Module 4
Value-based management
1.
Give Russian equivalents to the following words
to tailor objectives, to boost earnings, analytical techniques, balance sheet,
income statement, to have an effect on, to quantify, specific targets, revenue growth, the
right option, line managers, acquisition, merger, improve margins, target setting,
performance measurement, incentive system, return on investment
2.
Give English equivalents to the following words
поглощение компании, разница между ценами, система поощрений, отчет о
финансовом положении, отчет о доходах, стратегические оперативные решения,
денежный поток, влиять на стоимость компании, оценка работы компании,
слияние компаний, доходность капитала, подогнать цели к потребностям клиента,
выразить в цифрах
3.
Before you read the text answer the questions.
1.
Do you know how to improve management of a company?
2.
Have you read anything about Value-based management?
Text 4A
Value-based management
Recent years have seen new management approaches for improving
organizational performance. Many have succeeded - but quite a few have failed. Often
the cause of failure was performance targets that were unclear or not properly aligned
with the ultimate goal of creating value. Value-based management (VBM) tackles this
problem head on. It provides a precise value upon which an entire organization can be
built.
The value of a company is determined by its discounted future cash flows. Value
is created only when companies invest capital at returns that exceed the cost of that
capital. VBM extends these concepts by focusing on how companies use them to make
both major strategic and everyday operating decisions. Properly executed, it is an
approach to management that aligns a company's overall aspirations, analytical
techniques, and management processes to focus management decision making on the
key drivers of value.
VBM is very different from 1960s-style planning systems. It focuses on better
decision making at all levels in an organization. It recognizes that top-down commandand-control structures cannot work well, especially in large multi-business corporations.
Instead, it calls on managers to use value-based performance metrics for making better
decisions. It entails managing the balance sheet as well as the income statement, and
balancing long- and short-term perspectives.
When VBM is implemented well, it brings tremendous benefit. It is like
restructuring to achieve maximum value on a continuing basis.
Yet value-based management is not without pitfalls. It can become exercise that
has no effect on operating managers at the front line or on the decisions that they make.
The focus of VBM should not be on methodology. It should be on the why and
how of changing your corporate culture. A value-based manager is as interested in the
important details of organizational behavior as in using valuation as a performance
metric and decision-making tool.
Examples of VBM’s impact
When VBM is working well, an organization's management processes provide
decision makers at all levels with the right information and incentives to make valuecreating decisions. Take the manager of a business unit. VBM would provide him or her
with the information to quantify and compare the value of alternative strategies and the
incentive to choose the value-maximizing strategy. Such an incentive is created by
specific financial targets set by senior management, by evaluation and compensation
systems that reinforce value creation, and - most importantly - by the strategy review
process between manager and superiors. In addition, the manager's own evaluation
would be based on long- and short-term targets that measure progress toward the
overall value creation objective.
VBM operates at other levels too. Line managers and supervisors can have
targets and performance measures that are tailored to their particular circumstances but
driven by the overall strategy. At the top of the organization, on the other hand, VBM
informs the board of directors and corporate center about the value of their strategies
and helps them to evaluate mergers and acquisitions.
Value-based management can best be understood as a marriage between a value
creation mindset and the management processes and systems that are necessary to
translate that mindset into action. Taken alone, either element is insufficient. Taken
together, they can have a huge and sustained impact.
A value creation mindset means that senior managers are fully aware that their
ultimate financial objective is maximizing value; that they have clear rules for deciding
when other objectives (such as employment or environmental goals) outweigh this
imperative; and that they have a solid analytical understanding of which performance
variables drive the value of the company. They must know, for instance, whether more
value is created by increasing revenue growth or by improving margins, and they must
ensure that their strategy focuses resources and attention on the right option.
Management processes and systems encourage managers and employees to
behave in a way that maximizes the value of the organization. Planning, target setting,
performance measurement, and incentive systems are working effectively when the
communication that surrounds them is tightly linked to value creation.
The first step in VBM is value maximization as the ultimate financial objective
for a company. Traditional financial performance measures, such as earnings or
earnings growth, are not always good proxies for value creation.
