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This report investigates the balanced scorecard approach to organisational performance, and covers.

Extracts from this document...

Introduction

EXECUTIVE SUMMARY This report investigates the balanced scorecard approach to organisational performance, and covers. 1) Tangible Advantages * Translating strategy into specific objectives. * Balance between internal and external measures. Tangible Disadvantages * Involvement of senior managers required. Intangible Advantages * Focal point to organisation. * Non-financial aspects. Intangible Disadvantages * Not defining vital measures of success. * Slight account of likely time lags. 2) Experience from Wheatley Park shows, that in order for a business to increase added value, and gain a competitive advantage, they have to set goals and translate into measurable outcomes. However they have to be sure what they decide to measure is relevant, and then monitor the trends and fluctuations for any negative issues that may occur. A company can gain functional integration by applying the balanced scorecard to individual departments, and bring together measures that integrate the key business processes. However they must be cautious not to favour one department, as a gain in one department could be at the expense of another. 3) Provided it is properly implemented the Balanced Scorecard can help managers measure and control simultaneous aspects of the organisation. It can also branch outside the organisation in to the supply chain by analysing the inputs (resources) as well as the customer perspective. However, a Balanced Scorecard on its own cannot perform as effectively as it can in conjunction with other managerial practises. Teams within the organisation will form their own measures inline with the overall Balanced Scorecard. These performance measures can help increase morale and motivate employees. TABLE OF CONTENTS 1. ...read more.

Middle

Alternatively 2GC (Active Management 2002) feels the best way to approach this is to have a corporate balanced scorecard and then each department create their own separate aligned versions from that. Each way is effective. A practical example of functional integration has happened is Rockwaters, who used their internal business when measures to focus on more integrated processes instead of each functional department on its own (Kaplan, and S. Robert, 1993). Thus giving them a competitive advantage over competitors. If Frazer Digby were to consider this approach, communication and efficiency within Wheatley Park would increase. An example where functional integration would help Wheatley Park is in week 1, where the night porter could not get a customer some towels because they came under house keeping duties. A point to consider is that some departments might become to focused on their own targets, they forget about the overall strategy of the business. A gain in one area of the business might be at the expense of another. 3.2 Added value: In order for an organisation to add value to its products and services, through the balanced scorecard approach, they have to set goals in customer satisfaction, internal business use, innovation and improvement. They then have to translate these into measurable outcomes such as the 'occupancy rate' ratio (R. Kaptan and D.P Norton, 1992). This is shown in week five by Frazer Digby, as his objective was to decrease the day-to-day operational costs, by measuring and analysing the number of employees needed compared with the annual average occupancy rate. This approach can sometimes be misunderstood. ...read more.

Conclusion

5. Conclusion The balanced scorecard can clearly help an organisation increase its performance, by linking together different aspects within a business and integrating departments to work together where possible. However it fails to examine some important information, for example the competition within the market, also if what a company sees as a key factor for success is wrong then they will be putting themselves at a disadvantage especially if they do not have the right information systems in place to stop the error in the early stages. This is why overall it is important for a business to select the right measures when adopting the Balanced Scorecard. And use it along side other aspects of the business. 6. Recommandations After analysing the Balanced Scorecard approach to organisational performance, we have concluded that it is an effective measure of performance, but it does have weaknesses. Therefore we recommend that the Balanced Scorecard could be implement to the Cosmopolitan Hotels Group, but not on its own. This is due to the fact that it does not account for competition within the highly competitive UK hotel industry (Phillips 1999). Alongside the Scorecard we would implement Porter's Five Forces model. This is because it identifies the threat of competition, of both existing firms and the possible threat of new entrants. The customer and supplier perspectives are also included in the model, which will reinforce the information that the Scorecard gives. This will help to draw more accurate and reliable conclusions on proposed market strategies. 7. Appendices Appendix 1 Shows the linkages between the perspectives Financial Perspective Customer Internal Perspective business Perspective Innovation and Learning Perspective Source of model: (J Brown and B McDonnell, 1995). 9. ...read more.

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