Balanced Scorecard as a Tool for Strategic Management
Write an assignment – 5 pages about balance score
card as a strategic management tool and give examples from UAE
companies. It should include what is balanced score card when its
established and by whom and the benefits of it then the example
from companies.
Solution
Introduction
Balanced score card involves a shift from the industrial competition to information
competition age. Business owners today are focusing on improvement initiatives rather than
creation of new products and services. Some of these initiatives include, Just in Time (JIT), total
quality management, employee empowerment, re-engineering and activity based cost
management (Gnanapoo, 2016). Despite causing an increase in shareholder value, the above
initiatives focus on short term growth and survival of the business. Nonetheless, business owners
are more interested in long term growth and competitive capabilities. Strategic management has
been and still is strong tools for achieving long-term goals of a business. Business owners have
used the balanced scorecard has been used by business owners to facilitate strategic management
for over two decades now (Norton & Kaaplan, 2007). The idea behind the business card is that
long-term success of a business depends on its capabilities and competences. It uses financial
and non-financial indices to determine a company’s level of performance (Intafocus, 2014).
Business score card is not only a performance measurement tool but also a tool for performance
management. The balanced scorecard has several benefits on a business enterprise namely.
Among them, the balanced score card aligns business activities to the organization’s strategy;
improves internal and external communication channels and checks the organization’s strategy
against the goals. Quite a number of companies in the UAE have adopted the use of the business
scorecard with an aim of utilizing its capabilities. This paper seeks to explore scenarios in which
the balanced score card is used as a tool for strategic management specifically in the UAE.
Abu Dhabi Education Council
BALANCED SCORECARD AS A TOOL FOR STRATEGIC MANAGEMENT 3
The business scorecard is used to achieve ground breaking results. The Abu Dhabi
education council is a government institution tasked with the responsibility of regulating the
operation of private and public schools. Since its institutionalization in 2005, the organization
made great achievements. Its main goals were to create an education system that both
innovation-based and knowledge-producing. The project involved 350,000 students and 22,000
teachers based in approximately 470 private and public institutions. To achieve the
transformation, the management decided to use the balanced scorecard to facilitate the
performance assessment and management. The use of balanced scorecard facilitated the
synchronization of the different institutions and sectors involved hence creating common
performance agendas. The organization has also managed to create a strong workforce in all its
strategic business units which include; pre-primary to year 12, private institutions, institutions of
higher education and support service. By the year 2013, the organization had 620 workers, ten
times more than the number in 2006. Important to note is the fact that the creation of the above
named strategic units was a product of strategic evaluation and planning facilitated by the
balanced scorecard.
The introduction of the vision 2030 by the government heightened the performance
requirements of the organization. In addition to its earlier goal of ensuring innovativeness and
knowledge in the education system, Abu Dhabi Education Council needed to facilitate human
resource development through quality education. The new requirements prompted the
organization to perform and evaluation after which the main challenges affecting its performance
were identified. The challenges included poor course curricula, school buildings, teacher
qualifications and lack of an overarching governance model (Rusell, 2014). Given all these
challenges the organization needed a management tool that would accelerate its operations
BALANCED SCORECARD AS A TOOL FOR STRATEGIC MANAGEMENT 4
towards the achievement of the vision 2030 goals. The main role of the balanced scorecard in
this organization was to align the operations to the organization’s strategy hence ensuring that
the goals are attained within the set timeline. Among the achievements realized after the
implementation of the balanced scorecard are:
o Students in band1 and band2 EMSA increased by 37%
o The level of stakeholder satisfaction rose from 74.6% to 82.7%
o The number if students passing grade 12 increased by 6%
o For the first time the organization managed to achieve a state-of-the-art ICT
infrastructure
Abu Dhabi Sewerage Services Company
One of the key uses of the balanced scorecard is to develop a performance-driven culture
in an organization (Balanced Scorecard Institute, 2016). The Abu Dhabi sewerage services
company (ADSSC) is a government organization tasked with the responsibility of managing and
maintaining sewerage systems. In addition, the organization is responsible for planning and
executing the required system expansions given the fast growing population. The ADSSC took
over the management of the sewerage systems from the former management that was rather
overstretched beyond its limits. The predecessor was handling 60% more work than its capacity
(Rusell, 2014). As a result, leaking drainage pipes, bad odors and complaints were the order of
the day. ADSSC had to develop a strategy that would facilitate infrastructure improvement and
sewerage system upgrade without depleting the company’s assets. The organization came up
with a project that would ensure both short-term and long-term waste water drainage needs
called the strategic tunnel enhancement program (STEP). The implementation of STEP was a
BALANCED SCORECARD AS A TOOL FOR STRATEGIC MANAGEMENT 5
complex process particularly given the low performance levels of the employees and the
organization at large. The project would not have been completed past the creation of a
performance-driven culture in the organization. Abu Dhabi sewerage Services Company used the
balanced scorecard to create a performance driven culture in a bureaucratic organization.
