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The aim of the work is to discuss the use of the Balanced Scorecard by small and medium enterprises, based on the article by Andra Gumbus and Robert N. Lussier "Entrepreneurs use a balanced scorecard to translate strategy into performance measures." The central conclusion of the paper is that the use of BSC in small enterprises has proved itself to be an effective way for better company's performance; but due to the fact that the knowledge and research in this sphere is scarce, deeper knowledge is necessary for implementing more effective measures in combination with BSC, which will finally lead to general better operations process in small enterprises. The use of the Balanced Scorecard by small and medium enterprises The article discussed is based on the description and research of the three SME Hyde Park Electronics, Futura Industries and SGC. All three have adopted the use of the BSC in the attempt to come to the better company's performance, and to link their strategy with the measures for achieving this goal. Though, the three companies under research have stated their striving for better consumer satisfaction as the key to business success, they used different measures and approaches to become successful on the market. Speaking about Hyde Park Electronics, it is interesting to note, that in striving for consumer satisfaction they have not only created an innovative product in the sphere of ultrasonic technologies, but have also concentrated their work on improving the system of product delivery.
It is not a secret that creating a new product is far not enough for it to be successful timely delivery without any delays and problems will make this product profitable and popular among customers. Not only was Hyde Park able to make up more than 80 percent of company's sales with the new product, but to constitute 96 percent of delivery structure with on-time delivery. As the chief manager of Hyde Park uses the BSC beam, on which he draws stick data, it becomes easier for his employees to understand the aims they are to strive for in their limited scope of work and each of them contributes into general performance of the company. (Gumbus & Lussier, 2006) The approach towards employees as the core of the company's success has been implemented by Futura Industries. The use of BSC has allowed the company to link the benefits of hiring highly-qualified and devoted personnel with the higher level of customer satisfaction. The management of Futura Industries paid attention to the two main aspects of the consumer factor of the BSC: learning and growth, as well as customer satisfaction. The level of learning and growth among the company's employees is controlled and monitored through check of the certified specialists per job, as well as hiring people who align with Futura's core values, and retaining those who perform. (Gumbus & Lussier, 2006) The level of customer satisfaction is monitored through the telephone calls, which are randomly given to 20 customers on a monthly basis, with visiting another 50 randomly chosen customers with the help of specially contracted consultant.
Thus, the company has direct data, which is to be used for better company's performance through the BSC application. SGC appears to be the company, which the member of Hall of Fame, founded by Kaplan and Norton for the companies (now there are 12 of them) which have achieved miraculous results through the use of the BSC. SGC is the company of 150 employees, but it was able to achieve wonderful results in all BSC dimensions, creating the fifth one 'core values'. Through the use of the BSC SGC is now the largest supplier of the NFC orange juice, and the most low-cost company in this area. The use of the fifth metrics 'core values' allow the company to hire people who will easily align with the strategies and goals of the enterprise, and thus will work for better customer satisfaction. In the customer satisfaction dimension SGC uses percent shipments within specification and customer service in combination with loading time cycle. (Gumbus & Lussier, 2006) The question arises, whether these measures are truly customer-centric?
I should suggest the following: on the surface, all three enterprises seem to exercise the approaches, which make the customer the central element of any business success. On the other hand, the means through which these approaches are brought into reality are different. The truly customer-centric approaches are displayed by Futura Industries. The fact that the company has hired a specialist to visit the customers and speak to them, to understand and measure their satisfaction with Futura's product is awesome.
It means that customers really constitute the essential portion of the BSC application in this company, and the BSC consumer dimension is the main metrics, through which Futura links its goals with real life performance. Hyde park Electronics is also on its way for better customer satisfaction the enterprise has not only created an innovative product, based on the customer demand, but has also combined it with the effective system of delivery, in which the on-time type of delivery now constitutes more than 96 percent of the general delivery costs. (Gumbus & Lussier, 2006) Not much is said about SGC; though it is stated that the company has achieved significant results in all four BGC measurements, - it is either due to the limitations of the case study, or to the fact that paying attention to all dimensions at once makes all of them mixed and unclear in their effect, - there is no customer-centric approach viewed. It is evident, that companies' attempt to measure their business from the customer's perspective has created wonderful positive effects on the general companies' performance. Hyde Park Electronics was able to achieve its highest profit rate in 2001 with the use of the BSC. They were able to link their financial costs with the customer requirements, reducing the time of assembling and the cost of the product itself. Futura Industries was able to make the BSC the daily management tool, establishing communications and learning as the core concepts for hiring talented workers and retaining customers. (Gumbus & Lussier, 2006) Communications for Futura was the principle means of looking at the company from the customer's perspective.
SGC, with its customer-centric initiatives being unclear through the work, is seen as the company which was able to become an important supplier of the NFC orange juice, which means that it was able to satisfy customer needs and keep its market position for a long period of time. Though all three companies described have displayed effective means of better performance through the BSC application, there are still some measures to be undertaken. I would suggest that both SGC and Hyde Park Electronics use the communications tools of Futura Industries, which will allow them to link their strategic goals and customer satisfaction in the general striving for better position of the company on the market and its higher profitability. Conclusion Though the effectiveness of the BSC use in small companies has been proved in this case study, there are lots of gaps in knowledge, which will assist such companies to improve their performance and apply consumer-centric approaches, which will ultimately lead to the general success of the company on the market. References Edwards, Cliff. (2006). AMD: Chipping away at Intel's head.
Business Week, 3988, 72 - 73 Gumbus, A. Lussier, R. (2006). 'Entrepreneurs use a Balanced Scorecard to translate strategy into performance measures'. Journal of Small Business Management, 44 (3), 407 - 425 Kaplan, R. & Norton D. (2001). Transforming the balanced scorecard from performance measurement to strategic management. Accounting Horizons, 15, 147 - 152
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Research essay sample on Balanced Scorecard Hyde Park
