Balanced scorecard implementation at Cattaraugus County rehabilitation center

Strategic Management represents a collection of managerial actions and positions that shapes a company's performance in the long run. It entails internal as well as external environmental scanning, strategy development (long-term or strategic planning), strategy execution, evaluation, and control (Wheelan and Hunger, 2008). Gluck, Walleck, and Kaufman (1982) are of the view that organizational managers endeavor more towards effectively tackling the changing global scenario through four strategic management stages. The first stage entails primary financial planning. The second stage addresses forecast-based planning, and the third comprises of externally oriented strategic planning. Cattaraugus County's ReHabilitation Center (ReHab) started making the use of Balanced Scorecard (BSC) in its process of organizational strategic planning (Martelloetal, 2011).

The Balanced Scorecard (BSC) model of Norton and Kaplan is a strategic performance tool used by managers to give a balanced view of the outcomes and the factors guiding the outcome.. The BSC is a guidance tool that helps a system to organize the strategic objectives of an organization into four outlooks. The model is operationalized through development of quantitative measures in these four outlooks; they are:

Financial

Internal Business Processes

Growth and Learning

Customer (Martello et al., 2011)

Analysis

The ReHab Center of Cattaraugus County is committed to enhancing disabled persons' QOL (quality of life). It delivers all-round care to help every patient attain maximum independence. It has been engaged in strategic planning since many years. A Strategic Planning Director was appointed about 9 years ago, by the Center. Following a careful evaluation of the Center's efforts in strategic planning, the newly instituted director resolved to employ the BSC strategic tool for cascading strategic planning through the Center. The aim of employing BSC was uniting every area of the Center under its overall strategic design. Subsequently, all areas would come up with outcome measures in line with the Center's overall strategic goals. Though numerous metrics or measurements are easily discernible or available in the case of for-profit firms, they cannot be so easily obtained in the case of non-profit organizations, particularly for rehab facilities wherein the consumer population has developmental issues (Martello et al., 2011)

Gaining acceptance and involvement of all staff members in the BSC system is crucial for its successful implementation in the ReHabilitation Center. Initially, a number of employees expressed doubts about the approach, viewing it as an impetuous, one-time system which would again require them to divert precious time towards it, away from their routine tasks. The director, after some interval of time, was successful in convincing the senior-most managers that this tool would result in more efficient organizational strategic planning. The Center, then, with the aid of its entire workforce, accomplished the development of a corporate strategic plan for 2002-2005, which the organization has continually updated, on an annual basis. The ReHabilitation Center's vision, mission and values are displayed below in Exhibit 2 . An analysis of its Mission statement makes it rather clear that the Center's key focus is its customer base (Martello et al., 2011).

The ReHabilitation Center aims at becoming the leader in delivering and evaluating requisite services to disabled individuals. The Center's Vision as well as Mission must be achieved with the help of personnel in the Center, whose work culture is values-based. The Center's outlined values are: integrity, loyalty, positivity, respect, learning, and result-oriented attitude (Martello et al., 2011).

Exhibit 1

The ReHabilitation Center accords equal importance to both financial and customer perspectives.

Conclusion

The ReHab Center, in applying the BSC tool, has equally focused on the financial and customer perspectives. The basis for this equal attention is the Center's necessity to perform its main mission for customers (i.e., developmentally disabled persons), and maintain its financial stability. The focus on both perspectives is crucial to the Center for catering to its customers in an effective and efficient manner (Martello et al., 2011).

Though the application of the BSC approach in the Center's long-term planning process is new, the company's management team has approved it. The challenge ahead is continuance of the process of developing measures of outcome for separate organizational departments, and tying these measures to its strategic goals. The Center is aware of the fact that this process is very challenging as it is not easy to measure real outcomes. Outcome measure formulation constitutes a constant developmental process. The Center feels that this will undoubtedly improve long-run organizational effectiveness and efficiency (Martello et al., 2011).

SLP (3 Pages)

The largest beverage manufacturer in the world, the Coca-Cola Company (NYSE: KO) refreshes its customers with over 500 sparkling brands. The organization, along with its bottling partners, commits itself to its 2020 Vision, which is a strategy to increase system revenues two fold in this decade, and concentrate on five major areas, namely, profit, portfolio, people, planet and partners. Its brand portfolio is the strongest among non-alcoholic beverage makers; the Company now features 20 brands, which generate a yearly retail sales amounting to 1 billion dollars (Sheets, 2010).

Mission

The Coca Cola Company's mission is long-term. The mission statement declares its intent as an organization, while serving as a yardstick against which the company evaluates its decisions and actions.

