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Example research essay topic: Balanced Scorecard Value Chain - 1,071 words

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... by performing a chain of activities in a cost effective way, there has also been some potential weaknesses in using this managerial tool. Such limitation includes calculation al difficulties for small-sized corporations, ignoring the importance of information to maximize value. Value chain is a very powerful cost management tool to make a detailed analysis of a company's cost position to obtain the competitive advantage. However, it doesn't imply that constructing a value chain is a quite easy process. Complex calculation al difficulties between a series of value-adding activities would be a potential problem to apply this framework, especially for small-sized organizations.

There are several thorny problems to confront: calculating a value for intermediate products, isolating key cost drivers, identifying linkages across activities, and computing supplier and customer margins (Hwang and Richard, 1999). Another weakness of value chain is that it ignoring the power of information to maximize value for organizations. In recent years, with the emergence of information technology, recognition that IT can add value for the customer while simultaneously reducing the costs of producing an end product or service has revolutionized the role of technology and information in organizations, (Porter & Millar, 1985). The application of the physical value chain model to most of organizations seems relatively slow and inefficient in such a rapid change environment.

While more and more use of information component of any process advance faster than the physical counterpart. Especially in creating added value for customers. The main reason is the power of information is such that it provides opportunities for organizations to establish a virtual value chain in addition to any pre-existing physical value chains. And new established virtual value chain creates value not only through a physical value chain involving the creation of physical goods, but also with analysing and utilising information. Therefore, traditional value chain in current information systems field may as well take information into very consideration to meet the requirement of new economics. 3. 3 Implementation issues within organizations The value chain is applicable from corporate strategic level to the individual managing a project. Because of its inherent logic of the process flow, it can be used to analyze most of business process where there are different inputs, outputs and transactions.

One straightforward implementation of the Value Chain is the SIPOC analysis (often used in Six Sigma Quality). This takes the Value Chain as: Suppliers - Inputs - Process - Outputs - Customers to evaluate how organizations generate revenues and controls costs while enhancing the customer satisfaction. Once the value chain is established, other business analysis tool such as SWOT analysis, Marketing Mix can be applied to each stage and to each functional group contributing to the value (Walters, P. 125) Successfully implementing value chain activity in management undoubtedly would strengthen a company's competitive advantages. More specifically, organizations must perform different activities than competitors or perform similar activities in different ways tailored to its unique value proposition so that make them difficult for competitors to imitate linkages between value-adding activities. Information on cost distribution, cost allocation bases, and relationship of value chain costs and degree of cost tracing is essential to manage value chain activities successfully. (Hwang and Richard, 1999) To succeed in today's competitive business environment, corporations need to undertake value chain analysis and select an optimal mix of value chain activities (Hergert and Morris, 1989). One problem when applying cost analysis of the value chain into business operation should be avoided.

The company's own value chain should not be considered in isolation because value-creating activities are linked each other inside the organization. Such linkage exists if the performance or cost of one activity affects that of another. Decreasing the costs of one activity can lead to an increase of costs in other activities. Therefore, the costs of activities should not be reduced independently.

To achieve competitive advantage, organizations should make cost analysis of the value chain and coordinate and optimize linked activities together instead of viewing them as separate and independent cost centers (Walters, P. 125). In addition, it is important to be aware that organizations are just part of a wider system of adding value, involving supply chains, distribution value chains and customer's value chain. By managing the whole value system and co-operating with suppliers and distributors, the entire process - from raw materials to the end product - can be optimized, thus creating greater value and / or less costs. This way competitive advantage can be achieved (Hergert and Morris, 1989).

All in all, with the recognition of the value chain's claimed benefits and potential weakness stated above as well as some implementation issues, if the organizations can properly adopted the value chain theory, it may assist organizations to explore the role and contribution of its resources which would maintain sustainable competitive advantage in the long run. Developed at the Harvard Business School, the Balanced Scorecard is an organizational framework for implementing and managing strategy at all levels of an enterprise by linking objectives, initiatives, and measures to an organization's strategy. The scorecard provides an enterprise view of an organization's overall performance by integrating financial measures with other key performance indicators (Walters, 2002). Nowadays Balanced Scorecards have been implemented at corporate, strategic business unit, shared service functions, and even individual levels at hundreds of organizations -- in both the private and public sector. 3. 3 Claimed benefits Kaplan and Norton also state: "The scorecard brings together in a single report many of the disparate elements of the company's competitive agenda, e. g. becoming customer orientated, shortening response time, improving quality, emphasizing team-work, reducing new product launch times and managing for the long term. " (Kaplan and Norton, P. 68) A clear strength of the Balanced Scorecard was that of being an easily understood concept.

It summarizes in a single, succinct document, four different perspectives on the company's performance. Viewing the strategy from the four different perspectives, and identifying by links between them, clearly illustrated the causal relationship between the fulfilment's of customers and employees expectations and those of shareholders. The use of the Balanced Scorecard has been attached of considerable benefit as strategy implementation system for connecting long-term strategic planning and short-term action and budget planning (Ahn, 2001). In this regard, the strategic programs were translated into individual actions oriented towards attainment of the objectives pursued. For example, determination of employee's need with regard to job satisfaction as the individual actions derived from encouragement of j...


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Research essay sample on Balanced Scorecard Value Chain

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