Companies also need nonfinancial goals - goals concerning customer satisfaction,
product innovation, and employee satisfaction, for example - to inspire and guide the
entire organization. Such objectives do not contradict value maximization. On the
contrary, the most prosperous companies are usually the ones that excel in precisely
these areas. Non-financial goals must, however, be carefully considered in light of a
company's financial circumstances.
Objectives must also be tailored to the different levels within an organization. For
the head of a business unit, the objective may be explicit value creation measured in
financial terms. A functional manager's goals could be expressed in terms of customer
service, market share, product quality, or productivity. A manufacturing manager might
focus on cost per unit, cycle time, or defect rate. In product development, the issues
might be the time it takes to develop a new product, the number of products developed,
and their performance compared with the competition.
Even within the realm of financial goals, managers are often confronted with
many choices: boosting earnings per share, maximizing the price/earnings and
increasing the return on assets. We strongly believe that value is the only correct
criterion of performance.
Notes to the text
1.
value-based management – ценностно-ориентированное управление,
нацеленное на создание стоимости
2.
quite a few – большое количество
3.
to tackle the problem head on – занимать твердую позицию при
решении проблем
4.
discounted future cash flow – дисконтированные будущие денежные
потоки
5.
to invest at returns - получать отдачу от инвестированного капитала
6.
to align aspiration - объединить усилия
7.
key drivers- главные стимулы
8.
performance metrics - показатели эффективности
9.
staff-captured exercise – упражнение для персонала
10. line-managers – среднее звено руководства
4.
Answer the questions to the text.
1.
What do discounted future cash flows mean?
2.
What are the principles of VBM?
3.
What are the benefits of implementing VBM?
4.
What are the pitfalls of using VBM?
5.
How does VBM operate at the management level?
6.
In what way do management processes and systems encourage employees
to work better?
7.
How must objectives be tailored to different levels of an organization?
Text 4B
Who would you rather work for?
Discuss these questions.
1)
a)
b)
c)
2)
3)
Which would you prefer to work for?
A mail boss
A female boss
Either – you don’t have a preference
What are the characteristics that are attributed to female managers?
Which ideas do you agree with?
Women are more efficient and trustworthy, have a better understanding of their
workforce and are more generous with their praise. In short they make the best
managers. The survey of 1,000 middle and senior managers from across the US showed
that women had a more modern outlook on their profession and were more open
minded and considerate. A majority of those questioned believe that male managers are
egocentric and more likely to steal credit for work done by others.
According to the research conducted by Management Today magazine women
have become role models for managers. Male bosses were rated by their staff to be selfobsessed and autocratic. Female managers use time more effectively. They also appear
to make good financial sense for penny-pinching companies (unwilling to spend
money): most people would rather ask for a rise from a man. “If men want to be
successful at work they must behave more like women”, said the magazine editor. Socalled feminine skills are vital for attracting and keeping the right people.
Business psychologist John Nicholson is surprised by the survey’s findings,
asserted that the qualities valued today in a successful boss are feminine, not masculine.
Women make better bosses, because they are less status-conscious, conduct better
meetings, are more effective negotiators and display greater flexibility.
Women are no longer scarce in the boardroom - they occupy a third of the seats
round the conference table. Women directors are still relatively uncommon in older age
groups, but among young directors the proportion is growing. In the past women who
worked in management were encouraged to be more manly. It looks now as if the boot
is on the other foot.

The boot is on the other foot – a situation has changed so that somebody
now has authority over the person who used to have power or authority over them.
Text 4C
Translate this text into English in writing
Value-Based Management – концепция управления, направленная на
качественное улучшение стратегических и оперативных решений на всех уровнях
организации.
