Answer To: HOLMES INSTITUTE FACULTY OF HIGHER EDUCATION HA2011 Management Accounting Individual Assignment...
Akash answered on Sep 23 2021
MANAGEMENT ACCOUNTING
CASE STUDY – BALANCED SCORECARD
Table of Contents
Executive Summary 3
Introduction 4
Suitability of BSC for Telstra Corporation Limited 4
a) Overview of Telstra Corporation Limited 4
b) Balance Scorecard (BSC) and its Characteristics 5
c) Difference of BSC from Traditional Performance Measurement Systems 7
d) Suitability of BSC to Telstra Corporation Limited 11
Conclusion 12
References 13
Executive Summary
The assignment below is about a telecommunication service providing a company named Telstra Corporation. An overview has been given to the company in the beginning. Afterward, a brief discussion has been included on the balanced scorecard system and its features. The report also contains a comparison of the BSC system with traditional systems to represent how it is different and better. In the last segments, it has been concluded that BSC is a suitable system to be implemented in the Telstra Corporation.
Introduction
The organisation in question here is Telstra Corporation Limited. The company wants to re-evaluate its budgeting system. Therefore, I, as a graduate consultant, have been hired from my management consultancy company to suggest them on their budgeting system. Telstra Corporation Limited’s CEO has recently learned about a new budgeting system called Balance Scorecard (BSC) and the CEO wants to understand if this can be utilised for their organisation as well. In order to evaluate it, the consultant will research about the system and its features.
There are many other performance measurement systems in the market such as KPI, industry dashboards and ISO standard that are being used for years. Therefore, it is important to know the aspects in which it differs from the traditional systems. Thus, its advantage can be known. Telstra is a private business corporation. Therefore, the report will also include a brief discussion about whether it is suitable for a private company and specifically for this firm.
Suitability of BSC for Telstra Corporation Limited
a) Overview of Telstra Corporation Limited
Telstra Corporation Limited is based in Australia. It is mainly a telecommunication business company that provides telecommunication services by building and operating telecommunication networks. It also has other services such as paid television facility, internet connections, mobile connection and voice access along with suitable devices. The company mainly was formed alongside the Australian postal service company Australia Post and was identified as this company’s postmaster general department. It was the year 1901 when it first started working as the telecommunication provider under Australia post.
Later in 1975, according to the government’s decisions, the postmaster general department separated from the company and reinstated as Telecom Australia (Chenhall & Moers, 2016). Its operation back then was only to provide networks within the country. Their overseas operations as service providers started in 1993. In the same year, they officially renamed the company as Telstra Corporation. The word Telstra was derived from the name Telecom Australia, Tel from telecom and stra from Australia. The company is also enlisted in the Australia Security Exchange.
It means that the business avails a part of the company’s shares for shareholders to purchase and make a profit from their revenue. Being an ASX listed company; they have certain responsibilities towards their financial statements and shareholders (Molavi, Naderi & Valiniya, 2016). Therefore, it is essential to understand whether BSC is appropriate for such a firm. From early 1990, Telstra faced heavy competition in the market. Therefore, their CEO is keen to know this system and execute it in the business. The company has been fully privatised in 2011.
b) Balance Scorecard (BSC) and its Characteristics
Balance scorecard is a famous and well-established budgeting system that also measures an organisation’s performance. It was established in 1990. It is considered to be a leading concept in the strategic management framework. It is essential to know here that this system itself does not produce or give away any strategy for the organisation. It is actually used to create a clear visual and format of the organisation for them to identify the gaps and to come up with new strategies and systems better suited to the organisation’s objectives (Awadallah & Allam, 2015).
Even if it has been decades, this system has been introduced, still, there are many business firms who are not yet familiar with the concept and realise its usage. Moreover, it is as relevant and vastly utilised at this age. The main purpose of this system is to align a business organisation’s company objectives and missions with its operations and activities. The company must communicate within itself and with its employees and management team to make it clear what they are trying to achieve. This vision has to be clear to each one in the firm. The company’s strategies must also line up with its daily action plans of employees (Tjhaia, Khalidb & Jalaludin, 2016).
This progress has to be measured by the company to understand if it is going in the right direction towards achieving its strategic goals as well as monitored thoroughly. Besides, it is also important to know which activity, operation, project or facilities or products must be put in the priority list by the organisation. Each of these aspects has its own priorities and these must be arranged in a proper order based on its significance or precedence. An organisation has multiple strategic elements such as its vision, which it seeks for, core beliefs, which the company believes in, and its mission, which it aims for.
The system connects these points along with the established strategies. Besides, there are also operational components like its day-to-day activities and continuous development in the projects and the measurement programs, which assess the organisation’s strategic performance to achieve targets, and the projects regarding it (Masum, Fakir & Hussain, 2017).
(Source: Balanced Scorecard, 2017)
When an organisation faces an issue, and they require fixing it with the limited resources, it is necessary to come up with a strategy, which will solve the issue from its root, and it needs to be explained to the employees as well so that everyone knows what the company is working towards. Finally, the strategies need to be followed and implemented accordingly for this to work effectively. This is where the BSC becomes convenient. There are four perspectives surrounding this system that are customers or stakeholders, financial, an organisation’s capacity for learning and growing and internal processes (Al-Naser & Mohamed, 2017).
It is crucial for a company to understand its performance and the purposes it has been designed to serve from a stakeholder’s point of view. As stakeholders impact and are influenced by a company’s performance and operations, their standpoint is necessary to know. Customers are key stakeholders to any company, especially a manufacturing and retailing company. An organisation is completely incapable of going on if it is not performing well financially. The capitals and other investments in the company projects have to return to its primary source along with annual revenues, benefits and operational expenses.
Hence, it is important to understand if the financial performance of the company in the market as well as its financial capability for its ongoing and future projects (Singh & Jain, 2018). The company must utilise its resources productively to sustain and develop itself. As per a company’s effective performance, its...