QUESTION 1: Represent the balance scorecard for Itaca ltd selecting and allocating the KPIs in the performance measurement perspectives?
ANSWER:
Balance Scorecard is a strategic planning tool, which is used in business operations for the purpose of aligning business activities with a company’s vision and strategy. It used to determine that how a company can improve its internal business process and external operations. It also improves the communication between company’s internal and external operations and helps in monitoring performance against a company’s strategic goals.
Strategic goal of Itaca is to provide quality services and serve customers as per customers’ needs. Itaca achieved this goal by implementing the Balance Scorecard and it improves the Itaca’s internal and external business operations. In the Balance Scorecard, Itaca has identified some of its key performance indicators that determine that whether the company’s operations performance is aligned with the company’s vision and mission or not.
PERSPECTIVES
Balance Scorecard that is used in Itaca suggests that it views the Itaca under four perspectives and with the help of developing the metrics, data is collected and analyzed from Itaca’s database according to each of these perspective.
FINANCIAL PERSPECTIVE
According to Itaca, timely availability of funding and accurate financial data is always the first priority, and managers of Itaca will do whatever is necessary to provide it. In this perspective, the Itaca needs the financial data of customers, which can be gathered by creating a financial database with respect to customer’s transaction and buying behavior. By creating such a database, Itaca will be able to know each and every individual customers’ mode of payments and the preferred choices under different price structures like which customer is placing maximum number of orders and in what amount a customer has paid and is willing to pay for the placed order.
INTERNAL BUSINESS PROCESS PERSPECTIVE
In this perspective, managers of Itaca will develop metrics that will allow them to evaluate how well Itaca’s business operation is running, and whether Itaca’s products and services are meeting customer’s requirements and whether they are aligned with Itaca’s mission statement or not.
Customers Perspective
In today’s business world, trend is shifting towards satisfying customers by providing them specified products according to their needs. Itaca is satisfying its customers by providing excellent services to its customers through value addition. By doing so, Itaca is not only retaining its customers; but it is also attracting more customers towards it. Itaca is achieving this by conducting customer satisfaction surveys, and through the feedback on services provided by Itaca.
Learning and Growth Perspective
In this perspective, Itaca is providing training to its employees so as to improve their performances with respect to the products and services. It also performs the evaluation test and through this test it finds out about its employees’ attitude with its customers. In Itaca, employees are continuously getting the training, which is enhancing their learning; therefore, Itaca has become a knowledge worker organization.
Following are the Key Performance Indicators under four perspectives that are used in Itaca:
1) Financial KPI
¶ Return-on-capital-employed
¶ EVA
¶ Products contribution margin
2) Internal Business Process
¶ Number of hours per employee with key customers
¶ Number of projects per week
¶ Safety incident index
3) Customers KPI
¶ Customer satisfaction index
¶ Market share distribution
¶ Customer complains
4) Learning and Growth
¶ Employee improvement suggestions.................
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