Overview
Instructions: Please review all three Articles, and provide a general review of the students response to the article. Three Articles: 100 - 150 words per article
Article One
THE INFLUENCE OF BALANCED SCORECARD PERSPECTIVES ON THE FIRMS’ PERFORMANCE: EVIDENCE FROM THE BANKS IN THE DEVELOPING MARKET
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Summary:
This article looks at how the four perspectives of the Balanced Scorecard (BSC)—financial, customer, internal business processes, and learning and growth—affect the performance of companies, using the resource-based view (RBV) theory as a foundation. The study focuses on banks in Jordan and examines how these BSC perspectives influence their performance. The research suggests that these perspectives can help improve a company’s competitive advantage and overall success.
The study tests several ideas, with the main one being that BSC perspectives have a major effect on firm performance. To gather data, the researchers used questionnaires from 124 people working at 15 banks listed on the Amman Stock Exchange. They analyzed the data using statistical methods like Structural Equation Modeling (SEM) and SPSS.
The findings show that the financial, customer, and internal business process perspectives positively impact the performance of Jordanian banks. However, the learning and growth perspective did not have a significant effect, so the hypothesis about its impact was rejected. The research also found that commercial banks benefited from all the BSC perspectives except learning and growth, while Islamic banks only saw a positive impact from the financial and customer perspectives.
The article concludes that the BSC is a valuable strategic tool for banks, offering a well-rounded approach to measuring performance using both financial and non-financial factors. It also suggests that future studies should explore BSC’s impact in other industries and countries to make the results more widely applicable.
Reaction:
This article really emphasizes how important it is to look at all aspects of a business when measuring success, not just the financial side. It shows that while financial results are always important, focusing on customers and improving internal processes also plays a huge role in success. However, the study also found that some businesses struggle with the learning and growth side of things, especially in banks, where employee development and innovation might not always be aligned with the company’s overall goals.
What stands out to me is that, even with a solid framework like BSC, companies need to make sure they’re using it correctly. The learning and growth aspect, for example, often gets overlooked, even though it’s crucial for long-term success.
I can apply this knowledge to improve my business by using the BSC approach to track performance across different areas. I’d look at financials, such as sales and profits, but also pay attention to customer satisfaction and retention. By improving how we handle inventory, sales processes, and customer service, I can make the dealership more efficient. From the learning and growth perspective, I could focus on training my staff and developing their skills to better serve customers and stay ahead in the market.
By balancing all these areas, I can ensure that my dealership is constantly improving, meeting customer needs, and staying competitive in the long run. Regularly checking all these factors will help me grow my business in a sustainable and balanced way.
Reference:
Bshayreh, M. M., Qawqzeh, H. K., Ahmad Al-Momany, I. A., Abdullah Saleh, M. M., & Hmoud
Al Qallap, K. D. (2024). The Influence of Balanced Scorecard Perspectives on the Firms’ Performance: Evidence from the Banks in the Developing Market. Corporate & Business Strategy Review, 5(2), 243–254. https://doi-org.lopes.idm.oclc.org/10.22495/cbsrv5i2art21
The balanced scorecard: Do managers need a strategy map when evaluating performance?
Summary:
This article researches whether managers need a strategy map when evaluating performance based on a balanced scorecard. Previous research has indicated a judgmental bias when evaluating performance using a balanced scorecard. This study found that when using a strategy map, managers are far more likely to develop greater strategic casual relationship knowledge when evaluating performance. It was also determined that neither manager exhibited judgment when reviewing performance. A balanced scorecard is a comprehensive report that allows managers to share expectations for an organization’s objectives and performance measures. With so many measures, managers can experience more challenges when processing the broad set of information. Common bias is frequently experienced in this type of evaluation. Oftentimes, with so many aspects to evaluate, managers misinterpret results, strategic objectives, or performance measures. When provided with a strategy map, their attention is drawn back to the key points, and areas that an employee must be evaluated. This conveys the links between metrics and is beneficial when making decisions regarding an employee’s areas for improvement. This does not necessarily eliminate common bias but can create an enhanced understanding. It was found that managers with a strategy map can strategically develop causal relationship knowledge than their counterparts. They are also able to develop a more accurate mental model of organizational strategy and expected outcomes. This also allows the manager to have a stronger view of the organization’s goals and how to properly communication those with their employees. Narrative information is also key to ensuring a manager has a clear understanding of a balanced scorecard. A narrative can lead to open communication and a lack of common bias in the review. This study explains that with a narrative and strategy map, managers are more accurately able to reflect on an employee’s balanced scorecard.
