Pretend you are again a manager of your favorite manufacturing company. You have been asked to determine whether a product (one of your choosing) should be manufactured in-house or outsourced to anoth

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The balanced scorecard

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The balanced scorecard

Balance scorecard in a performance metric used in strategic management in order to identify and improve various internal functions of an organization (Niven, 2011). This performance metric can be utilized to measures Telsa Inc financial performance, customer satisfaction rate, internal process, and organizational capacity. The financial component of the balanced scorecard is used measures how well Telsa Inc is doing financially. The key area of consideration includes revenue, expenses and cash flow. The financial performance component checks whether an organization has sound management whereby the decision made on revenue should have less variance as compared to the desired revenue. The forecasted figure is compared with the actual figure in order to access the variation.

The variances reveal the management efficiency in financial forecasting. For example, when actual revenue is low as compared to the projected sales then it means that the company might have made some mistakes while forecasting. Favorable variance includes a situation whereby the rate of revenue projected is more than previous year's revenue. Telsa Inc has been recording improvement in overall revenue each year which suggests that the company management is effective in forecasting and keeping expenses low. Unfavorable variances include a situation whereby the projected sale revenue is higher than actual sales. The forecasted figure should reveal the financial condition of the organization.

Financial consideration is based on salaries, cost of benefits, training, travel expenses, equipment, supplies, rent, and taxes for employees and other expenses (Niven, 2011). This cost influences the overall revenue. Therefore, as manager in Telsa Inc, my key responsibility is to analyze revenue based on the potential expense. Unfavorable variances on expense are achieved when the actual expenses are lower than the project expenses. The second component of balanced scorecard measures the rate of customer satisfaction delivery of product and quick response to customer issues. Telsa Inc product demand and market share increase each day which suggests that the company customers are more satisfied with the brand.

Customers concerns about the quality of products influence customer retention and satisfaction ratio. Management in Telsa Inc ensures they maintain proper inventory of finished and work in progress in order to meet customer’s needs. The production budget is used in this case to determine the number of units that must be produced. The budget also indicated the required level of inventory needed at the end of the period. Telsa Inc maintains 20 Percent of its vehicle fully made before the beginning of the new quarters. The finished inventory will supplement the needed inventory on the market. As a result, customer satisfaction and retention level will improve positively.

The process component measures the internal process efficiency and how the company utilizes its process in order to cuts cost. Telsa Inc reduces the cost of inventory by utilizing information technology such Enterprise resources planning software's (ERP). This software's helps the company function more effectively. Integration supply chain network ensures suppliers and the company communicates more effectively and therefore the company will not incur cost relating to opportunity cost on the profit margin. Human resources planning and task allocation help the company utilize the employees well. If employees are well utilized then the organization will not need to outsource labors.

Technology is the best tool which determines efficiency in time and cost. Detail accounts and reports are prepared in order to track firm performance in relation to the utilization of the assets through comparing revenues with assets, labor management by comparing labor with the actual revenue. Lastly, Telsa Inc can use learning and growth component of the balanced scorecard to gauge how the company has improved during the years of operation (Niven, 2011). The areas which indicated learning and growth include employee’s improvement in the organization operation. Motivation and retention level of employees is clear indication of learning and growth in Telsa Inc. Learning and growth to employees are influenced by innovation and development where employees develop new skills.

References

Hope, J., & Fraser, R. (2001). Beyond Budgeting questions and answers. CAM-I, BBRT, Dorset.

Kaplan, R. S., & Norton, D. P. (1996). The Balanced Scorecard: Translating Strategy into Action. Boston: Harvard Business Review Press.

Niven, P. R. (2011). Balanced Scorecard: Step-by-Step for Government and Nonprofit Agencies. Hoboken: Wiley.