The History of Balance Scored Card (BSC)

The first BSC was created in 1987 at Analog Devices, a mid-sized semiconductor company.
The e-book chronicles its development over the period of 1986-1992. In 1992, Dr. Robert
Kaplan and Dr. David Norton from Harvard University expanded BSC into four general
categories for measurement:
I. Financial perspectives
II. Customer perspective
III. Internal operations perspective
IV. Learning and growth

Definition of BSC
According to Kaplan & Norton (1991), BSC is a set of metrics that aids top managers in
gaining a complete understanding of the firm. According to Ahmad and Zabri (2016), the
performance measurement system by BSC is used to support and improve the efficacy and
efficiency of activities in order to achieve the organization's purpose. The BSC approach
aims to offer a balanced and thorough framework for evaluating an organization's
performance from the four viewpoints in order to help management oversee the company in a
cutting-edge and distinctive manner.
The BSC, developed by Kaplan and Norton, took into account both financial and non-
financial goals for both immediate and long-term success (Al-Naser & Mohamed, 2017). The
BSC technique is a management tool that enables all staff members, from production workers
to the company's management, to identify their strategic goal and achieve it through the
appropriate strategic actions and metrics (Dalla Via et. al., 2019). A sole focus on financial
data could result in lopsided justifications. Occasionally, the four perspectives can be
changed for certain sectors.
One of the most significant and strategically vital sectors of Malaysia's manufacturing sector
is the automobile industry (Zadry, 2005). Nevertheless, despite the fact that Malaysian
automotive has been established for almost 40 years, the performance of the country's car
manufacturer and the local suppliers who supply its parts continues to draw criticism,
complaints, and a variety of suggestions for how to enhance their product quality, operational
management, and customer satisfaction. As a result, the Malaysian government has backed
numerous quality programmes, strategies, and automotive policies such the vendor
development programme (PVD), zero defect, strategy partnership, and National Automotive
Policy in an effort to improve the quality of the automotive industry (NAP).
The Balanced Scorecard (BSC) is regarded as a crucial tool for integrating financial and non-
financial measures from four key perspectives (financial, customer, internal business process,
and innovation and learning) for better performance and, consequently, against the
competitive advantage (Kaplan and Norton, 1992, 1996a,b).
Perspective of BSC

