Balanced Scorecard and sales organisation - chances and risks

Table of contents

List of figures

List of abbreviations

1 Introduction
1.1 Executive Summary
1.2 Scope of Work

2 Problem and Research
2.1 Problem Definition
2.2 Relevance and Motivation
2.3 Methodology

3 Basics on Balanced Scorecard
3.1 Characteristics and definition
3.2 Vision and Strategy
3.3 Four Balanced Perspectives
3.3.1 Financial Perspective
3.3.2 Customer Perspective
3.3.3 Internal Business Perspective
3.3.4 Learning and Growth Perspective
3.4 Cause and effect chain

4 Application of the four perspectives to sales organization
4.1 Perspectives
4.1.1 Financial Perspective
4.1.2 Customer Perspective
4.1.3 Internal Business Perspective
4.1.4 Learning and Growth Perspective
4.2 Advantages and disadvantages

5 Conclusion

Bibliography
Literature
Internet

Appendix

ITM Checklist

List of figures

Figure 1 – Balanced scorecard framework

Figure 2 - Concept of the Balanced Scorecard

Figure 3 - The Internal–Business-Process Value-Chain Perspective

Figure 4 - Cause and Effect Relationships

Figure 5 - Four perspectives regarding the sales organization

Figure 6 – Samples for measures and objectives relating to sales organization

Figure 7 - Chances and risks of the balanced scorecard

List of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

1.1 Executive Summary

The balanced scorecard means the implementation of a balanced reporting of a company. This is one of the most well-known approaches of the performance measurement. The balanced scorecard was developed by Robert S. Kaplan and David P. Norton within the scope of a research project called “measuring performance in the organisation of the future” in the year 1992.

In large enterprises the balanced scorecard is already in use – for small and medium sized enterprises the implementation of a balanced scorecard can also be reasonable in order to define and convert a company strategy. The balanced scorecard is not only reasonably implemented in industrial enterprises; it could also be used and customized in different areas. The sales organization should serve as example for a possible strategy development and its measures for implementation concluding the chances and risks of the balanced scorecard.

1.2 Scope of Work

The assignment “Balanced Scorecard and sales organization - chances and risks” starts with the introduction which includes the executive summary and the scope of work that is realized in here. The second chapter deals with a detailed definition of the problem that causes the relevance of this assignment, the determination of the objectives as well as the methodology that describes the assignment’s structured procedure.

Chapter three is focused on the basics of the balanced scorecard. At this juncture in particular the characteristics and definition of the balanced scorecard, the balanced perspectives as well as the cause and effect relationship are being analyzed.

Chapter four is about the application of the four already described perspectives to sales organization and the corresponding chances and risks for the sales organization by implementing the balanced scorecard.

Finally, the results of this assignment are summarized; especially whether the set objectives are reached as well as critical comments about the assignment is given in the last chapter.

2 Problem and Research

2.1 Problem Definition

The successful implementation of a company’s strategy is one of the challenges for companies in today's time. The pure formulation and composition of a good strategy leads not necessarily to success of a company due to the fact that the implementation of a strategy needs to be successful.

The Balanced Scorecard (BSC) is successfully used by many companies in order to support the implementation of a strategy. But it still remains open whether and to what extent the sales organization is coupled to the strategy implementation by means of the balanced scorecard. Thus, a system can be developed which promotes and recompenses the successful strategy implementation.

2.2 Relevance and Motivation

According to the arising significance of company’s sales and distribution achievement, the implementation of an efficient balanced scorecard is an essential requirement from managerial point of view.

This change requires a stronger orientation of business enterprises towards an optimized balanced scorecard as we well as sales organization in order to create a lasting added value for the enterprise.

In order to meet these requirements, the primary objective of this assignment is to reveal and underline the importance of well implemented and managed balanced scorecards for corporate success and to explain methods for the management critically.

2.3 Methodology

In general, data researches are clustered into two groups:^[1]

- Secondary Research
- Primary Research

On the one hand, the secondary research is based on already existing literature. The primary research or the so-called field research raises data and information on the market originally - starting point for the data collection is the origin respectively source of facts and opinions.^[2]

Due to time restrictions this assignment is only based on secondary research which is particularly about the arising problems that causes the relevance of that assignment.

Today, competition becomes more and more turbulent. Therefore, it is of increasing importance to assure a future-proof company strategy and their fast conversion. These are the main developments which cause the growing importance of well implemented and managed balanced scorecard for corporate value creation.

In addition, the objectives of this assignment are defined: Primary, these are the explanations about the significance of a balanced scorecard, the critical analysis about the necessity as well as methods to manage a balanced scorecard respectively sales organization.

3 Basics on Balanced Scorecard

3.1 Characteristics and definition

The concept of the BSC was developed approximately at the beginning of the nineties by a research team around Robert S. Kaplan and David P. Norton. The name of the BSC - concept is derived from its balance and its clear reference for measurement. The criticism towards the strong financial orientation of US- American management systems was the starting point for the researcher team for the development of the BSC.

Away from the purely financial orientation, a set of financial and in addition not financial measured variables should be determined, in order to be able to judge the entire value creation of an enterprise correctly. With the compilation of the measured variables it was made attended that in its whole all relevant business contents in the concept find consideration. It was shown that with appropriate selection of measured variables and goals in the BSC, the BSC serves as clarification of the enterprise’s strategy and also makes the conversion of the strategy measurable at the same time.

Due to the allegation of goals which affect the behaviour, the behaviour of the co-workers in the enterprise can be brought in agreement with the enterprise strategy by the selection of the right goals. This realization entailed a shift of emphasis of the original concept. Today strategic goals and their representation are located in the center of the BSC.^[3]

On the basis of the vision of an enterprise, strategies are derived and formulated from it goals. For the measurement of the achievement of objectives relevant characteristic numbers are assigned to the goals.^[4] Due to the translation of the enterprise strategy in figures, the strategy can be communicated into all divisions of a company and therefore also can get the strategy across to the co-workers.

[...]

^[1] Cf. Meffert, H. (2000), p. 145.

^[2] Ibidem.

^[3] Cf. Horváth & Partner (2004), pp. 2.

^[4] Cf. Jossé, G. (2005), p. 4.