Все люди, которые принимают решения, концентрируют все усилия на
ключевых факторах стоимости. В рамках концепции VBM
выбирается
максимизация стоимости компании. Стоимость компании определяется ее
дисконтированными будущими денежными потоками. Новая стоимость создается
тогда, когда компания получает такую отдачу от инвестированного капитала,
которая превышает затраты на привлечение капитала. Для того, чтобы управлять
чем-либо, необходимо это измерять: это означает, что необходим инструмент,
позволяющий оценить результат от инвестированного капитала. Мы можем
определить основные факторы, влияющие на стоимость компании. Эти факторы
должны учитываться при создании стоимости – затраты на собственный и
заемный капитал и доходы. Доходы генерируются существующими активами и
могут выражаться в различных формах: прибыль, денежный поток и.т.д.
В 80-х – 90-х годах появился целый ряд показателей, отражающих процесс
создания стоимости.
Market Value Added (MVA)
MVA - самый очевидный критерий создания стоимости, рассматривающий
в качестве последней рыночную капитализацию и рыночную стоимость долгов
компании.
MVA рассчитывается как разница между рыночной ценой капитала и
инвестированным в компанию капиталом:
MVA = Рыночная стоимость долга + рыночная капитализация –
совокупный капитал*
* следует учитывать, что в балансовую оценку совокупного капитала
должны быть внесены поправки для устранения искажений, вызванных методами
учёта и некоторыми учётными принципами. Данные поправки будут более
подробно рассмотрены при описании показателя EVA.
С точки зрения теории корпоративных финансов MVA отражает
дисконтированную стоимость всех настоящих и будущих инвестиций.
Economic Value Added (EVA)
Наверно, из всех существующих показателей, предназначенных для оценки
процесса создания стоимости компании, EVA является самым известным и
распространённым. Причина этого в том, что данный показатель сочетает
простоту расчёта и возможность определения стоимости компании, а также
позволяет оценивать эффективность как предприятия в целом, так и отдельных
подразделений. EVA является индикатором управленческих решений: постоянная
положительная величина этого показателя свидетельствует об увеличении
стоимости компании, тогда как отрицательная – о её снижении.
Cash Flow Return on Investment (CFROI)
Одним из недостатков показателя EVA, рассмотренного выше, является
игнорирование денежных потоков. Данный недостаток устраняется при расчёте
показателя CFROI:
CFROI = Скорректированные денежные притоки (cash in) в текущих ценах /
скорректированные денежные оттоки (cash out) в текущих ценах
Другим преимуществом данного показателя по сравнению с EVA является
тот факт, что как денежные потоки, генерируемые существующими и будущими
активами, так и первоначальные инвестиции выражаются в текущих ценах, т.е.
учитывается фактор инфляции.
Вывод: в силу того, что каждый из рассмотренных показателей имеет свои
ограничения и недостатки, а также потому, что область стоимостных показателей
является относительно новой отраслью знаний, некоторые авторы предлагают
комбинированное использование нескольких показателей при оценке процесса
создания стоимости. На наш взгляд, такой подход не будет оптимальным, т.к.
эффективность системы VBM может быть достигнута при подчинении всех
значимых управленческих решений единой цели, что предполагает наличие
единого критерия, на основе которого строится и оценка эффективности, и
соответствующий
стоимостной
показатель
исходя
из
соображений
оперативности, выгод и затрат, связанных с получением информации,
необходимой для его расчёта.
Mini-presentation
You are asked to give a short talk. Choose one of the topics from the three below
and talk about it for three minutes.
1.
2.
3.
How to encourage employees to work better.
What are benefits and disadvantages of using VBM.
Successful implementation of VBM.
Module 5
SWOT analysis
1. Give Russian equivalents to the following words and word combinations
business venture, to set the objective, achievable goals, improve performance, to
highlight, internal appraises, to determine relevance, strategy implementation, to amend
objectives, competitive advantages, impact on objectives, to compile lists, a profitseeking organization, viability study, to be involved in a project, landscape analysis,
underlying factors
2.
Give English equivalents to the following words and word combinations
объект исследования, внутренняя и внешняя среда, возможности и угрозы,
сильные стороны организации, ключевые факторы успеха, достичь цели,
определить главные факторы, оценка данной ситуации, жизненный цикл товара,
стратегические вопросы, ставить цели, делать поправки в целях
3.