Financial
Customer and staff happiness should be managed and improved, and the financial perspective
should follow suit (Bhasin, 2008). Financial performance is crucial for assessing if
organisational strategy and implementation lead to superior bottom-line growth and
favourable shareholder returns (Kaplan and Norton 1992, 1996, 2008; Irala, 2007; Jusoh et
al., 2008). Moreover, Malaysian manufacturing companies favour higher sales revenue, sales
growth, net profit, and gross profit among other financial measures (Kassim et al (1989).
It has been demonstrated that financial performance in terms of profitability, such as
operating income, return on investment, economic value-added (EVA), and improved
competitive position, increases market share, increases revenue, decreases expenses, and
improves financial results (Zakuan, 2009), all of which have a positive impact on measures of
organisational performance citing evidence and arguments in support.
Customer
An organisation will benefit from the customer's perspective on performance if it cares about
product and service quality, cost, customer satisfaction, and delivery efficacy, and then aligns
its internal business processes with customers to improve financial results (Kaplan and
Norton, 1992, 2008; Jusoh et al., 2008). Measures including customer satisfaction, retention,
reaction time, loyalty, market share, and on-time delivery are all included in this perspective.
(2008); Jusoh et al. (2008); Eker and Pala (2008); Kaplan and Norton (2008).
As a result, a business will be able to generate high quality goods and services with the help
of the information and analysis data acquired through learning about consumer needs based
on specifications and requirements. This is due to the fact that client feedback directly affects
how well an organisation performs (Johnson and Gustafsson, 2000). For instance, data for
customer loyalty and retention obtained by methodical service and follow-up inquiries,
including a type of exit interview with defectors (Zakuan, 2009).
According to another study by Kue et al. (2001), efforts to raise customer happiness and
practise customer need analysis can boost productivity, spur sales growth, and boost business
profits. In conclusion, the author contends that the customer perspective, which includes
seven factors, can be used to gauge an organization's performance. These factors are: growing
market share, boosting customer satisfaction, boosting customer loyalty, raising customer
presentation rates, lowering customer complaints, lowering warranty claims, lowering
shipment returns due to poor quality, and lowering late deliveries.
Internal Operations
Top management should identify the operation management processes that have a positive
impact on organisation strategy in order to establish internal business process measurement.
Customer pleasure, financial returns to shareholders, and an improvement in staff skill level
and contentment can all help achieve this (Kaplan and Norton, 2004; Irala, 2007). Operations
management primarily oversees the actions involved in acquiring raw materials from
suppliers, turning raw materials into completed goods, distributing finished goods to clients,
and managing risk in industrial organisations (Kaplan and Norton, 2004). The primary
performance indicators in this viewpoint can include manufacturing effectiveness, quality,
defect rate, and cycle time in order to continuously improve the internal process (Kaplan and
Norton, 1992, 1996, Jusoh et al., 2008).
Learning and growth.
The future of an organisation can be determined by how it improves personnel skill and
satisfaction, advances technology system and procedure, and creates new market
opportunities (Kaplan and Norton, 1992, 1996; Jusoh et al., 2008; Eker and Pala, 2008). In
short, innovation and learning growth achieve two essential components, with a focus on how
organisations innovate and learn in accordance with these organisational strategies: (1) the
development of new products, new patterns, leadership of a high calibre, new markets, and
new technologies; and (2) the improvement of employee skill levels, health and safety,
absenteeism, and satisfaction.
In order to compete for global demand, generate long-term value creation, and improve
external product marketplaces, innovation and learning growth measures are crucial (Irala,
2007; Jusoh et al., 2008; Kaplan and Norton, 2008). This is also reinforced by Kaplan and
Norton (1992) and Eker and Pala (2008), who believe that innovative and learning businesses
will enhance consumer value, enhance operational efficiency, and boost shareholder return.
For instance, utilising information technology to create performance measures can help a
company concentrate on the causal connections and links between each performance measure
within the company and make performance review more strategic (Kaplan and Norton, 2006;
Neely et al., 2005). According to a different study (Jun et al., 2006; Zakuan, 2009), employee
happiness has a beneficial effect on organisational performance. To support the organization's
strategy, it is crucial to combine increased innovation with learning growth in the fields of
product, people, technology, and market.
Factors effecting BSC
Eva Benkova et al. (2020) outline the four significance of non-financial metrics, including
how they affect a company's ability to compete more effectively, the strength of its
workforce, innovation, and customer satisfaction. On the other hand, reasons, why businesses
do not adopt BSC, have been identified. These reasons include inconsistencies between
managers' perceptions of the company's strategic goals, the fact that managers can only view
the BSC methodology as a passing fad that will fade away over time, a lack of strategy, an
inability to employ the BSC methodology correctly, and a lack of enthusiasm for
implementing a methodology aimed at enhancing business performance.Advantages of BSC.
Tabatabaei et al. (2017) emphasise that BSC aids in the visualisation of how the chosen goals
might be attained as well as the success criteria required to do so. According to Malagueo et
al. (2018), BSC enables businesses to receive feedback from each organisational unit
regarding their control, improve financial performance, and be able to innovate in certain
organisational areas.
The BSC focuses on the business units and workers about their role in achieving the
organization's objective as well as translating strategy into operational terms as the
organisation aligns its strategy (Frigo & Krumwiede, 2000). Since knowing their job is
crucial to ensuring that the organization's goals are met, this will inadvertently encourage
individuals to perform better at work.
The third benefit is that BSC enables employees to comprehend the strategy and goals,
connecting them to day-to-day operations at your business. The facilitation of continuing
assessment and feedback (Pandey, 2005). The process of constant review and feedback will
be simpler if employees can understand this.
Fourthly, BSC attempts to function as an engine to effectively align the firm with the strategy
of the foam so that managers may synchronise their actions and efforts. This is done by
defining the operational strategy and facilitating communication (Voelpel et al., 2005). A
BSC can assist managers in organising the steps and efforts they must take to get the greatest
job results. BSC, among other things, strives to motivate managers to supervise the work of
their subordinates more effectively.
Fifth, BSC is used in businesses of any size to manage and assess company strategy, track
operational effectiveness, and inform all staff of relevant procedures (Rohm, 2006). While
this BSC may seem extensive and in-depth, it can actually be used by businesses of all sizes
to monitor and assess business strategies, guarantee that operational efficiency is constantly
at its highest level, and effectively provide pertinent processes to all personnel.
Another benefit is that the BSC's communication strategy enables managers to comprehend
how their actions affect measurement results (Atkinson, 2006; Burney & Widener, 2007).
Managers will benefit from the BSC's communication tactics in understanding how their
decisions will be impacted by their actions.
Lastly, a firm or organisation can use this BSC to oversee the efficiency of their business.
This is explained by the fact that when this BSC is implemented, employees' daily work can
always be frequently checked through their separate scorecards, and indirectly needless costs
will be recognised, which can then be minimised, finally leading to great employee
productivity.
Limitations of BSC
Any organisation will always come up with strategic planning or effective development
methods. The BSC was created to aid at the beginning of this development process, but it is
not without flaws. According to the literature review, these flaws can be split into two
categories: design flaws and process flaws.
According to Eva Benková et al. (2020), BSC is a tool that is too pricey for businesses. Due
of the distinctive environments that each organisation has, it is also challenging to adopt.
Also, selecting the ideal goals and then communicating them is challenging. In order to
properly apply BSC, one must speak with advice and consulting firms that do so for
comparatively expensive fees.
One of the shortcomings of BSC from the standpoint of design is that a scant understanding
of perspective will result in the failure to achieve a balance between financial and non-
financial needs. Because employees are expected to comply with all requirements, regardless
of what is deemed necessary by superior employees, the perspective here carries the
connotation of the opinions of the implementing group, such as employees.
Also, if there are too many indications in this BSC without a clear understanding of what is
most important, a company will lose focus and be unable to pinpoint the precise relationship
between the present indicators. As a result, the BSC design for the organisation will be
lacking. The failure to evaluate organisational strategy comes last.
When a company tries to include all of its Key Performance Indicators (KPIs) into each
perspective without screening to just include the metrics linked to the strategy, this happens.
This indicates that the organization's strategy is not implemented, and as a result, the BSC is
of little use to the organisation.
Background of the organization
The concept for the National Vehicle was developed in 1979 by Tun Dr. Mahathir Mohamad,
who was Malaysia's fourth prime minister at the time. On May 7, 1983, PROTON Holdings
Berhad (PHB; also known as PROTON) was officially established. It is a Malaysia-based
firm engaged in the design, production, distribution, and marketing of automobiles. In Bahasa
Malaysia, "PROTON" is Perusahaan Otomobil Nasional (translated as National Automobile
Company). PROTON is a subsidiary of DRB Hicom and has its headquarters in Shah Alam,
Selangor. PROTON City, Perak (Tanjung Malim) is where it also runs additional facilities. A
long-term turnaround plan for PROTON includes a transformation process that is presently
underway. On February 16, 2016, Proton unveiled its new corporate logo and slogan, “It’s in
the Drive!”