Arabian Automobiles
Restructuring or re-strategizing is one of the most daunting processes that a company
would go through. The process involves immense changes. In most cases, it is difficult to
determine the results or predict the outcome of the new strategy using the conventional methods.
In the 2006 restructuring, the company realized great success amounting to Arabian automobiles
being one of the greatest automobile companies with a workforce of 3,000 employees. Arabian
automobiles was established in 1968 as Rostamani-Automobiles. The economic recession in the
year 2009 saw most businesses incur great losses. Particularly in the automobile industry there
was a 45% drop in sales globally (Islam & Verick, 2010). Most automobile companies were
forced to set back and re-strategize or develop solutions on how to deal with the crisis. To
counter the effects of the recession, the Arabian automobiles management took an expansive
approach. In the year 2010, the company the company initiated a project called vision 2015. The
project had two major goals; first, to double the company’s revenue to $2 billion and second, to
establish itself as a world class company (Rusell, 2014). Attaining these two goals required
robust strategy execution, building strong processes in the different business units and
capitalizing on global expansion.
The company set up a framework to act as a guide to achieving the goals. This
framework defines five pillars including: healthy financial foundation, operational excellence,
BALANCED SCORECARD AS A TOOL FOR STRATEGIC MANAGEMENT 6
compliance, emphasis on human resource and a supportive organizational culture. Balance
scorecard, was the most appropriate tool for realizing these management goals. Some of the
achievements realized with the use of the balanced scorecard. These benefits include increased
revenue and gross profit, customer satisfaction, employee retention and technical productivity.
These results could not have been realized without the contribution of the balanced scorecard.
Conclusion
As mentioned earlier, the business world today is undergoing a revolutionary
transformation. This revolution involves a shift from the industrial competition to information
competition age. The age of information completion requires the adoption of initiatives for
improvement rather than new creations. However most of the initiatives are based on short-term
growth and sustainability of the business. Despite causing an increase in shareholder value,
initiatives such as the JIT and total quality management focus on short term growth and survival
of the business. However, business owners are more interested in long term growth and
competitive capabilities. The dream of every investor is to gain more in the long-term than short-
term. Strategic management has been and still is strong tools for achieving long-term goals of a
business. Business owners have used the balanced scorecard has been used by business owners
to facilitate strategic management for over two decades now. Particularly, most companies in the
UAE have adopted the use of the balanced scorecard as a tool for strategic management. In the
essay a few of these companies were sampled with the aim of assessing how they used the
balanced scorecard to ensure exceptional strategic management. In all the three companies, it is
clear that balanced scorecard has been used in situations that require complex strategic
management. All the companies have realized great results from the use of the balanced
scorecard system.
BALANCED SCORECARD AS A TOOL FOR STRATEGIC MANAGEMENT 7
References
Balanced Scorecard Institute. (2016). Balanced scorecard basics. Retrieved on 23 rd April 2016
from: http://balancedscorecard.org/Resources/About-the-Balanced-Scorecard
Gnanapoo,.E. (2016). Balanced scorecard- A strategy management tool. Retrieved on 23 rd April
2016 from: http://maaw.info/ArticleSummaries/ArtSumKaplanNorton96.htm
Intafocus. (2014). Balanced scorecard: what is the balanced scorecard.
https://www.intrafocus.com/wp-content/uploads/2014/06/What-is-a-Balanced-Scorecard-
Intrafocus.pdf
Islam,.I. & Verick,.S. (2010). The great recession of 2008-2009; causes, consequences and
policy responses. Retrieved on 23 rd April 2016 from: http://ftp.iza.org/dp4934.pdf
Norton,.P.D. & Kaaplan,.S.R. (2007). Using the balanced scorecard as a strategic management
system. Retrieved on 23 rd April 2016 from: https://hbr.org/2007/07/using-the-balanced-
scorecard-as-a-strategic-management-system
Rusell,.H.R. (2014). Strategy execution champions: the palladium balance scorecard hall of fame
report 2014. Retrieved on 23 rd April 2016 from:
http://www.id.gov.ae/userfiles/assets/RosaZDrAmUi.pdf
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