1.
2.
3.
Before you read the text answer the questions.
What do you know about SWOT analysis?
What do the letters in the word SWOT stand for?
What steps does SWOT analysis include?
Read the text, translate it and answer the questions
Text 5A
SWOT analysis
SWOT analysis (alternately SLOT analysis) is a strategic planning method used to
evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a
project or in a business venture. It involves specifying the objective of the business
venture or project and identifying the internal and external factors that are favorable and
unfavorable to achieve that objective.
Setting the objective should be done after the SWOT analysis has been performed.
This would allow achievable goals or objectives to be set for the organization.
•
Strengths: characteristics of the business, or project team that give it an
advantage over others
•
Weaknesses (or Limitations): are characteristics that place the team at a
disadvantage
relative to others
•
Opportunities: external chances to improve performance (e.g. make greater
profits) in
the environment
•
Threats: external elements in the environment that could cause trouble for the
business
or project
External Internal
origin origin
SWOT ANALYSIS
Helpful
Harmful
Strengths
Weaknesses
Opportunities
Threats
SWOT analysis, with its four elements in a 2x2 matrix.
Identification of SWOTs is essential because subsequent steps in the process of
planning for achievement of the selected objective may be derived from the SWOTs.
First, the decision makers have to determine whether the objective is attainable,
given the SWOTs. If the objective is NOT attainable a different objective must be selected
and the process repeated.
The SWOT analysis is often used to highlight and identify strengths, weaknesses,
opportunities and threats. It is particularly helpful in identifying areas for development.
Matching and converting
One way of utilizing SWOT is matching and converting. Matching is used to find
competitive advantages by matching the strengths to opportunities. Converting is to apply
conversion strategies to convert weaknesses or threats into strengths or opportunities. An
example of conversion strategy is to find new markets. If the threats or weaknesses cannot
be converted a company should try to minimize or avoid them.
Internal and external factors
The aim of any SWOT analysis is to identify the key internal and external factors
that are important to achieving the objective. These come from within the company's
unique value chain. SWOT analysis groups key pieces of information into two main
categories:
•
Internal factors - The strengths and weaknesses internal to the organization.
•
External factors - The opportunities and threats presented by the external
environment to the organization.
The internal factors may be viewed as strengths or weaknesses depending upon
their impact on the organization's objectives. What may represent strengths with respect to
one objective may be weaknesses for another objective. The factors may include all of the
4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external
factors may include macroeconomic matters, technological change, legislation, and sociocultural changes, as well as changes in the marketplace or competitive position. The
results are often presented in the form of a matrix.
SWOT analysis is just one method of categorization and has its own weaknesses.
For example, it may tend to persuade companies to compile lists rather than think about
what is actually important in achieving objectives. It also presents the resulting lists
uncritically and without clear prioritization so that, for example, weak opportunities may
appear to balance strong treats.
The importance of individual SWOTs will be revealed by the value of the
strategies it generates. A SWOT item that produces valuable strategies is important. A
SWOT item that generates no strategies is not important.
The usefulness of SWOT analysis is not limited to profit-seeking organizations.
SWOT analysis may be used in any decision-making situation when a desired objective
has been defined. Examples include: non-profit organizations, governmental units, and
individuals. SWOT analysis may also be used in pre-crisis planning and preventive
crisis management. SWOT analysis may also be used in creating a recommendation
during a viability study.
SWOT - landscape analysis
The SWOT-landscape grabs different managerial situations by visualizing and
foreseeing the dynamic performance of comparable objects.
Changes in relative performance are continually identified. Projects (or other
units of measurements) that could be potential risk or opportunity objects are
highlighted.
SWOT-landscape also indicates which underlying strength/weakness factors that
have had or likely will have highest influence in the context of value in use (for ex.
capital value fluctuations).
Corporate planning
As part of the development of strategies and plans to enable the organization to
achieve its objectives, the organization will use a systematic process known as
corporate planning. SWOT can be used as a basis for the analysis of business and
environmental factors.
