Balanced Scorecard Method Performance Measurement Research Proposal

Excerpt from Research Proposal :

However, none was found that centered on small hotels in China. This research add to the existing body of research by providing an assessment of the balanced scorecard method in this special business setting. The information obtained by this study will help to make small hotels in China more competitive and able to compete well into the future.

This research will play an important role in the development of the small hotel business in China in several important ways. It will help them to see what areas of their business need improvement, it will help them to pinpoint specific problems within their organization. It will help to bring weakness from obscurity into the forefront where solutions can be found. It will also show them their strengths and the area that could be developed for even greater prosperity in the future. This research will help small hotels to develop long-term vision and goals that will drive them to greater success in the future.

1.7 Conclusion

The business environment in China has been changing rapidly as a result of economic reform. As the Chinese attempt to move into a competitive position in the global marketplace, both large and small businesses will benefit. However, in order to be competitive on an individual basis, companies will have to make certain that their business practices are ready to make the move into the global economy.

The Commercial Center Hotel may be a small business entity, but it is located near a world-scale tourist attraction. It is important for the hotel to capitalize on its strengths and to minimize its weaknesses. The balanced scorecard perspective will give the company the knowledge that it needs to put a plan into action. Through reading this case analysis, other similar hotels will also gain the knowledge that they need to conduct their own assessment. This research is a small part of the overall scenario of economic growth that currently characterizes China.

This research will take a qualitative approach due to the subjectivity of the balanced scorecard method and the individual circumstances surrounding the Commercial Center Hotel. This research method will provide the flexibility needed to address any issues that may arise during the research procedure. This approach is similar to that used by other studies researching application of the balanced scorecard approach to business metrics in other areas and industries. This research methodology has proven successful in similar studies in numerous studies in a variety of business settings.

Chapter 2: Literature Review

The balanced scorecard approach offers companies the ability to see many things that are not included in traditional financial metrics. Much has been written about the balanced scorecard method in recent literature. However, one of the difficulties in a thing this literature to a case study is that every situation is unique. The balanced scorecard method allows for the amount of flexibility needed to the applicable in these many unique situations. This characteristic of the balanced scorecard method makes it difficult to apply the findings of one study to the current situation. Another difficulty with using findings from previous literature regarding the balanced scorecard method is that the subjectivity of the method does not lend itself to traditional research methods. The following literature review will provide information on the balanced scorecard method and the business environment in which it will be applied in this research study.

2.1 Understanding the Balanced Scorecard Method

The first step in applying the balanced scorecard method to a case study is to understand not only what it involves, but also its limitations and abilities. The balanced scorecard method retains many of the traditional financial methods found in other systems. However, one must understand that traditional financial measures were developed during the height of the industrial age (Balanced Scorecard Institute 2009). This age represents a different philosophy then exists in today's business environment. At the time when these measures were developed customer relationships were not critical success of the organization. The only factors that were of importance were those that told a story of how past investments would perform in the future (Balanced Scorecard Institute 2009).

The technology of today has changed the way in which companies manage their assets. The relationship between customers, suppliers, employees, business processes and procedures, and innovation cannot be ignored in terms measurement and strategic analysis (Balanced Scorecard Institute 2009). This is the key reason for the popularity of the balanced scorecard method. It is much more suited for today's business environment and methods that relied on financials only. The balanced scorecard method suggests that businesses be viewed using four different perspectives that embody different aspects of today's business environment. The four perspectives are financial, internal business processes, learning and growth, and the customer. All four of these aspects are interrelated and must be considered in light of all of the other aspects of the business. The following figure represents the relationships between the four aspects of the balanced scorecard approach.

Balanced Scorecard Approach

Fig. 1. source: Business and Strategy Insight for You. 2009. [Online]. Available at:

The financial perspective is given the least amount of attention in the balanced scorecard method. In older measurement systems the financial perspective was practically the only consideration. Financials are still important using the balanced scorecard method, but they do not take precedence over the other aspects of the business (Balanced Scorecard Institute 2009). They are considered in relation to these other characteristics. Technology makes processing of financial data much easier than it was in the past. This part of the scorecard takes the amount of effort to complete that it did in the past. Financial reporting no longer stops but the bottom line. It now includes areas such as risk assessment and cost-benefit data as well as traditional assets and liabilities (Balanced Scorecard Institute 2009). Financial data now gives a much more rounded perspective of the ability of the company to succeed than it did in the past.

The learning and growth perspective of the balanced scorecard includes employee training and organizational cultural aspects that may benefit or harm the future performance of the company (Balanced Scorecard Institute 2009). People are now considered a viable asset of the company. It is recognized that they bring to the company a library of past knowledge and experience that can be used to help the company grow a competitive advantage. The balanced scorecard method provides a means to measure how individual knowledge benefits the company in contributes to performance of the organization. Although measurement of learning and growth does not supersede financial performance, it is now considered just as important, lest the scorecard becomes "unbalanced."

The business process perspective of the balanced scorecard refers to internal business processes. It lets managers know whether their products are conforming to custom expectations or whether they need to change how they are doing their business. This metric helps keep the business in line with goals and visions set forth in the strategic plan (Balanced Scorecard Institute 2009).

The customer's perspective is the fourth aspect of the balanced scorecard approach. This perspective as a result of recent management philosophy changes that reflects the realization that the customer's satisfaction must come first (Balanced Scorecard Institute 2009). Managers knew this inherently in the past, but they had no means to measure it or to include it in their business strategy. The most recent rendition of this recognition is the development of metrics, such as customer satisfaction surveys (Balanced Scorecard Institute 2009). These metrics provide the company a means to quantify customer satisfaction.

The central philosophy of the balanced scorecard method is that all of these aspects must be in balance in order to maximize company performance. If one of these aspects is out of balance, then the entire scorecard is also out of balance. The balanced scorecard method gives the company a means to identify problem areas and to developing means to fix them. Strategic mapping is used in the balanced scorecard method as a communication tool that connects company's strategy with goals and objectives (Balanced Scorecard Institute 2009). Strategic mapping is one of the most important tools used in the balanced scorecard method.

The balanced scorecard system has resulted in the development the various software packages that help to implement the balanced scorecard system. However, understanding the balanced scorecard system goes beyond using software. Software can help to automate the balanced scorecard system, but to implement the key concepts of the strategy, one must be able to integrate this knowledge and to apply it to daily business operations. The balanced scorecard system goes beyond the numbers and this is what makes it one of the most valuable metrics available to businesses today, but it is also the aspect that makes it one of the most difficult systems to apply in a real world situations.

Applying the balanced scorecard involves a combination…

Sources Used in Document:


Alleyne, P., Doherty, I. And Greenidge, D. (2006). Approaches to HRM in the Barbados Hotel Industry. International Journal of Contemporary Hospitality Management, 18, 2, 94 -- 109.

Balanced Scorecard Institute. 2009. Balanced Scorecard Basics. [Online]. Available at:

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Chen, C.N. And Ting, S.C. 2002. A Study Using the Grey System Theory to Evaluate the Importance of Various Service Quality Factors', the International Journal of Quality & Reliability Management, 19, 6, 838 -- 861.

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