Introduction
The balanced scorecard approach is one of the techniques utilized by businesses to evaluate their performance with reference to customer satisfaction and performance efficiency (Kaplan, 2005). There are four different perspectives used when referring to the balanced scorecard approach, these being the Customer perspective, financial perspective, internal business processes, and Learning and Growth. The four perspectives are interdependent meaning for one to achieve successful business; he should look at every field individually, and adjust accordingly (Niven, 2007). The customer perspective primarily seeks to capitalize on the various needs of the customer to reach a balance between the company’s production and product efficiency in the eyes of the consumer. It builds on three ideas based on the following propositions:
- Who the consumers are
- What the customer expects of the company
- How best the company can present value or add value to their consumers through their products or services (Niven, 2007)
The customer’s satisfaction is important to any business venture, since the consumer creates demand and therefore requires a product, which the manufacturer then provides. To ascertain that the customer receives or retains a positive image of the company, the production company should then maximise its efforts in trying to present the customer with quality products.
Three companies are reviewed in a case study to evaluate their performance after implementing the balanced scorecard approach and the benefits they experienced afterwards. These companies are the SGC Company, Futura Industries and Hyde Park electronics. While all the above companies seek to achieve more profits while balancing their operational expenses, they all differed in their individual measures or solutions.
Hyde Park was initially focusing on its customer satisfaction as it sought to maximise production while retaining quality and service delivery to its customers in the timeliest manner. Futura industries also focused on consumer preference but in a more indirect manner. Its leaders believed that employees’ satisfaction could result in high performance overall. It later focused on consumer preference directly by carrying out consumer feedback research to find out to what degree the company had satisfied its customers. SGC Company focused its efforts in lowering the cost of its production and offering cheaper prices for the products, which led to the company attracting a larger number of customers (Gumbus et al, 2006).
Analysis
For Futura Industries, we can see that the company looked into various areas with the hope that its efforts would finally result in more satisfied customers. They even went as far as carrying out research to see if the customers were happy with the services delivered by the company, and if the delivery of both products and goods was timely enough. Thus, their measures were customer- centric. This worked greatly in enlarging their customer base. Hyde Park integrated operational measures, which delved into finding out how their customers responded to their delivery services to determine how effective their services were. This enabled them to improve their delivery services to meet the expectations of their customers. Their focus rather, was on their employee’s manufacturing capability and speed; they focused greatly on improving the company’s employees’ efficiency and speed so as to ensure the production of more products in a shorter period of time. This therefore meant that they would make more profits within a short period. In essence, the company focused more on increasing their sales and the returns they would receive, and not as much focus was put on the customer needs (Gumbus et al, 2006).
The SGC Company was a small venture with around 150 employees, and its founder found it necessary to leave the personal interest in place of the company’s wellbeing. The employees were more efficient if left to brainstorm, and customer satisfaction was the least of their focuses in developing the lowest-cost strategy the company embarked on. This is supported by the fact that the company was the best performing not-from-concentrate orange juice firm. Yet they used fewer oranges and embarked on incorporating up to 25% more chemical constitution in their juice production (Gumbus et al, 2006).
Conclusion
The BSC scorecard seems to work for the three different businesses on the same level, though approaching from different perspectives. It was rarely utilized, and until its use in the mentioned companies, each had experienced poor returns and varying economic changes within their organizations. The BSC scorecard evaluated the financial performance of the firms, evaluated the labour efficiency, production capacity and efficiency, customer satisfaction, and helped the companies achieve lower production costs, and enlarging market shares for the firms.
An evaluation of each firm on performance and customer satisfaction would suggest that both Hyde Park and Futura worked on manufacturing efficiency and customer satisfaction largely resulting in their ultimate success, but SGC underestimated the importance of the aspect of customer satisfaction. SGC lowered its cost of production and its product prices consequently. The overall effect was that the customers bought into the product, but through a lowest-cost approach of the company. It should have incorporated more customer interests in its decision making to achieve a long-life goal of customer-intimacy.
References
Gumbus, A. & Lussier, R. (2006). Entrepreneurs Use a Balanced Scorecard to Translate Strategy into Performance Measures. Journal of Small Business Management , pages 407-425.
Kaplan, R. S. (2005). A Balanced Scorecard Approach to Measure Customer Profitability. Working knowledge: A first look at faculty research , page1.
Niven, P. (2007). Customer perspective. EPM Review , page 1.