Strategic Planning Of Enterprise's Industrial Activity Using A Balanced Scorecard

Balanced scorecard directions

BSC has two basal directions. Firstly, it acts vertically, it means it connects the managing an enterprise with others hierarchical levels. Secondly, it acts horizontally it means it takes financial tasks to the “language” of a certain activity (Kaplan & Norton, 2004; Kaplan & Norton, 2007). In BSC it is generally taking into consideration several indicators related four coordinates of business:

• Market/clients (consumers): it shows how consumers perceive an enterprise.

• Inner business processes (an inner coordinate): it shows where an enterprise exceeds competitors.

• Innovation and education indicate if an enterprise could continue improving and creating value.

• A financial coordinate: it shows how an enterprise looks in eyes of stockholders and competitors.

A condition of successful implementing BSC for estimating the company marketing during interaction with consumers is a dynamic monitoring major indicator of functionality. The interaction with consumers is a reactive type phenomenon: an action – a reaction – adjustment – an action. A deciding factor is responsibility towards the success. The subcomponents might allow providing efficiency of the monitoring (Meyer, 2004).

To get an objective assessing major indicators of functioning should meet the next requirements.

Firstly, a clear and unambiguous determining criterion allowed every employee to understand it equally. Secondly, relying accurate data from company staff that are not always able to recognize importance of obtaining information sent a huge amount of information about consumers. Thirdly, a focus on data, which is easy to obtain. If it is possible, major indicators of functionality should be based on data which is appeared in the process of managing interrelationship. Fourthly, an acceptable level of accuracy at which there is no opportunity for fraud that it is especially important if major indicators of functioning act as a target or it is a part of a circuit of stimulating interaction. Fifthly, consistency that is immediately checked in the point of obtaining information for guaranteed accounting data required for indicators and the place of obtaining it. Sixthly, setting up basic characteristics for factual indicators with involving lower levels of primary information (Sedera, Gable, & Rosemann, 2001).

These requirements are provided BSC the next advantages (Sharma, 2009; Wu & Hung, 2007). Firstly, BSC let avoid the information excess because of a point is directed to these parameters, which are main. Secondly, BSC met requirements almost eliminates suboptimization induced managers to take into account operational indicators comprehensively. Thirdly, BSC requires managers to convert statements of common way of an organization to a set of certain parameters which reflect strategic factors of development (Chzhan et al., 2019). The core of concept of a balanced scorecard is generally known. Along with other main factors, the compatibility of BSC of the marketing (BSCM) with the existing indicator system is essential, the system of existing indicator is used in different subdivisions of an enterprise. In the way, it is needed to provide the coinciding goals of BSC of the marketing with goals determined in higher systems. In addition, it is necessity to keep an eye on indicators of BSCM not to contradict indicators set up in different systems in the similar level. There is, for example, considering systems of marketing indicators of other subdivisions of an enterprise or indicator systems of different functional spheres (Brown, 2007; Kaplan & Norton, 2004; Niven, 2003).

In many publications of considered problem there is developing BSCM in the way of enterprise perspective “Relation with clients”. The implementing the perspective is often viewed as a task of marketing in an enterprise. It is needed to agree with the opinion of A. Praisner (Nili, Adame, & Cennerley, 2003). There would think that a goal of marketing is exceptionally more detailed analysing control parameters related interaction with clients. Then by analogy the perspective «Internal business processes» would be exclusively related to foundry processes, the perspective «Education and growth» would be related to the personnel department and the perspective «Finance» would be related to the financial department and the enterprise management. In the way it is overlooked important relations existed between these departments. For example, sales activity might influence to the reducing common time cost of business processes (the perspective “Internal business processes”) but more flexible production is able to provide increasing consumer satisfaction, etc.” (Nili, Adame, & Cennerley, 2003).

The using BSC included the assessing the marketing suggests that in every certain way it might use more or less amount of perspectives (directions of estimating the marketing) with changing its plot. There is no a mathematic theorem which could prove that four components of BSC are important and sufficient. It is more important to check every perspective to be more significant in every concrete case. Table 1 gives interpretation of BSC in the modern way.

Main principles of using BSC in estimating efficiency of the marketing of managing foundry:

• BSC is a controlling tool related strategic and operational level.

• BSC let track multipurpose tasks (primarily it is regards interaction with clients and finances) to conduct stepwise.

• BSC is a flexible system and it easily adapts to the using in different enterprises and different conditions.

• Success of the using BSC is determined not by the compliance of technicalities but by the understanding goals of all employees of an enterprise.

Compliance of these principles can allow avoiding potential conflict situations both a horizontal one (conflicts of indicator systems of the same level) and a vertical one (conflicts of indicator systems of another level) and harmonizing BSCM with BSC of an enterprise.

The union of BSCM and BSC

Harmonizing BSCM with BSC of an enterprise is able to do in two ways (Olven, Petreyk, Roye, & Roye, 2005; Praysner, 2007).

Firstly, there is a way “top down” at which perspectives of a corporate-wide BSC are copied and transferred to the marketing level. Secondly, a “native” way, according the way, it is needed to determine when the marketing is in its “harmony state”. Necessary perspectives are determined on the base of critical factors of success.

