SLP 2 BCS Flexibility and the Customer Perspective

INTEGRATIVE PROJECT: BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE 2

INTEGRATIVE PROJECT: BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE PAGE 6

INTEGRATIVE PROJECT: BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE PAGE 5

REVIEW: THE BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE

SESSION LONG PROJECT

STUDENT, UNIVERSITY

INTEGRATIVE PROJECT: BALANCED SCORECARD & THE FINANCIAL PERSPECTIVE 1

PRINCIPLES OF ACCOUNTING: MANAGERIAL ACCOUNTING-BUDGETING PAGE 1

PRINCIPLES OF ACCOUNTING: MANAGERIAL ACCOUNTING-BUDGETING PAGE 3

Abstract

The purpose of the Session Long Project is to give you the opportunity to explore the applicability of the module to your own life and work. This is done in a number of different ways - sometimes with cumulative papers, sometimes with practical hands-on experimentation, sometimes with reflections on a place of work or life. The common thread is personal application, aimed at demonstrating a cumulative knowledge and understanding of the course material.

For this course, the Session Long Project will take the form of putting together background from each of the four perspectives for a balanced scorecard approach to an organization or organizational unit with which you are familiar. In the final module (Module 5), you will have a go at strategy mapping. You won't be building a complete Balanced Scorecard - that would be far beyond our current scope - but you’ll have a chance to see what goes into it and how it gets put together into a coordinated whole. As in the Cases, you’ll be drawing on your previous coursework to help.

The Module 1 assignment has two parts. First, identify an organization in which you have access to at least some information concerning financial data, staffing and human resource systems, marketing and customer relations, information systems, and operations. While most material on the Balanced Scorecard is written from the private, for-profit point of view, it’s perfectly possible to use this approach with public or non-profit organizations as well.

For the second part of this assignment, consider the organization's mission and strategy from the perspective of its financial operations (from your work on the Case, your previous coursework, and your background reading, you should be reasonably clear what such operations are). In this section of the assignment you’ll begin to identify objectives and measures relevant to that perspective. If you’re unclear on just what objectives and measures are, here is a presentation that describes what they are and how to write them: Objectives, Measures, Targets & Action Plans .

When you have thought about it and made your selection, specify (in 2–3 pages):

• The name of your organization

• What this organization does - its mission, vision, and overall strategy

• The access you have to information about this organization. Remember, you’ll need information about its financial performance, marketing, internal operations, strategy, and management systems.

Once you’re reasonably clear on what’s involved, think about your organization and its finances, and then:

• Identify at least three objectives for improving the organization's financial position and show how they relate to the mission, vision, and strategy of the organization.

• For each objective, develop at least one meaningful performance measure (metric).

• For each objective, identify at least one expected level of performance (target).

• For each objective, identify at least one new action or program that needs to be developed to ensure successful implementation of the organization's strategy (initiative).

The organization under review in this module is Nike inc. Nike Corporation is a multinational company that has subsidiaries in several countries across the world with its headquarters in Beaverton, Oregon. The organization deals with manufacturing and distribution of sporting apparel for men, women, and also children. The sporting clothes manufactured and distributed by the organization are classified into several categories depending on the type of game is categorized and designed to be used. For instance, the organization categorizes its sportswear into football, basketball, running and training et al sportswear. “To bring inspiration and innovation to every athlete in the world” is the organization’s vision statement. The mission statement of the organization is “if you have a body, you are an athlete”.

As indicated in its vision statement, Nike Corporation uses innovation as its key strategy to attain success by acquiring a competitive advantage in the industry in which it operates. The organization also undertakes suitable strategies that enable it to meet the needs of its customer thereby helping it achieve maximum satisfaction for its customers. According to Mullen & Johnson (2012), satisfaction helps to increase customer loyalty and hence Nike Company uses maximum satisfaction for its customers as a strategy to increase its competitive advantage. Besides using maximum for its customer as a strategy to outpace its competitors, Nike Corporation also undertakes marketing strategies to help it further enhance its competitiveness in the industry in which it operates. For instance, the organization undertakes media advertisement for its products, a factor that has seen it acquire a large market share in the industry in which it operates. Also, the organization undertakes product differentiation a factor that has further helped it to remain equally competitive in the competitive industry in which it operates. Nike Corporation gets involved in corporate social responsibility a factor that has helped increase its competitive advantage. It can be noted that in the course of undertaking corporate social responsibility the organization further continues to advertise its products and hence this gives the organization a competitive advantage.

From the comprehensive income statement, it is evident that the financial performance of Nike Corporation has been increasing over years from the year 2012. The following table shows the net income for the organization from the year 2012 to the 2014 retrieved from http://finance.yahoo.com/q/is?s=NKE+Income+Statement&annual:

Year	2012	2013	2014
Net income	2,211,000	2,472,000	2,693,000

The table shows that the organization has been increasing its profitability over years. According to Brigham & Ehrhardt (2013), one of the objectives of any profit making organization is profit maximization. The fact that the profitability of Nike Company has been increasing as indicated in the table above makes it justifiable to say that the organization has achieved its objective of maximizing its profitability. Nike organization can still improve its financial position. The following table shows some of the objectives that can help improve its financial position:

Objective	Measure	Target	Action
Increase the total revenue of the organization	Percentage	20%	· Carry out extensive marketing strategies · Enter into new distribution channels in which the products of the organization are not saturated · Undertaking such grant strategies as vertical and horizontal integration
Reduce the cost of revenue	Percentage	15%	· Undertake research and development programs to learn of suitable strategies that the organization can undertake to reduce the cost of revenue without impacting adversely on the product quality · Undertake supplier appraisal to learn of the suppliers who offer quality and yet cheaper supplies to the organization. · Research on any possible innovation that might see the organization reduce its manufacturing costs
Reduce the operating expenses	Percentage	10%	· Undertake innovation to help reduce the manual labor force required and hence cut on the labor costs

The above objectives can help to increase the financial position of the organization in several ways. For instance, increasing the revenue of the organization can result to increased profitability. According to Zimmerman & Yahya-Zadeh (2011), increasing the volume sales of an organization increases the unit contribution margin and hence the total contribution margin which in turn increases the profitability level of the organization. The objective of increasing the revenue of the organization is related to the vision of the organization since it calls for innovation that might the organization increase its productivity level. According to Zimmerman & Yahya-Zadeh (2011), reducing the cost of revenue results to maximization of the contribution margin realized by an organization and hence increased level of profitability. As such, the objective of reducing the cost of revenue is justifiable as a strategy to increase the financial position of Nike Company. It is related to the vision statement of the organization since it calls for innovation that might reduce the manufacturing costs. Operating expenses have an adverse impact on the net income. Hence, reducing the operating expenses is a justifiable course of action to improve the financial position of the Nike Company. It is related to the vision statement of the organization since the organization is compelled to undertake an innovation that can see it cut on operating expenses.

References

Brigham, E., & Ehrhardt, M., (2013), Financial management: theory & practice, Cengage

Learning

Nike Corporation, (2015), Mission and Vision, Retrieved from http://www.nikeinc.com

Mullen, B., & Johnson, C., (2013), The psychology of consumer behavior, Psychology Press

Zimmerman, J. L., & Yahya-Zadeh, M., (2011), Accounting for decision making and

control, Issues in Accounting Education, 26(1), 258-259