The Balance Score Card
Organizations have used the balanced scorecard to overcome different issues that may affect business performance including measurement of effective performance, effective management of intangible assets, and the increasing challenges experienced in strategy implementation (Niven, 2006). From literary analysis, it is clear that Metro Group, one of the leading retail and wholesale companies in the world implements the Balances Scorecard (Ali, 2012). Like Metro Group, Walmart, one of world’s wholesale and retail companies, applies the Balanced Scorecard approach in performance evaluation and strategy formulation. The purpose of this paper is to compare and contrast how Metro Group and Walmart have implemented the Balanced Scorecard approach. Analysis will be based on four perspectives of the Balanced Scorecard namely; customer, financial, process, and learning and growth. Based on extensive review of existing literature, it is evident that Walmart has done a better job of implementing the Balanced Scorecard approach than Metro Group.
A far as finance perspective is concerned, issues that will be focused on include return in assets, sales, and net profit margin. Under customer perspective, this paper will look at issues related to customer satisfaction and customer retention rates. The number of new service items, sales performance, and transaction efficiency will be focused on under internal process perspective. As far as learning and growth are concerned, issues of concern will include; responses to customers service, professional training, organizational competence, and employee stability (Niven, 2006). Both Metro Group and Walmart have made significant steps as far as implementation of the Balanced Scorecard is concerned. However, the progress that Walmart has made is better than that of Metro Group (Ali, 2012).
Metro Group deals in a variety of business systems including wholesale trade, hypermarkets, department stores, consumer electronic stores, and online trading. The company has done well in leveraging its learning and growth perspective. According to Ali (2012), Metro Group has successfully implemented a Radio Frequency Identification that enables it o register customer data through radio waves as frequently as possible. This information technology tool enables Metro Group to track customer data automatically without human intervention. This allows the company to maintain highly accurate inventory records, customer data, employee data, and advanced shipping notices. This way, Metro Group has managed to reduce transaction errors, incorrect product identification, product shrinkage, and misplaced products. In addition, the Radio Frequency Identification has enabled Metro Group to increase sale, raise net profit margin, improve customer satisfaction, reduce customer complaints, and improve organizational competence. It is clear therefore that Metro Group has made some step in implementing the Balanced Scorecard approach.
When compared to Walmart, one can conclude that Walmart has done better than Metro Group in implementing the Balanced Scorecard approach. Walmart has established a stronger relationship between its financial, customer, internal process, and learning and growth perspectives than Metro Group (Ali, 2012). The company has concentrated much in leveraging the learning and growth perspective as a way of improving performance in other areas (Fishman, 2006). For instance, Information Technology plays a very important role in supporting Walmart’s business. The company has gone an extra mile in advancing its Information Technology systems, and the degree of advancement is higher than that of Metro Group. Over the recent past, Walmart has invested a lot in a central database, a satellite network, and a store level POS system (Ali, 2012).
By combining external information affecting sales and sales data, Walmart has been able to provide additional support to customers, which has helped it to ensure more accurate purchasing forecasts as compared to Metro Group. Walmart also uses Retail Link, one of the world’s biggest civilian databases. This link helps Walmart to keep data of every sale made over a prolonged period of time (Fishman, 2006). Through the Retail Link, Walmart allows its suppliers to access real-time sales data from individuals up to store level. Walmart also adopted the Collaborative Planning, Forecasting and Replenishment in 1990 that allows it to share critical information related to the supply chain such as inventory levels, daily sales and promotion data (Ali, 2012).
Walmart uses a Vendor-Managed Inventory (VMI) program that enables suppliers to manage their inventory levels in all distribution centers of the organization. This form of technological advancement has not been implemented at Metro Group, making Walmart to be in a better position than Metro Group as far as implementation of the Balanced Scorecard is concerned Ali (2012). Like Metro Group, Walmart has tried its best to leverage its Information Technology system by implementing Radio Frequency Identification systems. This form of technological advancement has enabled the company to collect sales and customer data automatically. However, the Radio Frequency Identification system has brought about more efficiency at Walmart than at Metro Group.
Walmart decided to implement the Radio Frequency Identification technology with the aim of increasing the efficiency of its supply chain. Since the implementation of the technology, Walmart has been able to enhance transparency of its supply chain, which has enabled it to minimize labor and material costs. Since then, Wamart has recorded a net improvement in sales of approximately 15 per cent. Additionally, Walmart has managed to increase its net profit by approximately 20 per cent since implementation of the Radio Frequency Identification technology. The technology has also promoted customer satisfaction and organizational competence. Generally, by leveraging its information technology system, Walmart has achieved great success related to finance, customer, and process perspectivesn (Fishman, 2006).
Metro Group has 220, 000 workers in 22 nations countrywide, while Walmart employs over 2.2 million workers in more than 27 nations globally. This difference in employee population has compelled Walmart to engage in more extensive employee training methods than Metro Group with the aim of increasing worker competency and skill levels. Walmart continuously evaluates its employees’ competency levels by giving then tests that they are required to answer (Fishman, 2006). The company has set a target that employees must meet in order to be declared competent. This strategy has helped Walmart to ensure that its workers possess the necessary skills and competencies that they can employ in providing the best customer service. Highly competent employees is one important factor that has contributed to increased sales, high net profit margins, customer satisfaction, organizational competence, and job satisfaction (Ali, 2012).
The Balanced Scorecard is a very important evaluation tool for organizations. Every company needs to use the Balanced Scorecard to assess its performance level with the aim of identifying areas for improvement (Ozturk and Coskun, 2014). Even though both Metro Group and Walmart are examples of best performing retail and wholesale companies in the world, Walmart has done better than Metro Group as far as implementation of the Balanced Scorecard is concerned. This conclusion has been made following analysis of finance, customer, process, and learning and growth perspectives of the Balance Scorecard for both Metro group and Walmart.
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