In all ways, it has to observer the main principle of designing BSCM, it is all perspectives have to be in casual interrelationship and comprise the more part of marketing spheres which are important for developing an enterprise. The system is essential only if indicators of perspectives “Internal business processes” and “Educational and growth” influence on perspectives “Finance” and “Interaction with clients”.

In other words, BSCM is a set of some hypotheses of reasons and result. The system of assessing should clear provide interactions (hypotheses) between goals and criteria of achievement in different conditions to be real and it is able to manage. Every indicator included in BSCM has to be an element of the chain of the causality which informs all employees of an enterprise about the meaning of its marketing. According the above, it might propose the next general methodical circuit of building BSCM using the “native” method of harmonizing BSCM with BSC of an enterprise. To achieve the goal, it is needed to recognize a place of BSCM in the system of marketing planning in an enterprise (figure 1 ).

According to figure 1 , active marketing activities should be conducted continuously. It means that before the developing BSCM it is needed to derive a marketing strategy. The main requirement for the indicator system is meeting requirements. Result of the marketing audit is integrated to a process of developing and using an indicator system to achieve a goal in the condition but it is possible to integrate new goals and new parameters of assessing efficiency of enterprise activity.

Taking into account the compliance between the indicator system and the planning process, it is possible to developing a concept of introducing and using BSCM. Therefore, the indicator system with regard to marketing is able to develop in an enterprise. The concept is consisting of eight particular steps which are able to integrate in certain ways. It is important that every step will be taken into consideration.

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Figure 2 points out that the developed BSCM should be a kind of a complex of result indicators and factors of marketing.

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Without indicating these factors, it is impossible to figure out what result is. Except it, at early steps with just indicators it is impossible to assess how successful marketing strategy of an enterprise is. Conversely, these factors as duration of a time cycle without result indicators might help to achieve short-term operational improvements but not reflect its influencing the client base state and accordingly financial result. Well-developed BSCM should include achievement of the future result (indicator of done work).

While developing BSCM, there is a question about a number of indicators included in the system. If every of perspectives of BSCM has got from four to seven different parameters, in the BSCM there will include an average of 25 indicators. How it was in the practice, employees of an enterprise are distrustful towards statement that there is no more than two dozen for effective assessing the operational activity. In a sense, it might be right but the problem is there is no the difference between diagnostic indicators, which can be used to figure out the business, is controlled and can be signed about extraordinary situations required to immediately take steps and strategical situations determined a development strategy.

Enterprises might have got hundreds and thousands number of indicators which control business processes and sign any failure in the system, but it is not decisive factors of obtaining final results. These parameters can be considered as helping an enterprise to carry out the activity, it is a diagnostic indicator.

BSCM includes major indicator of implementing an enterprise strategy. Therefore, if it is considered BSCM as a combination of more than two dozen of indicators, the working with it is too difficult for any enterprise.

BSCM is not substitute of a system of assessing obvious parameters. System indicators are chosen to make managers and employees of an enterprise to focus on marketing factors, which might lead to major achievement in competition of the market.

During developing and introducing BSCM there is arising a question why financial indicators are included in the system.

A comprehensive system of the assessing and the managing should indicate how improving the marketing is related with improving the financial activity through increasing sales, operating profit, accelerating a capital turnover, reducing operational costs. The balanced scorecard has to save a focus on financial results. In the end, the causality of all indicators has to be linked to financial target. The system keeps all advantages leaved financial indicators as the final result; however, without the exaggeration and misrepresentation which inevitably rise when the exclusive emphasis is directed to improving short-term financial indicators. As soon as BSCM id developed, it becomes the base of creating a balanced scorecard for departments and certain employees of an enterprise. A goal and a strategy of it are determined in the scorecard of efficiency of operating entity.

The system of major indicators of achievement

To assess achievement of each department and every employees of an enterprise correctly it is needed to determine single, fair, understandable and “clear” major indicators of achievement (MIA) by each employee. Major indicators of achievement are directly derived from a mission, vision and main roles of employees. By the opinion of H. K. Rampersad, it is “related to financial sustainability (how much it is possible to provide financial needs), relationship with others (relationship with a life partner, children, friends, an employer, colleagues and other people), internal processes (the state of health and psychological stability) and also knowledge and training (your possibilities or skills and ability to learn)”.

In table 2 there are the most important factors determined a success of enterprise employee activity. The resource of these factors is its mission, vision and main rules. In essence, MIA is determined the answering the next question: which of my own aspirations are crucial for my personal well-being and success (Niven, 2003).It is possible to say that the MIA is a system of enterprise success indicators because the dropping result at one or another way is immediately signalling problems, which influence both the current result and also potentially the developing business at all.

Managers of departments develop own MIA which is completely fit goals and marketing strategy of the whole enterprise and adequate BSCM. The answering an essential question, which is it is needed every employee to get his major indicators of achievement, is positive in the way if an employee has a goal, a strategy but a department where he is working has clients (internal and external) and also an internal business process which let attain the goal and implement the strategy.