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Business Model and Strategic Plan Part III

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Business Model and Strategic Plan Part III

The business’s strategic objectives are crucial for the achievement of the broad business goals. According to Steiss (2005, pg, 44), strategic objectives are expected change in welfare, behavior, and condition because of initiating a project or program. In this scenario, the initiation of sustainable resources division by McDermott International Inc., has certain outcomes on the general condition of the company. The outcomes range from financial implications, managerial implications, and market implications among others. Specifically, strategic objectives are specific and time bound; it states why and how the organization intends to fulfill its proposal. They depend on the vision and mission of the program; in the case of renewable resources division, the strategic objective states how the vision, “shaping the future of energy sources by innovative energy solutions that address the needs of every member of the society”, is achieved. It also specifies how and why the mission, “to help people lead enjoyable lives while addressing energy related causes of climate change and environmental deterioration”, is addressed.

A balanced scorecard is a measurement system that incorporates non-financial and financial performance measures (Whittington & Delaney, 2007, pg 259). It translates the division’s mission and vision into a set of performance measures in four major perspectives; these perspectives are financial perspectives, which measure the return on investment, profitability, revenues and costs, and competitive position. The customer perspective centers on areas critical to the customer, they measure customer value, customer satisfaction, and retention. Internal business processes or operations perspective focuses on business operations to assess their efficiency and effectiveness; it measures quality, cost, and time for operations critical to the clients (Whittington & Delaney, 2007, pg, 260). Specifically, it deals with measures of process performance, productivity or productivity improvement, operations metrics, and impact of change on the organization. The last perspective is learning and growth, which focuses on measures relating to infrastructure, employees, teaming and capabilities critical for the achievement of financial and customer objectives (Whittington & Delaney, 2007, pg, 260). In particular, it focuses on employee satisfaction, employee turnover or retention, level of organizational capability, nature of organizational culture or climate, and technological innovation.

The components of a balanced scorecard include the strategic objectives, performance measures that evaluate the attainment of objectives, baseline performance or metrics that states the current level of performance. Metrics help in evaluating the activities and derive value from employees taking part in the in the activities (DeDroote School of Business, 2007, pg, 3). In addition, it has targets, which is the expected improvement needed and the strategic initiatives which are the specific actions required for the achievement of strategic objectives (Whittington & Delaney, 2007, pg, 260). In the case of sustainable resources division, the metrics will not only focus on traditional financial measures like return on investment, but also employee satisfaction, leadership competencies, tactical diversity.

Sustainable Resources Division Balanced Scorecard

Scoreboard Four Perspectives	Strategic Objectives	Performance Measure	Metrics	Targets
				Yr. 1	Yr. 2	Yr. 3
Shareholder Value or Financial Perspective	Improve profitability	The change in revenue growth	Margin	↑ 5%	↑ 8%	↑ 13%
	Manage operating costs	Assess the operating costs and customer costs	Cost of producing one unit	↓ 8%	↓ 7%	↓ 3%
	Leverage asset base	Assess the asset utilization rate	Check utilization of assets to confirm maximum use	N/A	N/A	N/A
	Increase Market share	Assess the percentage change in the market share	Increase sales	↑ 10%	↑ 12%	↑ 20%
Customer Value Perspective	Increase customer retention	Assess the customer satisfaction rating on a scale of 1 to 5. Assess the number of repeat and referred customers as a percentage of overall sales.	Increase the quality and customer relations management	N/A	N/A	N/A
	Enhance customer satisfaction	Assess the time taken to deliver and install windmill to customers. Increase the number of customers served within the market segment.	Reduce the time taken to install windmills	↓ 5%	↓ 9%	↓10%
	Increase customer value	Assess product differentiation	Produces more varieties of windmills	↑ 3%	↑ 2%	↑ 6%
Process or Internal Operations Perspective	Reduce process duration	Measure of process performance	Develop new product development cycle	↓ 5%	↓ 5%	↓ 5%
	Enhance Productivity	Measure productivity ratio	Measure the number of windmills produce per hour	↑ 5%	↑ 10%	↑ 20%
	Enhance the efficiency of the operations	Assess the duration taken to process one unit
Learning and Growth (Employee) Perspective	Enhance employee satisfaction by training them to improve their skills	Asses the productivity and job satisfaction of individual employees on a scale of 1 to 5	Reduce employee turnover by 90 %	↓ 75%	↓ 90%	↓ 95%
	Engage with the best managers and world class leaders	Measure the leadership effectiveness on a scale of 1 to 10	Retain the top 80 managers	↑ 90%	↑ 95%	↑100%
	Enhance technological innovation by changing the available infrastructure that enhances productivity	Assess the installation date. Consider how frequent innovations are implemented.	Ensure new innovation every six months	N/A	N/A	N/A
	Enhance the culture of the organization	Assess the culture of the organization and change to adopt global changes and trends	Train employees on new organizational culture	N/A	N/A	N/A

