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... ob rotation as strategic programs of the potential perspective. Moreover, a wider range of participants that greatly outnumber the Balanced Scorecard team members were involved in order to determine individual actions, as they have a significant influence on company's daily life and on operational processes. In reality, the Balanced Scorecard is a useful tool help the management to better communicate the strategy, to prioritize and to motivate the teams to common and longer-term goals. Its logical structure and the strong tie of actions to the strategic goals enabled the employee to set the mind of longer-term objectives and understand the company's goals so as to recognize their contribution to achieving them. So the Balanced Scorecard emphasises teamwork in nurturing employee's commitment to deliver results that are consistent with longer-term goals and organizational strategy (Mooraj and Oyon and Hostettler, 1999).
Although the Balanced Scorecard doesn't bring about improvements in long-term competitiveness and profitability in corporation, it gives top managers a fast but comprehensive view of the business which is conducive to the long term health of the business in competition context. In fact, setting ambitious long-term objectives or short-term objectives followed by an overall list of initiatives for each measure in organizations has proven to be the key drivers to improve overall performance (Mooraj and Oyon and Hostettler, 1999). 3. 4 Potential limitations In spite of the Balanced Scorecard's great success in measuring company's performance, there have also been some potential weaknesses in using this management tool. Such limitations include taking too much time recording and monitoring data for the measures, overlooking the employee's acceptance, not considering supplier's contribution etc. One of the problems which occurred in using the Balanced Scorecard mainly focused on recording and monitoring the overloaded measures (Ahn, 2001).
Top management spends a great amount of time energy in gathering and analyzing the respective data rather than on making decisions. Sometimes the costs of such a procedure may well outweigh improvements in organizational performance. Hence, it is quite necessary to plan to substantially cut down the number of measures existing in organizations that are outside the scope of the Balanced Scorecard (Kaplan and Norton, 1992). The question of whether the employees in organizations would be open and receivable to new measures when the numerous measures has already existed proved to be another problem, and consideration had to be given as to which of the measures recorded to date should continue to be recorded in the future. One possibility considered to reduce the effort required was to handle them as 'diagnostic measures' in the sense that they are only presented to the management when their values exceed a given range (Ahn, 2001). Moreover, Kaplan and Norton's Balanced Scorecard concept does not give sufficient guidelines regarding structure.
However, the structure of the Balanced Scorecard can be criticized in that the four perspectives have to be translated into the specific needs of individual companies (Johnson, 1998). Potential shortcomings might include, for example, that suppliers are not adequately taken into account or that the financial goals lose too much importance when competing with three or even more other perspectives. 3. 5 Implementation issues within organizations The scorecard has currently been adopted by many companies and its format and content match to meet several management needs. Examples of users include, Intel and Apple computers; BP Chemicals, Milliken, the Nat West Bank, Abbey National. When implementing the Balanced Scorecard to measure organizational performance, there are some potential problems that should be taken into considerations as followed: Lack of a well-defined strategy: The first problem that many companies encounter is that top management can't articulate a clear and well-defined strategy (Johnson, 1998). In some cases, the strategy is not clear. In other cases, the member of top management team hold a different view on the strategy of the firm or what it should be.
However, Balanced Scorecard relies on a well-defined strategy and an understanding of the linkages between strategic objectives and the metrics. Without this foundation, the implementation of the Balanced Scorecard is unlikely to be successful (Johnson, 1998). Using only lagging measures: Many managers believe that they will earn the benefits of the Balanced Scorecard by using a wide range of non-financial measures. However, a successful scorecard must be comprised of not only the lagging indicators that describe past performance, but also leading indicators that can be used to drive and improve performance for future plan For example, in a logistics analysis system, 'customer complaints' is a lagging indicator, while 'on-time delivery' is a leading indicator.
A successful balanced scorecard must include metrics that provide both historical and future insights (Ahn, 2001). The process of building and implementing a Balanced Scorecard must be customized. Applying another successful firm's Balanced Scorecard development process as a guideline may be helpful, but it also increases the risk of overlooking the company's own competitive position (Walters, 2002). It is essential to realize that the competitive advantages can only be taken adequately into account by establishing a Balanced Scorecard unique to the company involved. As Kaplan and Norton (1996) state "the balanced Scorecard is not a template that can apply to a business in general or even industry wide. In particular, the specific of content of the four original perspectives of the Balanced Scorecard must be individually adapted to the circumstances of each organization." (Kaplan and Norton, 1992) Each firm should put forth the effort to identify the measures that are appropriate for its own strategy and competitive position.
In conclusions, Porter's Five Forces, Value Chain and Balanced Scorecard framework are all effective and powerful strategic management tools in current dynamic and competitive environment. The linkage between them is that they are all attached considerable importance for managers in organizations to develop and implement long-term strategy so that sustainable competitive advantages are built and maintained. And these three frameworks are useful tools to make change and adjust strategy to face up with intensive competition in current dynamic marketplace. However, these three respective frameworks have its own particular emphasis which is applied in different directions among the organization.
Porter's Five Forces mainly focuses on industry structure analysis in the organizations external environment. While Value Chain highlights internal analysis of a chain of business activities. As for the Balanced Scorecard, it emphasizes the evaluation of an organization's overall performance to gain cost advantage. All in all, it is important to be aware of the limitations and potential problems as well as the possible benefits of these three approaches, it largely relies on successful implementation by senior managers.
Free research essays on topics related to: organizational performance, competitive position, porter five forces, balanced scorecard, competitive advantages
Research essay sample on Porter Five Forces Balanced Scorecard
