Beginning Phase

Running Head: BALANCED SCORECARD 1

BALANCED SCORECARD 4

Creating a Balanced Scorecard

Institution Affiliation

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Introduction

A balanced scorecard is a type of performance analysis technique used in strategic planning to evaluate the internal operations of business with the aim of improving them and their outcomes. The process aims to provide feedback to the organization which will be used for decision making. The process involves data collection from various departments in the company for analysis. Data collection tools such as observation, interviews, questionnaires, and document review can be used for information gathering. Many companies all over the world create balanced scorecards to assist in evaluating company’s progress. For instance, Peapod.com, an online grocery company requires a balanced scorecard to examine its business operations.

Components of a Balanced Scorecard

A balanced scorecard is made up of four elements. These are, Financial Component, Customer Component, Processes component and Learning and Growth Component. Financial component entails the performance of the company financially regarding income and expenses. Expenditure is regarding taxes, rent, transport and travel, communication, equipment, supplies, salaries and maintenance. Information on the financial component will help the human resource department in the company to come up with strategies to cut on costs to maximize profits. For instance, Peapod.com can decide to cut on travel expenses to maximize profits. Moreover, issuing of compensations such as bonuses and health insurance can motivate employees thus improving their input to the company (Gibbons et al., 2015).

Customer component involves issues like customer satisfaction, delivery of goods to customers in time and providing quick feedback to customers in case of complaints. The customer is a very crucial element of any organization, and therefore businesses have to lay out strategies to maintain customers' trust and loyalty. When customers raise complaints to an organization, they have to be resolved within the shortest time possible (Keyes, 2016). Customers can raise concerns such as quality of products, delivery time, packaging methods, and shipping costs. The organization should ensure that they produce quality products to suite customer demands. They should also ensure that delivery of goods and order processing is done in time to avoid unnecessary delays which may discourage clients. Shipping costs should be standardized to avoid cases of extortion that can damage a company's image.

Processes component refers to the internal operations of the organization. All the activities of a company are facilitated by various factors. These factors include equipment and personnel. For Peapod.com equipment used for its operations include information technology components, that is, hardware and software, delivery vehicles and storage facilities. Personnel include database administrators, system analysts, network administrators, and programmers. All these facilitate the operations of peapod.com and should be evaluated to identify their strengths and weaknesses. This information will be used in devising strategies to improve their overall performance (Tobias et al., 2014).

The Learning and growth component refers to lessons that the organization has learnt over the years and the accomplishments it has achieved since it began its operations. This is an essential element as it helps the company in reviewing its success and failures and also assists in understanding the causes of the two. Understanding the causes of failure can help the company in laying down measures to mitigate risks and threats affecting the company either externally or internally. Strategies for adjusting with market dynamics can be outlined to enable the company remain in play despite changes.

How the balanced scorecard helps management in identifying information requirements

The balanced scorecard involves data collection from various departments in the organization. This data is used to evaluate company’s progress and identifies ways of improving productivity. Management uses this data to determine information requirements in a simplified manner. For instance, data collected about employee performance will be utilized by the management to evaluate employee performance to assist in determining areas that can be improved regarding employee output.

IS systems recommended for management to use to obtain this information for each scorecard component

An information system (IS) is software used in data collection, organization, and analysis. Peapod.com requires some information systems to collect and organize data for the four components of the balanced scorecard. For financial component, a transaction processing system will suffice as it contains all transaction records for the organization. Information about Customer Component can be obtained from order processing systems to capture order processing durations. Also, customer support system can be evaluated to identify various complaints raised by customers. Information about the Processes component should be acquired from information systems such as transaction processing system, equipment inventory and employee performance database. When it comes to the Learning and Growth component, the management will have to examine all its information systems to gather information on factors facilitating growth and ways of ensuring constant growth (Keyes, 2016).

Conclusion

A balanced score card is a very important performance metric. Companies should endeavour to create balanced scorecards to enable them to acquire important information about their operations. This information can be used to identify company’s strengths and weaknesses. The idea of the Balanced Scorecard helps businesses in creating strategic business plans and implementation by organizing operations of all departments in the organization around a common understanding.

References

Gibbons, R., & Kaplan, R. S. (2015). Formal Measures in Informal Management: Can a Balanced Scorecard Change a Culture?. The American Economic Review, 105(5), 447.

Keyes, J. (2016). Implementing the IT balanced scorecard: Aligning IT with corporate strategy. CRC Press.

Melnyk, S. A., Bititci, U., Platts, K., Tobias, J., & Andersen, B. (2014). Is performance measurement and management fit for the future?. Management Accounting Research, 25(2), 173-186.