With a reliance on the launch of the much anticipated SUV dubbed X70 and a hatchback car
named X50, PROTON's partnership with Geely is predicted to bring the company back to
profitability and help it restore its international presence.

Vision
A leading global mobility solutions provider.

Mission
Continuously create innovative processes, products and services that win people’s hearts and
minds.

Critical Issues

Throughout years of business, PROTON has a long list of issues;

Made the wrong investment at the wrong time

Upon its formation in 1983, PROTON saw steady growth in its sales and a bright future. In
order to take use of Lotus' strong engineering capabilities, which PROTON could not have
built independently, PROTON was so ambitious that it purchased Lotus Cars in 1996.
Regrettably, the financial crisis made the investment a bad choice. For more than 20 years
starting in 1996, Lotus Cars has lost money totaling an estimated RM6 billion.
Too volatile for competition
The Perusahaan Otomobil Kedua Sendirian Berhad, Malaysia's second automaker, surpassed
PROTON in 2005, widely known as Perodua. Due to Perodua's more affordable and
competitively priced goods, PROTON's sales have decreased for five years in a row. Then, in
2016, Honda passed PROTON, placing PROTON in third place, behind Perodua (32%),
Honda (18%), and PROTON (15%).
Failing exports business
PROTON started exporting cars into the UK in 1989 and Australia in 1995. Exports sales to
UK and Singapore have dropped to zero. In Australia, from January to April 2017, PROTON
only managed to sell 11 cars.
Jobs insecurity for its employees
The future of PROTON's 12,000 employees is unknown as Geely now controls
manufacturing, sales, and marketing. Geely also planned to move PROTON's production
plant from Shah Alam to Tanjung Malim, Perak.

