FINAL ASSIGNMENT

CASE STUDY ON BALANCED SCORECARD

SUBMITTED BY
NAME : MAHFUJUR RAHMAN SUSAN
ID : 2021010004119
COURSE : STRATEGIC MANAGEMENT
SECTION : 4

SUBMITTED TO
MOHAMMAD TAZUL ISLAM
 Summary

A balanced scorecard is a strategic management approach that is used by managers as

performance metric in identifying and improving many internal functions of an organization and
its resulting external performance. In the management of accounting, balanced scorecard is used
for data collection, analysis and interpretation of the data. This information helps the managers in
making good decisions for the company. Ideally, a company that takes this approach serious
normally has a competitive advantage over the other competitors. Indeed, the competitive
advantage in the new era is relying on human capital, knowledge, innovation, and technology,
and as a result, the managers of business should rise of the occasion by embracing balanced
scorecards and other corporate strategies. Truly, people create great value in the performance of a
company, and this is highly determined by how the managers perceive and control and manage
the employees and other stakeholders. It’s important to note that management should understand
how to link people with strategy and performance. Also, for the balanced scorecard to be
meaningful, they should in line with the firm’s strategic plan and objectives. Any successful and
performing company minds how far other competitors have gone and what strategies can be
employed to ensure that the company stays one step ahead. Nonetheless, as a tool for measuring
performance management through employees, balanced scorecard ensures that employees are
empowered through employment security, high wages, incentive pay, employee ownership,
promotions, social relationship, respect for all employees, and proper communication.
Introduction
In most organizations, the senior managers and CEOs are doubtful about the role played
by balanced scorecard as part of the success of their companies. As much as it's said that
financial management is one of the most valuable areas in an organization, many still do not
understand that the proper management of accounting turns the company mission and vision into
a reality. Nonetheless, this department is very crucial and requires proper approaches to sustain a
competitive advantage in managing a firm. One of the new approaches introduced to make it
happen is the balance scorecard. The balanced scorecard is a visual representation of the main
measures of the financial management's productivity, achievements, and other vital factors in a
firm. Some of the measured factors are performance management, financial data, business
processes, training, hiring, costs, and company goals. The major aim of the balanced scorecards
is to measure and track the effectiveness of an organization’s activities and enabling the
managers to create achievable investments in the structure of the management of accounting and
the organization at large. This approach focuses on company goals and strategic plans. This
paper’s purpose is to provide a clear understanding of balance scorecard in organizations,
literature review, its characteristics, functions, and importance.
Theory on Balance Scorecard
 Literature Review
Most of the balanced scorecards were created based on David Norton and Robert

Kaplan’s work. They both designed the first “Balanced scorecard” theories of Art Schneiderman
(Shields et al. 2015). In the present workplaces, balanced scorecards prove the managers with
metrics and data, which is in a tangible form about the costs and the benefits of the human
resource activities and processes. The approach works in a manner that draws up the budget used
by not only the managers of a company in using the data analysis to acquire and interpret
information that can be used in making the best organizational decisions but also helping the HR
to carry out its functions. The costs from its analysis are used to determine how much the
company is going to benefit. The HR processes developed by the balance scorecard is; it
identifies the critical deliverables for the human resources, identifies the customers for the HR,
defines the activities for the HR, which provides the critical deliverables, and conducts an
analysis of cost-benefit for the HR activities that provide the deliverables.
In most cases, a failed firm does not balance its functions, that is, the firm could be
producing quality products, but the operating costs are too high. Also, such firms could be having
quality equipment, while the management hires incompetent employees who waste the resources
allocated to them . All the imbalances facing the failed firms can be tracked down by the use of
scorecards through the provision of information, data, and metrics that measure the processes,
strategies, and functions of a company.
The implementation of the balanced scorecard is a different step after the approach has
been developed. It is embracing this approach in an organization to ensure that its running
requires strong management to ensure that the scorecard has been accepted and adopted fully.
Some of the guidelines that help in implementing the balance scorecard successfully are; shaping
a vision, leading change, demonstrating and monitoring the progress, mobilizing the
commitment, making the scorecard last, and building an enabling system.
A company with an implemented balanced scorecard can be easily differentiated from
those without the approach — for instance, the highly competitive advantage, employee
performance, human resource competency, and profitability
Therefore, the scorecard ensures that a company is perfectly performing and balanced in its
functions. More importantly, this system is representing a new aspect of aligning the goals and
objectives of the HR and the whole firm at large.
Characteristics

