration expenditure can be accessed as one of the major expenditure, and the same is required to be reduced in an appropriate manner for attaining the targeted rate of total expenditure (Pazarceviren and Celayir2014). However, the same is very less in Arsenal Holdings because player’s remuneration is made according to the terms of the contractual arrangements and bonuses are given where it is a legal or constructive obligation (Arsenal Holdings plc – Annual Report 2016-17.pdf, 2017). This means that the policy of remuneration is designed very carefully after considering the capacity to pay.

From the above comparison of the Companies,  it can be assessed that sales in Boot it in United have been increased by 24% ,i.e. from £ 103600 to 128500; however total expenditure has been increasingfrom£81000 to £ 123000. The proportionate of total expenditure regarding total turnover is 95% and 78.18% which is very high; thus the target of same should be made around 65% to 70%, so that appropriate amount is available for further enhancement of business. In Arsenals Holdings, other expenses like auditor’s fees, lease payments are highly in control of the management unlike Boot it in United, in which the respective figures are very high in 2017.

	Boot it in United	Arsenal Holdings
Particular	Existing increase rate	Target increase rate	Existing increase rate	Target increase rate
Total Expenditure	51.85%	20-25%	9.29%	3-5%
Total Turnover	24%	15-20%	19.94	9-15%

It can be said that the increase in expenditure of Boot it in United is very high as compared to the increase in turnover which needs to be checked. The same is balanced in Arsenal Holdings, which is due to their planned strategy of controlling expenses. The target increase rate of both the companies has been ascertained after considering the figures of profit and loss account.  

• The issues of Boot it in United Club relating to significant expenditure can be resolved through systems theory. As the theory requires the manager to under the manner in which system affects the worker and the manner in which management affect the system (Rice, 2013). Thus through applying the theory in Club Ltd appropriate monitoring on expenses can be made. It will assist the company in attaining the reduced targeted cost.
• Boot it in United Club can attain the same through fixing some part of salary and making some part dependable on the increasing rate of total turnover. Moreover, the management should be reorganized to ascertain whether unnecessary staff has been appointed in the company (Kaur, 2014).
• A detailed assessment of the procedure of ascertaining salary of executives as well as higher authorities should be made individually to ascertain increase in the rate of same (Gorodilov and Fetisova, 2015).
• The club should also emphasize the learning and development of employees along with increasing salary because circumstances might exist that even though management is happy with the payment but does not know the appropriate manner of working.

• Boot club can gain revenues from sponsorships in which they can get associated with local corporates and can encourage them to organize events and can charge for the same.
• The club can also sell sports merchandises to the visitors to generate an additional revenue stream.
• People have a crazy love for Football; so the club can arrange training programs to use spare time of players so they can train interested people and this was people would get aware of club and management can money from the same.

Strategic Objectives, Measures, Targets, and Initiatives

Advantages which will be attained by Boot it in United Club:

• The club will be able to access management’s commitment regarding process improvement and product innovation for attaining competitive advantage and generating higher revenues.
• The manner of providing service will be designed in accordance with market-driven to attract maximum customers and improve profitability (Weygandt, Kimmel and Kisi, 2015).
• The club will be able to convert new market opportunities into real saving for attaining the best value for money rather than simply realizing the lower cost. With this approach club can generate additional revenue sources and can pay good amount to the employees so they will be motivated to work better.
• Boot it in United Club will be able to attain the target cost percentage relating to salary as well other expenditures.
• It will be able to monitor the reason behind the increase in salary expenses appropriately as well as able to control the relevant variants (Zeng in and Ada, 2010).

Disadvantages faced by Boot it in United Club:

• As the concept of target costing is not limited to accounting and designed in a manner to fulfil the requirement of the customer; the cost-plus approach is preferred over same as it does not involve repetition and is faster.
• For attaining success in target costing it is necessary that information is attained at rapid speed and the same results into enhancing learning and expansion of the business (Zengin and Ada, 2010). Thus Boot club is required to ensure collection of viable data on a timely basis.
• Target costing is dependent on other approaches such as activity-based costing, etc. in order to provide the required results. Due to this factor; this cannot be applied solely to manage costs and is required to be supported by appropriate cost management techniques used by Boot club.
• Additional resources are required to be applied by the by Boot club in order to acquire additional requirement. This leads to apportioning of existing resources into more sections (Weygandt, Kimmel and Kieso, 2015).

According to Höglund and et al (2016), management accounting has gained attention in the past decade. Since there were many issues faced by management which were not addressed by financial accounting and management theories. Hence a combined branch was initiated that resolved the unaddressed issue by application of management and accounting. Areas like budget costing, product costing and BSC are successful areas of management accounting. Football club can also apply management theories suggested by Henry Fayol to ensure effective management. For example division of work can ensure specialization and there must be unity of command and direction to prevent confusion and ambiguity. Moreover; employees of the club should be sufficiently paid so they can be motivated to work productively. This will also ensure stability of Tenure of Personnel, Esprit de Corps and equity in workplace (DRURY, 2013). Management accounting provide assistance to the manager in decision making such as providing information relating to cost regarding pricing decision. Budget costing plays a vital role in making such decisions.

As per Otley and Emmanuel (2013), costing is a branch of management accounting which has its entire focus on controlling cost through product costing, activity costing, job costing, etc. In the above case study, we can observe that how the use of BSC is focused on improving profits through reduction of cost. Budget costing is another way through which the management can control operations of their company. There are various other tools for management accounting, but BSC and budget costing still hold a preferential place for the management.

According to the words of DRURY (2013), application of this theory along with budgeting will assist in developing the basis of measurement for evaluating the efficiency of operations being undertaken in the organization. A budget is referred to aplan of the policies that are to be attained during a particular period of time. All the actions of an organization are based on the budget because the budgets are prepared after examining all the activities of the company. The budget provides a basis for communication to the senior executives with their respective staff who are responsible for implementing the policies of the formulated by top management. Thus, control through Budget aids in coordination between various economic trends, thefinancial position of the company, policies and actions of an organization.

The Four Quadrants of Balanced Scorecard

Budgetary control also facilitates control over the plan and activities of the organization. As per the words of Hoque (2014), budget costing makes this possible by a consistent comparison of actual performance with that of the budgets. When the company is acquainted with the variances well in advance, necessary corrective actions can be taken before the variance affect the performance of the company.

Conclusion

The above study depicts that Boot it in United Club will be able to control and monitor the growth rate of expenditure through appropriate application of target costing. Moreover, management accounting will assist the organization in interpreting financial information in a manner through which it will be able to take a correct business decision. Overall implementation of target costing and management accounting will increase the efficiency of all the operation of the organization.

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