Underutilized production
PROTON is only able to produce an average of 100,000 units annually, with only 64,000
vehicles produced in 2018; in contrast, its Tanjung Malim factory is capable of
manufacturing an average of 500,000 vehicles annually.

Poor product quality

According to a study on "Malaysians Perspective on PROTON Vehicles" published in 2014
by Assoc. Prof. Dr. Idris bin Md. Noor from Universiti Malaysia Perlis, Malaysians have a
generalised negative opinion of PROTON cars due to their inferior product quality when
compared to those of rival companies.

Poor service quality

PROTON was ranked number 9 (last) in the J.D. Power 2019 Malaysia Customer Service
Index (CSI), with CSI rated average below average, primarily owing to poor service quality.

Keys to Success
The keys to PROTON's success are to strengthen the quality of its goods and services, save
costs, identify new markets through exports, boost plant utilisation rates, and last but not
least, put a strong emphasis on employee growth.

STRENGTHS WEAKNESSES
 The first National Car  Negative public perception
manufacturer  High cost due to advanced
 Variety of products technology
 Value for money  Lack of expertise in automotive
technology

OPPORTUNITIES THREATS
 New production plant in  Competitors
Tanjung Malim  Increase in Fuel price
 Leverage on partnership with  Market maturity
Geely  Slow market growth
 R&D  Fast technology changes
 Global expansion
 Government support

SWOT Analysis
Strengths
The first national automaker in Malaysia, PROTON, has a 40-year history. As a result, the
business has a solid consumer base. PROTON is able to satisfy the various needs of its target
groups by offering a range of automobile models. Customers choose PROTON because of its
value for money and the low cost of its automobiles.

Weaknesses
The low quality of PROTON's goods and services is harming its reputation with the general
population. Because PROTON lacks experience in cutting-edge automotive engineering
technologies, it must work with international partners who do. Because PROTON uses
expensive technologies and parts, its expenses are considerable.

Opportunities
PROTON would be able to produce an average of 500,000 cars yearly by making better use
of its Tanjung Malim facility in Perak. PROTON may benefit from its partnership with Geely
and gain access to its research and development (R&D) facility, which is home to 10,000
engineers from 46 different nations and is outfitted with Swedish technology. Additionally,
PROTON's partnership with Geely will give them access to international growth and the
chance to enter a 1.4 billion dollar new market area in China. Government support for
PROTON has always been present, as seen in the RM200 million Malaysian government
grant for the transfer of PROTON Holdings Bhd's development facility from Shah Alam,
Selangor, to Tanjung Malim, Perak, in 2017.

Threats
Due to competition, PROTON saw their market share decline from 70% to around 15%.
PERODUA is PROTON's main rival. Customers will be discouraged from purchasing cars as
a result of rising fuel prices, which could hurt PROTON as a manufacturer of automobiles.
Because Malaysia's market is mature and poses a challenge to PROTON, it makes more sense
for PROTON to export its vehicles elsewhere. The Malaysia Automotive Institute (MAI)
predicts a 2% market growth for the automobile sector. The world of automotive performance
technology is evolving quickly, and PROTON cannot keep up.
The company’s scorecard

Strategic Measurements
Strategic objectives
Lag indicator Lead indicator
Financial    
Enhance production
F1- Improve returns Return-on-investment capacity
Revenue mix- offer a
F2- Broaden revenue mix Revenue Growth variety of cars
Deposit service cost Streamlining its vendor
F3- Reduce cost structure change network
Customer    
Depth of relationship,
Engage with client.
Provide 100% loan,
C1- Increase customer satisfaction with rebates, low
our products and people Share segment downpayment.
Satisfaction survey, 4S
centres.
Calls/follow-up after
C2- Increase satisfaction "After the sales" Customer retention sales/services.
Internal    
Car specifications at par
I1- Understand our customers Price & quality with competitors
Structuring technical
I2-Create innovative products New product revenue quality unit
Product development
I3- Cross-sell products Cross-sell ratio cycle
Services/test drives can
be booked online
I4- Shift customers to cost-effective
channels Channel mix change
I5- Minimise operational problems Service error rate Increasing localisation
Request fulfillment Management responds
I6- Responsive service time to issues effectively
Learning    
Strategic job coverage
ratio.

Meetings to discuss to
improve the
performance of
employees.