The characteristics of balanced scorecards has both the non-financial and financial
measures. This new approach does not aim at replacing the old system of financial management,
but rather it’s a succinct summary capturing relevant information to those needing it such as the
managers and head of departments in an organization (Mone et al. 2018). Besides, it gives crucial
insight on a company’s strategy and plans. Thus, to ensure that a balanced scorecards meets its
functions effectively, the following are some of the characteristics; first, it focuses on the
strategic purpose of the company concerned, it has clear set of measurements which monitors an
organization’s performance against its objectives, it contains both the non-financial and financial
information that are mainly in four aspects, that is, learning and growth, customer, financial, and
internal processes, and a good balanced scorecards also has a portfolio of initiatives that are
developed to impact the performance of an organization’s objectives (Noe et al. 2017).
Focusing on the financial and non-financial information provided by the balanced
scorecard, first, the learning and growth aspect is analyzed by an investigation of knowledge
resources and training (Lin, 2015). The information gathered by this approach should be used
effectively by the employees in order to convert it into a competitive advantage against other
competitors in the market. Secondly, the business processes are evaluated by the balanced
scorecard. This is done by identifying how goods are processed. In this case, the approach
analyses the operational management by tracking any gaps, shortages in the market, delays, and
waste. Thirdly, customer perspectives are evaluated to gauge if the customers are satisfied with
the company’s price, quality, and product availability (Kopecka, 2015). Here, customers are
required to provide their honest feedback about any service delivery and production. Finally, the
financial data like income, expenditures, and sales enables the managers to have an
understanding on the financial performance. The involved financial metrics includes financial
ratios, income targets, dollar amounts, and budget variances.
Importance of Balanced Scorecard

Balanced Scorecard creates a cost leadership strategy to help a firm attain low costs
relative to its competitors. By doing so, a company can hire skilled employees, automated
equipment, and facilities, and in return, it increases the demand for goods and services to high
quality. The balanced scorecard balances the costs in a way that the company does not spend
more than it generates through profits (Hoque, 2014). Besides, the balanced scorecard enables
the managers to introduce programs such as to develop the leadership skills for employees,
increasing the reward system, and to build an employee competency system. The scorecard
correlates all these initiatives to impact the business positively and ensure competitive advantage
is enhanced. The various examples of programs are; providing courses, workshops, and adequate
resources to improve their knowledge and skills, hence improving their productivity. Moreover,
creating forums and teamwork assignments improves employee relationships, which diminishes
conflicts (Kopecka 2015). When such strategies are employed to manage the employees, the
workforce meets the deadlines, deliver strategic objectives, and improve the overall performance
of the company.
The aspect of hiring in HR is very critical in any organization and can determine the
performance of a business. A balanced scorecard performs a financial measurement. As it
overlooks the hiring process, this approaches to ensure that the main objective is reducing the
turnover costs by developing the best hiring methods and new methods of orientation to set high
standards for the recruits (Hakkak and Ghodsi, 2015). Part of the strategies involved to optimize
competitive advantage are; identifying specific qualities of successful new staffs who are likely
to stay at the business for a long time, utilizing the latest technology such as screening and
recruiting applications, integrating the brand efforts in the recruitment process, and revising
proper measures and policies that introduce the new employees into the company culture.
Incorporating these actions not only ensure that employees are in alignment with the firm's goals
and objectives, but also saving on costs of hiring again in case the new employees do not match
the company expectations (Baraldi and Cifalinò, 2015). Setting high standards during the
recruitment process puts the company on the map due to their guaranteed retention and
productivity, thus promoting sustainable competitive advantage.
The balanced scorecard is the best control measure to ensure that employees are well
managed to gain competitive advantage. While the management has the responsibility of
providing a favourable environment for its employees, the balanced scorecard emphasizes the
financial measurements that expands the employee empowerment and performance (Gomes and
Romão 2013). Growth and learning perspective is a systematic strategy, which ensures that
employees are equipped with the necessary information, skills, and technology through training
programs. In this case, the balanced scorecard provides the metrics on the allocation of
operational costs, such as employee development. The data prepared through the scorecard
remind the managers of how regular the employees require this training programs and through
which mechanism. As employees are empowered through the balanced scorecard, the company's
competitive advantage increases since the expectations of high quality are guaranteed.

HSBC brasil Balance Scorecard

HSBC Holdings plc is a global financial services company in Canary Wharf, London, United
Kingdom. As of 2010 it is the sixth largest bank in the world and the Financial Services Group
and the company ranked eighth is a composite measure of Forbes magazine. On June 30, 2010, it
had total assets of 2.418 trillion U.S. dollars, about half in Europe, fourth in the U.S. and a
quarter was in Asia.