•
Set objectives - defining what the organization is going to do
•
Environmental scanning

Internal appraisals of the organization's SWOT, this needs to include an
assessment of the present situation as well as a portfolio of products/services and an
analysis of the product/service life cycle
•
Analysis of existing strategies, this should determine relevance from the
results of an internal/external appraisal. This may include gap analysis which will look
at environmental factors
•
Strategic Issues defined - key factors in the development of a corporate
plan which needs to be addressed by the organization
•
Develop new/revised strategies - revised analysis of strategic issues may
mean the objectives need to change
•
Establish critical success factors - the achievement of objectives and
strategy implementation
•
Preparation of operational, resource, projects plans for strategy
implementation
•
Monitoring results - mapping against plans, taking corrective action which
may mean amending objectives/strategies.
Answer the questions to the text
1.
2.
3.
4.
5.
6.
7.
8.
What is SWOT analysis used for?
What steps does SWOT analysis involve?
Why is it important to indentify SWOTs?
What is a SWOT-landscape analysis?
Could you enumerate the steps used in corporate planning?
Why are internal and external factors important to achieve the objective
What is the weakness of SWOT analysis?
Can you determine the usefulness of SWOT analysis?
Read the text and answer the questions
Text 5B
Japanese industry in Europe
The growing role of Japanese manufactures in Europe has attracted critical or
even fearful comments. Japanese investment overseas started about thirty years ago.
Japanese companies which had become cash-rich from their exporting activities realized
that in order to expand markets overseas they needed investment sites, manufacturing
sites within the markets. The first investment from Japan started in the US, and they
started making all kinds of consumer goods. A second wave of investment was
concentrated in East Asia, Korea, Thailand, the places where labor is very cheap but the
quality of the skills available is high and education and resources are very good as well.
In terms of Japan’s total investment, the UK has attracted the lion’s shares, about
40%, followed by France. Even Iceland boasts a Sumitomo plant, though more of the
executives are Japanese. The only major European country without a Japanese
manufacturing presence is Norway. What matters to most investors is a good location
for distribution, good infrastructure, quality of labor and availability of English
speaking staff.
The government in Britain has been historically very much in favor of foreign
investment. It has always has always been promoted in Britain. The cost of labor is a
relevant factor. Now British labor is cheaper than labor in Germany. But the problem
that they are finding at the moment is that there aren’t really enough engineers in
Britain, skilled and highly trained people to fulfill the requirements of new investment.
That is starting to have an impact on new investment coming into Europe.
Japanese companies are introducing their own management styles and working
practices into Europe.
The thing is that the British culture and the Japanese cultures are quite different.
Communications, social organizations, even language determine or have influence o n
how a business will operate. Japanese companies have brought in the best practices, the
best philosophies they can from Japan, but they have combined them with the best
philosophies and practices that are available in the UK. You will find that if you go to
somewhere like Nissan, which is making cars in the north east of England, they are
quite proud, and the British workers and the British managers there are quite proud to
say that Nissan brought in a number of revolutionary ideas, but they have been
implemented by British managers and they have been worked by British workers using
a lot of lessons from British industry.
1.
What did the Director of the Nissan Motor Company mean when he said,
”We have to globalize, and to globalize we must localize”?
2.
Why have Japanese manufactures invested heavily in Europe in recent
years?
3.
What are the benefits and drawbacks of a Japanese presence in Europe?
4.
Would you like to work for a Japanese company? Give your reasons.
Text 5C
Render this text in English or translate in writing
Предприятие в процессе своей деятельность является открытой системой:
оно тесно взаимодействует с окружающей его средой. Искать причины успехов и
неудач фирмы только в ее внутренней организации было бы неправильно.
Поскольку окружающая среда является поставщиком ресурсов и потребителем
готовой продукции, она очень сильно влияет на деятельность фирмы. Следует
анализировать факторы среды как объективного окружения фирмы с целью
выяснения и предсказания возможностей и угроз с ее стороны. Инструментом
такого анализа является методика SWOT - анализа. Это инструмент комплексного
исследования внутренней и внешней среды организации, который предоставляет
возможность выработки гибкой стратегии. SWOT - анализ позволяет производить
комплексное тестирование маркетинговой среды для осуществления выбранной
стратегии, согласно целям собственника, бюджету и наличию материальных и
человеческих ресурсов.