L1-Develop strategies skills  Technology changes On job training

L2- Provide strategic information Employee satisfaction Strategic information
availability ratio

JV with Geely has

 Volvo technology,
increase technology
expertise/experience

Response from internal stakeholders

Despite having to close down for a significant portion of the Covid-19 pandemic, Proton still
managed to record 8.8 percent growth in 2020 and capture 4.4 percent more market share
compared to 2019, and sales in 2022 were the highest in ten years with more than 140,000
units sold. Five years after signing the agreement with Chinese automaker Geely, Proton
appears to be doing well with rising sales.

The Proton X50, the company's latest B-segment SUV, is largely responsible for the success.
In advance of the SUV's much-anticipated introduction in October 2020, Proton received
more than 20,000 reservations. It goes without saying that the X50 quickly rose to the top
spot among SUVs sold in the nation. The larger Proton X70 continued to rule the C-segment
SUV market in the meantime.

However, Hezeri Samsuri, the editor of the automotive news website careta.my in 2019,
claimed that Proton had been able to escape the turbulence it had previously experienced
because to the joint venture with Geely. Nonetheless, it was still a long way from being able
to rival household names like Honda or Toyota. He emphasised that despite the partnership,
Proton staff should be sent to China frequently to study with Geely or Volvo since Proton
must create its own technology in order to compete with Honda, which has Vtec, and Toyota,
which makes the VVTI system.

The chairman of Proton, Syed Faisal Albar, added that the company must benefit from
Proton's strategy for entering international markets. Instead of selling, the goal is to establish
a presence and increase market share. Proton is currently offered in many nations, including
Pakistan and Brunei, where more than a thousand units have been sold. At its height, the
automaker sold more than 20,000 vehicles abroad, but in 2017 that number dropped to only
248 units. With the 2017 purchase of a stake by Chinese auto giant Zhejiang Geely Holding
Group, Proton created a 10-year plan.

Li Chunrong, the chief executive of Proton, stated that the business's goal of increasing sales
to 400,000 units by 2027 remained "on track" after the company saw 36 percent growth in a
challenging market where overall automobile sales had decreased by 5%. The X70 model, a
rebadged sports utility vehicle of the Geely Boyue, is largely to blame for that. Improvements
in production quality are being made by company officials in an effort to change the way
people view Proton vehicles, and management believes the strategy is working. Before to the
joint venture in 2017, when a quality audit of Proton automobiles was conducted, one of the
primary problems was that the quality level was six times lower than it is now. Almost 6,000
demerit points were excessive. It is now 1,200 or 1,300.

Compared to the prior year, Proton's export sales increased by 50% in 2020. With that
achievement, they have already surpassed annual export figures by 174%. At the same time,
Proton played a role in the fight against the Covid-19 outbreak by contributing a variety of
medical supplies to the Ministry of Health. The employees of the company switched their
focus to making 130,000 face shields. Notwithstanding the difficulties, Proton is having its
most prosperous years to date. The management is certain that the impending introduction of
the Proton Iriz Active, Saga, and facelifted Persona will only help the brand progress towards
greater success while also leveraging the success of the sales of the X50 and X70 vehicles.

In a press release dated 3 February 2023, it was said that national automaker PROTON had
its greatest year-to-date start since 2013 twelve months after supply problems caused by
flooding in the beginning of 2022 depressed sales. Sales in January 2023 increased by
162.3% year over year to 11,681 units (domestic and export), which allowed the company to
comfortably maintain second place in the sales table. Deputy Chief Executive Officer Roslan
Abdullah states that the management is confident that Proton will be able to finish the year on
a high note thanks to new facilities that will be operational at the Tanjung Malim plant,
continued dealer network growth, investment in EV charging infrastructures, and the addition
of new conventional and EV model ranges.

Conclusion

It can be said that Proton does, in fact, use a balanced scorecard, if not directly, but there are
parts of a balanced scorecard there. The company goal must be in line with balanced
scorecards. The balanced scorecard measurements must be revised if the vision and strategies
are changed. The balanced scorecards must adapt in step with how the business environment
is changing. For organisations to be competitive in the complicated business climate, new
strategies must be reinvented. Using online sales as an example, during the epidemic. Each
balanced scorecard needs to be customised for each particular business in order to measure
business performance effectively. Depending on the company sector, additional views can be
created and included to the balanced scorecard. Improved internal and external
communication as well as monitoring business performance in relation to strategic goals are
two benefits of using a balanced scorecard.
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Appendix