HSBC Holdings plc was founded in 1991 in London by The Hong Kong and Shanghai Banking
Corporation, to serve as a new group Holding Company and to allow the acquisition of British
Midland Bank. The bank origins in Hong Kong and Shanghai where the branch was opened in
1865.

HSBC is a universal bank. It is organized into four business segments: Commercial Banking,
Global Banking and Markets (Investment Banking) Financial Services (retail banking) and
Private Banking.
HSBC first listing is on the London Stock Exchange and is part of the FTSE 100 Index. It has a
secondary listing on the Stock Exchange of Hong Kong (which is a component of the Hang Seng
Index), the New York Stock Exchange, Euro next Paris and Bermuda Stock Exchange €. Since
August 2010, it was the largest company on the London Stock Exchange with a market
capitalization of 115.8 billion pounds that had been achieved.

The balanced scorecard developed in 1992, belongs to a strategic management system that
includes efficient implementation and effective policies and tasks necessary to promote the
company’s customers, employees and management meet.

The usage of the e Balanced Scorecard can actually vary depending on the structure and
philosophy of the company. But in the case of HSBC, it centralizes the use of Balanced
Scorecard in a single department. The Balance Scorecard may also be able to identify closely
with managers and solve a variety of problems.

Background and problems

The research problem to be addressed: “A study to analyze financial performance and

management of HSBC”

The researcher wants to highlight:

A. Financial Perspective

B. Customer perspective-which is an approximation of HSBC’s efforts to reach target groups

C. Business Process perspective – shows an alignment of key business processes from HSBC

D. Lessons and prospects for growth – shows an approximation of the learning curve HSBC

Research Objective

• The researcher wants the vision of HSBC leading operational objectives. Communicate the
vision and the individual results.

• The researcher wants to organize wants to commute the HSBC’s Business planning,
Feedback and learning and then adjusting the strategy accordingly using the balance scorecard

Literature Review / Theoretical Framework

HSBC is to have sustainable growth as a market leader in the overall market in financial and
insurance sectors, as well as leadership in this segment. In both cases, the insurance and financial
services at HSBC will play a crucial role. HSBC is able to provide overall guidance to the rule
through the acquisition of other banks and financial institutions and utilities are combined into a
new, large undertaking. Train their employees, business processes and introduction of new
technologies will strengthen the positions of the various financing with HSBC Insurance. This
means in practice in the economies of scale to be able to create a distribution network for local
and international financing and insurance services. When a market is already controlled by other
companies, HSBC has devoted his attention to the development of a premium segment with its
funds and various insurance services (2004).

HSBC aims to ensure sustainable growth, while continually improving the profitability of the
company. The strategy to achieve this consists of four elements:

• The struggle for leadership positions in attractive markets

• Always focus on the sharing of financial and competitive segments of the insurance industry.

• Work to improve business processes efficiency and reduce operational costs.

• Continued growth through targeted acquisitions, if they are able to create added value for
shareholders.

Balanced Scorecard and HSBC’s Improvement

1)Translating HSBC’s vision into operational goals.

The appearance of the Panel of the economy reflects the difficulty in managing the growing need
for organizations, that require the effective use of valuable resources such as money, materials,
equipment and people. And HSBC is no exception to them. That is why the Balanced Scorecard
is used by the company to the most effective ways to use their resources through the application
of methods of analysis disciplines such as mathematics, science and engineering to determine
coordinate derivatives (2003).

Through this process, problems with HSBC meet operational objectives in different ways and
alternative solutions are then forwarded to management. Management then selects the
appropriate measures in accordance with business objectives. Often, the Balanced Scorecard
complex issues within HSBC and the high-level strategy, resource allocation, design, production
and prices and the analysis of large databases.

2) Communicate the vision and the individual results.

All businesses and organizations are governed by their goals and tasks. These objectives are
often considered a “corporate vision” or “business philosophy”. Therefore, some strategies are
implemented to achieve these objectives, and is a key element in the characterization of a
company or organization. The staff is clearly a key indicator to determine the characteristics of a
business or organization.

It is known to play a crucial role of human resources for HSBC differentiation and a potent
source of competitiveness for the company. That’s why HSBC is constantly investing in the
development of human resources, even in times of recession. But determining the extent that
HSBC may want to develop human resources depends on its financial performance for a specific
period of time.

