This assessment will cover the following questions:
- AB Limited is providing business equipment solution to local businesses. What are the balanced score card and how it would affect the performance of AB limited.
- Define benchmarking and how it could be used to improve performance of the AB limited.
Balanced score card is performance metric with context of strategic management for improving and identifying internal functions of business with external outcome. Benchmarking is replicated as process of comparing business entity as process against other organization. The present report will discuss about AB Limited as it is giving different business equipment solutions for purpose of local business. This report will help in evaluating performance with application of monthly financial reports for purpose of analysing it profitability on kinds of equipment.
A) Explaining balance score card with its application in AB limited for measuring performance
The balanced scorecard is referred as management system whose objective is to transformed as AB Limited's strategic goals for purpose of setting performance objectives and it will be monitored, measures and altered if there is necessity for ensuring that its strategic goals are accomplished or not. It is tool for monitoring the strategic decisions which are undertaken by AB limited on basis of established specific indicators and it should be capable to permeate via four aspects such as customer, financial, internal process along with learning and growth (Muda, Erlina and Nasution, 2018).
AB Limited must have presence of different measurement capabilities and to expand its monitoring which allows for relevant points of its supply chain which is going to be measured in this company. It helps in bringing various improvement with appropriate understanding of strategy which is elaborated through top level and it is assessed so that every employee is engaged in process. It could be performed through appropriate development of strategic maps.
- Financial Outlook:For purpose of succeeding financially, how company is valued from shareholders. AB Limited has to increase profitability which could be measured from financial statements.
- Customer perspective:The vision could be attained by tracing consumer views on basis of organization. There is requirement of reflecting that it how its equipments are superior in quality as compared to its competitor. It will be measured by consumer and number of equipments which are launched per quarter (Abadi, Sari and Widiyarto, 2018).
- Internal process perspective:The customer will be satisfied by extracting information about business process for accomplishing excellence. AB Limited could attain excellence in innovation along with quality control as it could be measured through appropriate statistical analysis of reports of consumer care services and social networks.
- Learning and growth perspective:For accomplishing vision, it would sustain capability for improving and changing. It could be easily measured through number of hours spent for training and certificates accomplished through employees (Balanced Scorecard,2017).
Strategic map for AB Limited
To raise profitability
The profitability could be raised by 10%
Negotiating with suppliers and innovative credit policies with perspective of distributors
Reference for equipment's variety
Increment in launching innovative equipments in each quarter by 10%.
Measuring innovative equipments which are launched in each quarter
Creation of committee for innovation and development
Internal process perspective
Capability of developing innovative equipment on constant basis
Taking initiative of at least 4 innovative equipment development in every month
Reports of project innovation
Acquiring software for purpose of managing development of equipment
Learning and growth perspective
Presence of extremely qualified staff for equipment development
Necessity of comprising 2 professionals for equipment development holding masters degree
Numerous equipment development professionals holding masters degree
Choosing employees to gain masters training
B) Explaining benchmarking with its application in AB limited for measuring performance
Bench-marking is replicated as process of measuring performance of products, services or process of AB Limited which is against business and considered appropriate best in its industry. It has to determine internal opportunities for purpose of improvement. The superior performance could be studied with possibilities of different break down. These process could be compared with business operation for implementing changes for yielding significant improvements. There is presence of two types of opportunities for improvement such as dramatic and continuous (Aguilar and et.al., 2018).
It could be implied through customised aspect on basis of organization policies, availability of resources along with process or project to deal with various issues. It gives recommendation about particular process in AB Limited could be strengthened. It is meant for improving various discrete areas for AB Limited and to monitor shifting strategies of competitor with its approaches. There are various drivers of different initiative of benchmarking in AB Limited. Generally, it comes through internal perspective where process and approach could be improved. The data will be gathered on its performance at unique point in time undertaken in huge circumstances for determining gaps and areas of strengthening in AB limited.
AB Limited could compare itself from its competitors with attempt to determine and substitute gaps in delivery of equipment and service to gain competitive advantage. The initiatives of benchmarks gives insights related to process and thinking of competitors. With reference to strategic benchmarking, it is used for elaborating AB Limited's interest with comparison of performance from best in class and deemed for world class performance. It comprises engagement to look beyond core industry of AB Limited which are replicated for their success with specific process or function (Yadav, Seth and Desai, 2018).
AB Limited has improved practices of customer services which might be compared for processes and metrics which are against its successful competitor. In case negative discrepancies are determined or variations in measures, it might embark on improvement of process for strengthening its performance and to increase profitability. AB Limited will measure and observe operation of competitor and in some industries, it will send its employees as consumer for gaining direct experience (Understanding the purpose and use of Benchmarking, 2018).
A) Uses of standard costing and reasons for reviewing standards
The standard costing is effectively used in initiating controlling over cost. Another use is that it helps in simplifying valuation of inventory and improving upon pricing of items. It is useful as it helps in implementing and set benchmark for estimating future performance in the best way possible (Baguley, 2017). It is beneficial as it helps in contributing to budgeting function of organization.
The reasons for reviewing standards are as follows-
- It assists in making comparison of planned performance with that of actual and extract deviations if any.
- It is required to review and monitor standards as it helps management to take corrective action for improvement of services quite effectually.
- Setting and reviewing standards help in eradicating inefficiencies and enhance level of efficiency of operations of AB Ltd in effective manner.
- Cost awareness by management is attained as standard cost act as a target cost for achieving planned performance.
B) Critical evaluation of standard costing to apply in manufacturing and service businesses
The standard costing is one of the important function which is used in preparing and setting benchmark as per the planned performance. The actual performance is then compared with it to analyze deviations if any in the performance. The standard costing can be applied to service and manufacturing businesses. This is evident from the fact that both type of businesses analyses stock and then seek for valuation in effective manner (Ross, 2017). Moreover, it can be said that it is applicable to processing, service and manufacturing industries as it leads to correctly price products in effectual manner. The standard costing is used for revealing variances that arises among expected and actual costs which is cost-effective method for manufacturing companies.
While, for service industry, standard costing is also helpful in service industry where operating cost system is applicable such as transport, gas and water etc. The company is able to analyse per passengers and expected and actual performance in relation to the transport business can be assessed. Moreover, deviations can be analyzed and management can take decisions. Thus, standard costing is applied to both businesses.
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From the above study it had been concluded that AB Limited could improve its performance with application of Balanced score card and benchmarking. It had shown that BSC is strategic management and planning system which is used for communicating when they are trying to attain. In the similar aspect, it aligns regular work with strategy. Further, with application of benchmarking in AB Limited it is considered as powerful tool for promoting continuous improvement in its innovative