Reaction:
I found this article to be interesting. I’ve worked in organizations that use a balanced scorecard for performance evaluations. In large corporations where personal relationships with managers aren’t as frequent, it’s important to ensure that they are not reviewing my performance with bias. I believe it’s important to provide managers with a strategy map, so they are fully able to identify an employee’s areas for improvement. This provides them with resources to fully understand the company’s initiatives and how that employee directly impacts those. This also gives them guidance when communicating needs or areas of excellence. Specifically with the addition of a narrative. Having a strong understanding of your employee’s role and metrics gives them confidence in your capabilities as a manager. I think our biases can become present in our life more than we realize. Having a strategy map provided for you from your leader, ensures that there’s limited opportunity for this to occur.
Humphreys, K. A. (2023). The balanced scorecard: Do managers need a strategy map when evaluating performance? Accounting & Finance, 63(4), 4357–4373. https://doi-org.lopes.idm.oclc.org/10.1111/acfi.13097
To improve Return on Investment (ROI) across Centex Yarns’ divisions, the company needs to focus on strategies tailored to the strengths and weaknesses of each division. Each division has different needs based on their margin and asset turnover, so a targeted approach is essential.
In the Polyester Fibers Division, the company has a 17% margin and an asset turnover of 1.3 times, resulting in an ROI of 22.1%. While the division is earning a decent profit on its sales, it could use its assets more effectively. To improve ROI, the division should aim to increase both the margin and asset turnover. Increasing sales can be achieved by expanding into new markets or customer groups, particularly internationally. Additionally, improving the sales team’s performance and utilizing more digital marketing tools to reach customers directly can help boost sales. To improve margins, the division should focus on reducing production costs, such as negotiating better deals with suppliers and finding ways to streamline production. Introducing new products that offer more value would also allow the company to charge higher prices, thus improving profit margins.
For the Rope Division, which currently has a high margin of 32% but low asset turnover (0.8 times), leading to an ROI of 25.6%, the primary goal is to increase asset turnover. This division makes a good profit but is not using its assets effectively to generate more sales. To improve asset turnover, the division can make better use of its current assets by improving production efficiency, reducing downtime, and optimizing inventory management. Exploring new sales channels, such as forming partnerships or working with distributors, can also help increase sales without requiring significant new assets. Additionally, the division can adopt lean manufacturing techniques to reduce waste, improve productivity, and make better use of its assets. By optimizing the distribution network and reducing transportation costs, the division can further improve asset utilization.
In the Nylon Fiber Division, the company has the highest asset turnover at 3.2 times but a relatively low margin of 10%, resulting in an ROI of 32%. While the division uses its assets efficiently, it could earn more profit on each sale. To increase ROI, the division should focus on improving its margin while maintaining its strong asset turnover. One way to achieve this is through product innovation by developing higher-value products that can be sold for a higher price. The division can also work on reducing production costs by using advanced technology and improving production processes. This way, the division can still use assets efficiently while increasing profitability. Additionally, establishing strategic supplier relationships can help lower raw material costs, which would contribute to higher margins.
Across all divisions, Centex Yarns should focus on increasing sales and improving operational efficiency. Expanding into new markets, improving marketing efforts, and using assets more effectively are all essential strategies. Cost reduction and product innovation can also help increase profit margins. Improving financial management is important for making the most of existing assets and improving ROI without needing substantial new investments.
Reference:
Davis C. E., & Davis E. (2020). Managerial Accounting, Enhanced eText (4th ed.). John Wiley
& Sons. ISBN-13: 978EEGRP40373