To invigorate the planet.

To stimulate moments of happiness and optimism.

To make a difference by creating value (Sheets, 2010).

VISION

This plays the role of a framework for Coca-Cola's Roadmap, driving all elements of its business by outlining what requires to be done by the company for continuing to attain sustainable, quality progress.

People: The Company strives to provide a great work setting wherein its people (employees) feel motivated to put their best foot forward.

Portfolio: It aims to develop a range (portfolio) of superior beverage brands, which foresee and meet customers' needs and wants.

Partners: The Company aims at nurturing a successful network of suppliers and customers with whom it wishes to develop mutual, lasting value.

Planet: It strives towards being responsible and making a difference by building and supporting sustainable communities.

Profit: Coca-Cola Company's goal is long-term maximization of shareholder returns, while bearing in mind its overall responsibilities.

Productivity: It attempts to be a lean, highly effective, and dynamic organization (Sheets, 2010).

WINNING CULTURE

This describes the behaviors and attitudes required by the company personnel to make its 2020 Vision come true.

VALUES

Coca-Cola Company's values play the role of a compass for its actions, and portray its behavior in society.

Leadership: The mettle to make the future better

Collaboration: Leverage combined genius

Accountability: Be the one to make it happen

Integrity: Being real

Passion: Dedication via both mind and heart

Quality: To perform every task/activity well

Diversity: As wide-ranging as its brands (Sheets, 2010).

FOCUS ON THE MARKET

Concentrate on the requirements or demands of customers, franchise partners and consumers

Venture out and mingle with market participants (customers, rivals, etc.) in order to observe, listen, and learn

Develop a world view

Be voraciously curious

Concentrate on daily marketplace execution

WORK SMART

Take action with urgency

Stay receptive to change

Be bold enough to alter course whenever required

Work efficiently

Stay constructively dissatisfied

ACT LIKE OWNERS

Retain accountability for both inactions and actions

Supervise and manage system assets, in addition to concentrating on value creation

Learn from outcomes, i.e., what activities led to desired results and what failed

Reward employees for risk-taking and discovering better solutions to problems

BE THE BRAND

Prompt innovation, optimism, fun and zeal (Sheets, 2010).

Financial Performance

The Company reported 12 billion dollars revenue in the third quarter, same as that of the previous year's third quarter. In combination with dip in sales during the first and second quarters, there is a 2% drop in the organization's year-to-date income. Net quarterly income was 2.1 billion dollars, a whopping fall of 14% from the past year. EPS (Earnings per share) was 48 cents - 6 cents lower than the previous year's EPS, and 4 cents short of the consensus estimate of Wall Street brokerage analysts (The Coca-Cola Company Announces Stronger Growth, 2014)

Sales volume in terms of unit cases rose by 1% during the quarter. While the volume for the company's international operations rose by 1%, there was a 1% decline in its North American volume. A volume decline of 5% in the European region was partly offset by a growth of 5% in Africa and Eurasia, making it evident that a large share of Coca-Cola's struggle rests in its markets in developed nations. Overall, in the third quarter, volume of still beverages rose by 2% - tea contributed a 4% growth, and volume of energy drinks as well as water grew 7%. The quarter results reported flat volume of beverage. Taking into account the challenges faced by the company in its home market and major business lines, a plan for growth was announced. CEO of Coca-Cola, Muhtar Kent stated that the company had looked hard at its progress up until now, and understood that, though the strategies established during the year's start are following the right course, the company needs to increase the scope of its actions and become more fast-paced. Thus, apart from launching a program to enhance productivity, the company also decided to streamline its operations, and align its incentive plans further for delivering against growth targets (The Coca-Cola Company Announces Stronger Growth, 2014).

The aforementioned plan encompasses a streamlined operating paradigm focused more intensely on domestic markets, and aimed at achieving 3 billion dollars "annualized savings" per annum by the year 2019; its other goal is refranchising a majority of company-owned bottling territories in North America before 2018, and several unexplored territories by the year 2020. Further, Coca-Cola will renew emphasis on marketing, in addition to adding returns as an incentive metric (The Coca-Cola Company Announces Stronger Growth, 2014)

In the long run, the company anticipates high single-digit growth of EPS and intermediate single-digit growth of net revenue. Its target of earnings before tax target will be 6-8%. For the years 2014-2015, it expects results to fall short of these targets. Company shares dropped to 41.10 dollars (i.e., an approximately 5% decline) during pre-market trading hours, but rose 4.8% year-to-date before this decline; the Standard & Poor's 500 for the company rose by around 3%. At the same time, rival beverage maker, PepsiCo's futures shares dropped to $93.36 (i.e., 0.2%) but rose 12.8% year-to-date; the company, protected from drops in its soft-drink division because of a huge snack division, depicted strong earnings in its third quarter (The Coca-Cola Company Announces Stronger Growth, 2014)

Coca Cola declared that it would take action towards bolstering growth. The actions back the earlier-announced five main strategic concerns for restoring momentum of the Company and its long-run growth goal of currency-neutral comparable EPS in high single digits.

