Free Balanced Scorecard of Tesco Essay Sample

According to Aubrey, a balanced scorecard is system of planning and management that is used to measure an organization’s effectiveness when compared to its vision statement. He continues to say that it transforms the vision statement into achievable goals. Some years back, businesses used traditional management accounting. This method however, became obsolete as it could not give accurate and reliable information on the performance of a business. From there on balanced scorecard has become quite popular in the area of management in organisations. The scorecard has many advantages over the traditional management accounting. The advantages include bridging the gap between different fields and departments and checking a few parameters. A good balanced score perspective has four perspectives. They are financial, learning and growth, customer and internal business processes.  

The balanced scorecard has beyond doubt proven to be better than traditional management accounting. First, a balanced score card bridges the gap between the various departments in the organisation. It takes measure of both the financial and non-financial aspects of a business. Because Tesco is a public company that deals with groceries and general merchandise. These are two different departments in the same company. A balanced scorecard will be able to unify the two departments of the company into one. This will enable Tesco to measure its performance easily.

Unlike the traditional accounting methods, a balanced score card just checks a few parameters of the business to measure its performance. Kaplan and David suggest that only about four measures should be developed for each of the perspective aforementioned.  As for Tesco company, the balanced score card will help them to measure their finance, the customer base, learning and growth and the internal business processes.

Businesses create business strategies that enable them achieve their goals and objectives. Furthermore, strategies are developed by businesses to outdo their competitors. In the case of Tesco Company, the following strategies will assist in achieving their objectives for a five-year period. Tesco should come up with generic strategies. To begin with, Tesco can strive to have the least costs in the whole industry and furthermore, offer its products to a wider market at the fairest prices.  This will rely on the ability of Tesco Company to control their cost of operation that will enable them to charge very fair prices and attract a wider market base. The large market base will result to high profits for the company in the long-term period.

Kaplan, Roberts and David suggest that a cost leadership strategy that will focus on the target market is very important for Tesco for a middle term period. This will mean that Tesco will have to create internal policies that will handle the external environment. Tesco Company may focus to concentrate their products on a specific area during this period. This is known as the strategy of niche. This strategy is known to work well with organizations in this industry.

The third strategy available for Tesco is the differentiation strategy. This strategy will need Tesco Company to offer products with unique features that will attract customers. This will enable the company to create a brand and therefore ensure customer loyalty. When Tesco incorporates either of these strategies, their market segment will be clearly defined and thus it will be easy to identify potential markets. The learning and growth perspective covers areas such as human resource capabilities, informational resource capabilities and employment and alignment. According to Dale, Brethower & Karolyn, first, we have the workers and the system procedures. It also focuses on how the organisation needs to be structured so that it can achieve growth. Its objectives include: empowering the workforce, enhancing information system capabilities and developing a skilful process. The perspective measures the percentage of manufacturing with real time feedback, the percentage employees trained in process and quality management and the percentage of front-line workers empowered to manage processes. The examples of this perspective are worker safety statistics, performance appraisals completed and training program hours per employee. When it comes to employee capabilities factors such as the skill level, training, automation and direct access to transactions matter most. An information system capability is based on customers, process redesigning, online access to information among others. Empowerment and alignment measures improvements and the individual and organizational alignment.

Tesco Company has made improvements in the area of learning and growth. The evidence used to validate this statement will be based on Tesco’s venture into the Asian market in 2004, when it teamed up with Taiwanese Ting Hsin. The number of Tesco stores has since grown to around sixty. When it comes to enhancing information systems, Tesco implemented a good IT infrastructure that helped to optimize the supply chain. This was an improvement from the initial system that Ting Hsin Company was using. Through the empowerment and alignment measures, Tesco outsourced its warehouses internationally so that it could focus on its core competencies. Tesco improved its management by training all their senior staff before taking office. This helped the company to communicate its expectations with the managers who would be in charge of the strategic goals of the company. Tesco’s slogan ‘every little helps ‘can be associated with the constant improvement of the company to achieve its goals.      

A scorecard for Tesco Company would appear as illustrated in the table below. This table summarises all the perspectives of a balance scorecard that Tesco Company might use.

 

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