Communication Plan

A balanced scorecard is a necessary tool used to update and communicate strategy among the organizations stakeholders. The sustainable resources division in McDermott International Inc should communicate the strategic objectives to the company’s stakeholders for its adoption. The benefits of adopting a balanced scorecard include better understanding and management of the link between specific decisions and the strategic goals of the organization, redefines the relationship between the organization and customers. It enables the organization to re-engineer crucial business processes and creates a new corporate culture relevant to the changes in the business environment (DeDroote School of Business, 2007, pg, 3).

A communication plan is an essential tool for effective strategic communication; it helps in aligning the communication to the mission, vision and goals of the organization (Gillis, 2012, pg, 119). Sustainable resources division has its mission, vision, and goals as stipulated; they are communicated in balanced scorecard format. Gillis (2012, pg, 119), defines communication plan as a documented statement highlighting the actions taken to accomplish particular organizational goals, the duration, the budget and the procedures for evaluating the consequences of the communication. Importantly, they help the communicator focus on actions aimed at helping the organization achieve its goals (Gillis, 2012, pg, 119).

The Purpose of Communication

The balanced scorecard highlights the strategic objectives, measures, and targets that cut across many departments in McDermott International Inc and particularly in the sustainable resources division. Communicating the balanced scorecard is important to decision makers to align their decisions to the goals of the organization. The decisions made consider both short and long-term actions. In addition, the communication plan guides in day to day working by setting priorities. Furthermore, it gives a sense of order and control and prevents last minute rush and mix up of actions. The communication plan includes the division’s strategic objectives, ways the objectives are to be achieved the schedule for achieving the objectives and how the results will be measured.

The Communication Plan’s Audience

The target audiences for the balanced scorecard are all stakeholders. The stakeholders include the executives, the public, employees of the division. It is important that the audience is inclusive because the implementations of the actions have certain implications that run across. For instance, financial implications require the finance department to understand and release fund. The marketing department needs to get to know the targets while the public need to understand its expectations.

Channels of Communicating a Balanced Scorecard

Two channels of communication will be used to communicate the scorecard. Lateral communication will involve communicating the goals and expectation of the scorecard among employees of the same level. The means of communication will include meetings, circulars and organization’s magazines. Vertical communication channel, which involves communing information from the executive to the employees, will also be used. The two channels of communication are effective in ensuring that information reaches every stakeholder. Secondly, when lateral communication is complemented with vertical communication it makes communication to be open and reduces distrust. In conclusion, the sustainable resources division in McDermott International Inc is able to achieve the mission and vision when the balanced scorecard is implemented.

Reference

DeGroote School of Business, (2007). Metrics and Balanced Scorecard: Driving Human Capital Measurement at Scotiabank.

Gillis, T., (2012). The IABC Handbook of Organizational Communication: A guide to Internal Communication.

Steiss A. W. (2005). Strategic Facilities Planning: Capital Budgeting and Debt Administration.

Whittington, O. R. and Delaney, P. R. (2007). Wiley CPA Exam Review 2008: Business Environment and Concepts..