With the Balanced Scorecard from HSBC in the last decade has transformed operations at very
low levels of writers to the success of the organization. However, budgets are also increasing at a
rate faster than the gross national product. In the midst of this influence on growth and increase,
managers and executives from HSBC are misled by the question: How to invest in human
resource development? Certainly, the answer will not be easy, especially since the actual level of
expenditure is often an elusive figure, depending on the financial performance of the
organization. However, the balance scorecard allows at HSBC’s investment in human resources
development to be determined.

3) Business Planning

Operational planning is a necessary function within HSBC. In most financial and insurance
companies that process is often very difficult due to the rapid evolution and the occurrence of
unanticipated events. HSBC uses different methods depending on the speed of customer demand
and level of financing, insurance. However, HSBC aims to change for each transaction is not: the
efficiency and effectiveness

Business planning by HSBC for its activities and resources will be implemented over time
coordinates. This allows the company to achieve its goals with minimal resources. Business
planning also enables the company to the status of their business plans at regular intervals to
monitor and control operations. Planning activities of HSBC is in four elements: planning,
production planning, financial planning and budgeting.

The program includes the specification of the onset, duration or length, and at the end of planned
activities.

Work planning is to allocate the necessary staff and delegation of responsibilities and resources

Financial planning is to identify the types and needs in terms of equipment.

Cost planning is to determine the costs and the possibility of occurrence.

4) feedback and learning strategy and adaptations accordingly.

One of the most important factors in improving HSBC is to measure the implementation and use
of the Balanced Scorecard as a performance indicator and measures around customer
satisfaction. These measures or indicators are measurable characteristics of products and services
company that HSBC is normally used to study and improve performance. The indicators are
chosen that are able to cover the essential factors that are essential for improving the operational
and financial performance of HSBC. Through analysis of accurate information from monitoring
processes, measures or indicators themselves may be analyzed and to increase its support for the
objectives of this type.

Methodology:

There is certainly a need to reconcile both the inside and outside functions. While HSBC’s
operations management involves focusing on the usage of the balanced scorecard as its core
competency with market position following its resource base, the company will be at a
disadvantage if it neglects the macro and finance and the industry environment. Therefore,
HSBC has to be aware of recent changes in the management of operations and changes in the
political, economic, legal and demographic or develop customer outside functions such as
identifying the market, the link Technology channel bonding, and monitoring.

The benefits derived by HSBC, is to use the Balanced Scorecard as from higher incomes.
Knowing what the market demands and trends could help the company come to fully exploit its
research and development capabilities with insurance and financial services which are not only
profitable but also high quality. The strategic option as a marketing tool, where attention to the
proximity with customers and focus their comments. On the other side of the coin, there is a
great mobilization of resources and risks associated with HSBC will be granted.

However, the above option seems to be a practical strategy in the wake of globalization, because
there is an abrupt change towards a more integrated global economy and independently. Key
stakeholders should not object if HSBC heart of business is not threatened. Centralized control of
the company activity is anticipated that key obstacles should exist in the exercise of this option,
unless additional time is necessary, given the scope and duration of operations of HSBC.

In the meantime, the partnership with HSBC’s main competitors is ridiculous at first glance as a
measure. But after careful consideration, the measure could pave the way for the company to
continue to improve its management. The conclusion is that both parties are increasingly
significant in this type of alliance. High performance measurement in operations management
capabilities can be combined with their competitors suddenly invincible force that has
transformed HSB. Another failure could be possible if one of the competitors of HSBC are in the
need for alliances.
However, the question remains whether HSBC might be able to implement any of these options,
and if these options may be acceptable to key stakeholders. Any merger or alliance may be the
exchange of knowledge. This company has always supported the approach of the Interior. It is
important to note that the merger could be many implications for HSBC: values ​​and
culture and resources. Key stakeholders would certainly be affected by options and must be
convinced of the positive aspects. Somehow, HSBC will be able to overcome this barrier in the
process of implementing the policy options above.

CONCLUSION

The results of the analysis carried out on the impact of the Balanced Scorecard of HSBC
indicated significant effects, even under the threat of unrest. Therefore, we conclude that the
management operations of HSBC are still expected to improve faster than average.

The review of HSBC’s operations management capabilities and resources revealed very little
inconsistencies regarding its strategy in using the balanced scorecard. However, the need to
reconcile both the inside-out and outside-in approaches becomes a need for HSBC.

The analysis of the financial sector environment, and management of operations and functions of
HSBC has shown some shortcomings, most of which are distorted to the environment. However,
these gaps paved the way towards determining a number of recommended strategic options to
secure the competitiveness of HSBC through the continued utilization of the balanced scorecard.

In addition, HSBC,has to find a balance between the internal forces within the administration and
the evolution of environmental forces so that such policy options can be implemented.
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