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The Usefulness of Balance Scorecard as a Tool in Performance Measurement in a Chinese Business Organisation

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Introduction

The Usefulness of Balance Scorecard as a Tool in Performance Measurement in a Chinese Business Organisation 1. BACKGROUND The circumstances of complexity and continuous change that characterise the current economic and production context have led companies to modify how their systems operate. Approaches such as Total Quality Management (TQM) and Just-In-Time (JIT) production both helps in developing more efficient and effective processes, thus, resulting into an improvement with respect to the generic parameters of quality, cost and time. It was precisely these actions in the area of production which brought to light the shortcomings of information derived from the use of only financial indicators to measure the success of organisations. It is increasingly recognised that measuring the success of organisations using purely financial criteria is no longer appropriate. As a result, many organisations are spending considerable amount of time, effort and resources in redesigning their measurement systems. Survey data suggests that between 40 and 60% of companies will have significantly changed their measurement systems between 1995 and 2000. (from: http://www.som.cranfield.ac.uk/som/cbp/Evolut.htm) In order to overcome the limitations of financial indicators, there is a need to monitor non-financial indicators both quantitatively and qualitatively. There is no doubt that the use of Balanced Scorecard, which focuses on the different dimensions of performance, is the best-known technique (Valentin, Azofra, 2003) to carry out such task. Balance Scorecard helps translate the organisation's strategy into tangible objectives and measures encompassing customers, internal process, learning and growth and financial perspectives. China is currently one of the most progressive countries in Asia. ...read more.

Middle

By creating measures under each of these headings, no important area would be missed. The Balanced Scorecard itself is just a framework and it doesn't say what the specific measures should be. "That is a matter for people within the organization to decide, and the set of measures for each organization (or even sections within the same organization) will be different. Much of the success of the scorecard depends on how the measures are agreed, the way they are implemented and how they are acted upon." (Source: http://www.dmem.strath.ac.uk/CSM/Research/IPMS.html ) So, the process of designing the scorecard is just as important as the scorecard itself. 4. RESEARCH METHODOLOGY The author has already sent electronic mails to the various companies who are taken Balanced Scorecard listed below to participate in the study. Beijing NaNO Sunshine Technology Co.Ltd, Coherent Beijing, ChengYin Technology Co.Ltd, Foctek Photonics. Inc, NanJing saifei Electro-optics Co.Ltd. However, none of the companies has given any response of interest yet as the moment. 4.1 Method of Data Collection Choosing the appropriate research method is very important because it affects the achievement of research. It will either strengthen or weaken the research effectiveness or efficiency.(Jacqueline, 2002, "Business Research Methodology") The data collection involves collection of primary and secondary data. The primary data is mainly gathered from questionnaire and interview. Because of the chosen topic, it is difficult to get a person who will agree to be interviewed. The questionnaire method designed with open-end and close-end questions will be carried out to get the relatively accurate information. ...read more.

Conclusion

A comparison of the different case companies will also be done. The advantages and disadvantages of using Balance Scorecard can be also be pinpointed as the data are analysed. Furthermore, its strengths and weaknesses will also be assessed. This will give the reader a clear picture of what factors can greatly affect the success of the utilisation of balanced scorecard. Depending on the results, the recommendations for successful implementing Balanced Scorecard will be presented. 4. Limitation of the Research Due to the chosen topic, methodologies such as participant observation, and experiment, can not be used, which usually takes several years. Furthermore, it is hard to find the company who are using Balanced Scorecard and if ever they are applying it does not necessarily mean they are willing to participate in this study because some companies are not willing to divulge their data. And because of limited time and resources, the number of case studies that will be presented will depend on the number of companies that are willing to participate (minimum of two companies). Due to financial and resource constraints, the questionnaire is only designed to be distributed to 100 people. It covers only small number of people so it can't represent all people's opinion. And there maybe have some bias information existing in the questionnaire. The open-close question gives the people freedom to write their opinions. In addition, Balanced Scorecard is a relatively new approach. There are still arguments existing about the usefulness of Balanced Scorecard. And some books and journals written are very subjective which may affect the quality of the information. Thus, this limitation may affect the outcome of report. ...read more.

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