Balanced Scorecard – Strategic and Effective Tool of Enterprises

 

BSC is a strategic tool which is designed as an effective measuring system. The system transfers the vision and strategy of the enterprise into specific goals, measurements and targets. BSC’s measurements should show the balance among 4 fields: finance, customers, internal processes and learning, and develop from the context, work force and target customers of the enterprise.

 

At the workshop “Applying Balanced Scorecard to improve human capital”, Mr Ngo Dinh Duc, General Director of L&A Company, said, “By applying BSC, all of L&A’s staff understand the strategy very well; therefore, they know where their targets are. Even the lowest level staff understand their responsibility towards their jobs and their contribution to the organization. “When L&A provided services for P&G Vietnam, thanks to BSC tools and giving balance scores to their staff by daily checklists with specific KPI, P&G achieved high production. So if they do it well, each month, each year they can fulfil their duties. Besides, implementing BSC helps the enterprise enact vital changes and take the initiative to achieve the target goals.”

 

However, according to Mr Truong Chi Dung, Consulting Director of L&A, “BSC is a new strategic planning method in Vietnam because small enterprises are not used to analyzing strategic development in the 4 fields of BSC. Most small enterprises in Vietnam just analyze the strong points and weak points of the activities of the year and make strategies for the next year. Compartmentalized analysis of each department is still confusing. Moreover, most small enterprises focus on implementing financial strategies and sales, and pay little attention to internal processes and human beings. They regard their staff as human resources, instead of regarding them as a labour force, or the enterprise’s resource.”

 

Designing BSC requires choosing 4-6 measuring methods for each fields. An important factor in applying BSC in the enterprise is establishing a strategy map, a loadstar for the enterprise. The strategy map will describe the enterprise’s strategies by a visual image of 4 fields instead a thick pile of files like in the past. Once establishing the strategy map, the enterprise will determine the targets, measurements, criteria and implementing method by deciding the specific fund for each target.

 

BSC leads the enterprise to 4 main strategies: the best total expenditures, the leading products, customer solutions and lock-in system. In the best total expenditures, BSC focuses on 4 main factors of providing the lowest expenditures, consistent high quality, fast supplies and suitable options. However, for each industrial enterprise, the investment to build a factory is high so the fixed cost per unit is high, in inverse ratio with its output. In this case, no matter how well the enterprise does, the factors of BSC cannot ensure the best total expenditures. The most significant factor for the best total expenditures is effective marketing and sales strategies which help the enterprise achieve the best production. 

 

Mr Nguyen Ngoc My, the president of OV Business Club, said, “The strategies of enterprises should have the foundation of target customers to determine the prices offered to the customer. When applying BSC, we need to mix the strategies, as it is called “balanced” in the method, not one part. The enterprise should divide their strategies into many stages, from the simple and increase little by little every year to achieve the best results.