KEY INITIATIVES

For the purpose of growth revival, the following two main initiatives were introduced by the Coca Cola Company:

Restructuring and simplifying organizational operating model for speeding up its decision-making system and enhancing focus on domestic market.

Enhancing its present successful productivity initiative by targeting annualized returns of 3 billion dollars per annum by 2019. The focus of this initiative will be on four major areas:

Reorganization of the international supply chain of the Company, including North American manufacturing;

Implementation of organization-wide zero-based budgeting;

Restructuring and simplifying organizational operating model; and Inspiring greater efficiency and discipline in regard to direct marketing investments.

Consequently, owing to the above-mentioned productivity efforts, Coca Cola expects to finance essential innovation and marketing initiatives for delivering sustainable net growth in revenue.

Refocusing on core organizational business strategy of developing the biggest beverage brands in the world and leading a matchless universal system of powerful native bottling partners

Strategic targeting of growth and brand-related investments for leveraging global company strengths. This encompasses formerly announced plans for improving marketing quality and quantity, and investing, in future, in categories and markets wherein brands continue to be underfinanced in relation to opportunity

Concentrating on driving profit and revenue growth over markets while delivering local operations using a clear, unobstructed view and aligned reimbursement goals (The Coca-Cola Company Announces Stronger Growth, 2014)

As has been explained, the Coca Cola Company maintains long-run target of high single-digit growth in EPS, regulates net revenue goals to growth in the intermediate single digit range, and targets earnings before tax rather than operating income for increase in growth of equity income from the Company's novel partnership model. Moving ahead, Coca Cola will depict 6-8% earnings before tax target (The Coca-Cola Company Announces Stronger Growth, 2014).

Objective

Measure

Target

Action

Concentrating on driving profit and revenue growth over markets while delivering local operations using a clear, unobstructed view and aligned reimbursement targets

Net sales returns

Constant improvements in efficiency are entrenched in the corporate culture of Coca Cola at all levels

Coca Cola expects to finance essential innovation and marketing initiatives for delivering sustainable net growth in revenue

Strategic targeting of growth and brand-related investments for leveraging global company strengths

Volume

The company is aware of its success being closely associated with community and consumer well-being and vibrancy.

Coca Cola possesses a disciplined incremental investments plan, which prioritizes spending in those markets wherein the proper package/price architecture and implementation capabilities are in place

Refocusing on core organizational business strategy of developing the biggest beverage brands in the world and leading a matchless universal system of powerful native bottling partners

Market shares

The company anticipates continuance of the earlier-mentioned challenges in 2015. Current geopolitical tensions will likely intensify adverse trends in forex; also, oil prices might continue to remain weak

This includes refranchising a majority of company-owned bottling territories in North America before 2018, and several left over territories by the year 2020

Discussion question (1 Page)

Financial Perspective

Assesses the strategy's profitability

Concentrates on how income is impacted by the following factors:

Growth (inputs required, units sold)

Productivity (efficient resource utilization)

Price Recovery (reduced costs, increased prices)

Objective:

Enhance shareholder value

Sample Measures:

Operating income growth

Reduction of costs in some aspects

ROI (return on investment)

Increase in revenue (Siena, et.al 2010)

As explained earlier, the Coca Cola Company maintains long-run target of high single-digit growth in EPS, regulates net revenue goals to growth in the intermediate single digit range, and targets earnings before tax rather than operating income for increase in growth of equity income from the Company's novel partnership model. Moving ahead, Coca Cola will depict 6-8% earnings before tax target. This perspective views Coca Cola from the standpoint of stability, profitability, liquidity, solvency, etc. It communicates how effectively company finances have accomplished its mission. This perspective has the following metrics linked to it: fiscal and economic, like ROE (return on equity), ROI, and lower-level values.

Customer perspective determines target market segment; it evaluates success of the company in the aforementioned segments and includes:

Market share

Customer retention ratio

Time taken for fulfilling buyer requests

Customer satisfaction (Thompson, et.al 2001)

A majority of companies prioritize the financial BSC perspective, while overlooking other perspectives; this mustn't happen. Companies must take care to balance all BSC perspectives and factors (Thomson, et.al 2001)