Balanced Scorecard Control And Adjustment Of Environmental Essay

Length: 6 pages Sources: 6 Subject: Business Type: Essay Paper: #78153805 Related Topics: Environmental Problems, Environmental Issues, Harvard Business
Excerpt from Essay :

Balanced Scorecard

Control and Adjustment of Environmental Factors for a New Bookstore: The Balanced Scorecard Perspective

All businesses, whether they are brand new and still in the planning stages or have been around for generations, must continually reappraise their position in their given market and industry in order to ensure that they are providing their shareholders and all stakeholders with the maximum possible benefit for their involvement with the business. Simply put, companies must make sure that their vision and strategies, in addition to being maintained with a high degree of focus and integrity, are also being implemented in effective and practical ways. There are a variety of different theoretical models that can help to translate the abstractions of visions and objectives into practical actions and decisions, and among the simplest yet potentially most effective of these models is the balanced scorecard.

The balanced scorecard model or framework was developed explicitly to provide a means for achieving the objectives stated in a company's vision and strategy statement by focusing on specific areas of the company and its operations (Kaplan & Norton 2002). The four perspectives identified in this framework -- financial, business process, learning and growth, and customers -- each represent one angle form which strategy must be viewed and formed (Niven 2002). The key word in the name of this framework is balanced -- all businesses must balance their strategy and their actions so that all of these perspectives are equally accounted for, without sacrificing one area of the business for gain in another (Olve & Sjostrand 2006).

For the new bookstore that has been proposed as a business venture, developing this scorecard will provide a straightforward and direct means for achieving success by determining what areas can be more directly controlled, and what areas must shift in response to external elements beyond the control of the business (Bourne & Bourne 2009). Though this is not the only model that can be used to help create and implement a clear strategy for a new business, its major strength is found in the clarity and ease with which this strategy is developed, and with a careful accounting for environmental factors that might not be directly dealt with in this model its efficacy can be greatly increased (Bourne & Bourne 2009). The following pages will provide an overview of a balanced scorecard for the proposed new bookstore venture, and will also deal with issues of control (and the lack thereof) in the four different perspectives identified in the balanced scorecard framework.

The Balanced Scorecard

The new bookstore that has been proposed will be like any other business in its need to contend with the four areas identified by the balanced scorecard. While it might seem like certain perspectives are more pressing for a bookstore than are others, and that a different mix might be needed for a different business, the fact is that the four perspectives are all necessary for all businesses to take into account (Kaplan & Norton 2002; Olve & Sjostrand 2006). Businesses have had problems in the past by focusing too much on one perspective and letting the others languish, and this is not generally productive (Kaplan & Norton 2002).

The financial perspective has often been the primary focus for many businesses, and this makes...


Without financial stability and the meeting of certain minimum financial goals, no business can survive. The balanced scorecard perspective does not deny this fact, but it places it in a context of wider concerns -- financial difficulties cannot solve themselves, after all, but must be solved by a reliance on other business elements (Niven 2002). For the bookstore, the primary financial objectives will be the complete cash solvency -- the ability to operate without borrowing each month to purchase product -- within two years. The measure for this is inherent to the objective, making it a clear matter of success or failure in meeting this objective, and smaller targets for reducing loan amounts each month can help keep this on track. Setting limits and keeping to them will ensure success in this regard, if the other elements encourage enough sales and efficiency (Bourne & Bourne 2009).

Efficiency is largely he domain of internal business processes, which are often not fine-tuned enough to achieve true financial success (Kaplan & Norton 2002). Ensuring that product is shelved in an easily navigable manner and that proper quantities of individual titles are ordered -- and that a proper diversity of titles within each category is maintained -- will improve cost efficiency and help provide better measures for the store and better service to customers. Improving the order-to-purchase ratio will be a clear objective in this area, measured by the time it takes to sell the original purchased amount of any given title. A one-month maximum should be the target for most titles, and initiatives to reduce slower selling titles can hone the products to the customers' wants (Niven 2002).

Learning and growth is the third perspective identified in the balanced scorecard, and this is perhaps the most overlooked element of most businesses (Olve & Sjostrand 2006; Niven 2002; Kaplan & Norton 2002). By maintaining a culture of ongoing learning and growth, extending from the top of the company down to the floor-level employees, businesses can ensure that they are always finding more efficient and effective means of achieving their goals in other areas, providing both direct and indirect advancements to the company (Bourne & Boune 2009). Ensuring that store employees each have at least one area of "expertise" in which they remain aware of the new books being published is one initiative that can be started that would help to measure and achieve a larger objective of ensuring that all of the different categories of books can be well represented and explained to customers.

The customers themselves are the final element of the balanced scorecard, and though most businesses are very conscious of this aspect of their business, it can be difficult to view customers as a workable perspective in strategy development (Kaplan & Norton 2002; Olve & Sjostrand 2006). Like financial security, without customer satisfaction any business will ultimately crumble as consumers turn to competitors to fill their needs (Niven 2002). For the bookstore, this means setting an objective of a certain amount of crowd attraction to the store. This can be measured by a number of technologies or through simple counting; targets should be a five percent increase in foot traffic for each month of the store's first year of operation. Having author signings and other events could help to achieve this.

From the above descriptions of the balanced scorecard's perspectives and the direct, concrete examples of strategic actions that can be taken in regards to these perspectives as they apply to the proposed new bookstore, it should be clear that the four perspectives are not really entirely distinct. In fact, it is because these perspectives and areas are so interconnected and mutually dependent that achieving balance in the strategic objectives and actions of any given company is so important (Bourne & Bourne 2009). The bookstore will achieve success only if it is able to balance its financial strategy with its internal business processes, enhanced by its learning and growth and with an equal attention to customer satisfaction. If any of these areas or perspectives is left out of strategic planning, or is cut in order to make room for more expansive strategy reforms and actions in other areas, there will be a greatly reduced likelihood for success (Kaplan & Norton 2002).

Area of Least Control

What also emerges from a consideration of a balanced scorecard are those areas of a given business's strategic concerns that are most within and most outside of their control. This can and does change…

Sources Used in Documents:


Bourne, M. & Bourne, P. (2009). Balanced Scorecard (Instant Manager). London: Hodder & Stoughton.

Kaplan, R. & Norton, D. (2002). The Balanced Scorecard: Translating Strategy into Action. Cambridge, MA: Harvard Business Press.

Niven, P. (2002). Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. New York: Wiley.

Olve, N. & Sjostrand, A. (2006). The Balanced Scorecard. New York: Wiley.

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