Существуют некоторые модификации этой методики. Для оценки силы
влияния факторов на предприятие используются количественные методики
SWOT- анализа. SWOT - анализ не бывает абстрактным. Силы и слабости,
возможности и угрозы – понятия относительные и зависят от времени, места и
характера действий субъекта. Рыночные возможности во многом определяют
стратегию компании. В зависимости от условий отрасли возможности могут быть
как многообещающими, так и бесперспективными.
Mini-presentation
You are asked to give a short talk on one of the topics given below.
1. What threats should worry the manager and which strategic actions he/ she
has to take?
2. Successful fulfillment of SWOT analysis.
3. Opportunities which can give a company a chance of achieving success.
Module 6
The Balanced Scorecard as a strategic management tool.
5.
1.
2.
3.
4.
5.
6.
7.
8.
9.
Guess the meaning of the words from their description.
tangible assets-assets which have material form and can be turned into cash
intangible assets-assets which are valuable but not easily turned into cash
critical-important, serious, crucial
to gage-to measure? Calculate
blueprint-a plan for managing the economy
to traverse-to cross an area
consistent-happening for a period of time
to excel at sth- to be very good at doing sth
allocation of resources- choosing the particular use to which a resources is
10.
11.
12.
to propel a company-to force a company to move in a particular direction
insight-an understanding of what sth is like
acquisition-the act of buying
put
6.
Give Russian equivalents to the following words and word combinations
to contribute to sth, timely service, specific words and needs, to set forth the
goals, a common goal, insight, information environment, a blueprint, a business unit,
cause-and-effect relationship, solely, to excel in sth, empowerment, alignment.
7.
Before you read the text answer the questions.
1. What management tools do you know?
2. Have you read anything about the Balanced Scorecard?
Read the text and answer the questions.
Text 6A
The Balanced Scorecard* as a strategic management tool
(* сбалансированная система показателей)
"The Balanced Scorecard" addresses an ever-increasing accounting problem. We
are now in the information age and the old accounting from the industrial age doesn't
properly measure a company. The theory is that there are many other intangible assets
that a company possesses that are not reflected on the balance sheet but do contribute
greatly to the performance of the company. "The Balanced Scorecard" describes a
method in which a company can measure and even manage using the intangible assets.
A Balanced Scorecard involves developing one strategy or mission for the company.
The idea is to incorporate every aspect of the company that will contribute to achieving
this mission. In the process, a company gains a new understanding of their business and
a new way of managing it.
Measurement and Management in the Information Age
The Balanced Scorecard measures a company's performance through a balance of
four perspectives: financial, customers, internal business processes, and learning and
growth. The four perspective of the Balanced Scorecard must be held together,
dependently working towards the overall corporate strategy. Without this, the four
perspectives may work against each other creating more problems. These measurements
include the traditional financial measurement of past transactions, but they also give a
measurement strategy for future operations. The business environment has changed
from industrial based to an information based one. This change has brought the focus
from tangible assets to intangible ones. Operations must be conducted in real-time,
which means they must operate without boundaries of intercompany segment or even the
supply chain. Traditional methods of measuring performance don't work today. The
Balanced Scorecard is designed to take a balanced look at all of the company's business
factors and formulate performance measures accordingly. The goal is not to have a new
measurement system; the goal is to have a management system.
In today's information environment, a company can no longer be measured solely
on past performance. The financial perspective is critical to the success of the Balanced
Scorecard. It accurately measures how well improvements in the other three perspectives
have worked. The Balanced Scorecard is needed because there are limitations on
financial measurement of business performance. By its very nature, financial
measurement is not forward-looking. To better gage a company's performance, one must
balance all areas of the business. The Balanced Scorecard helps form a strategy for this
implementation, but it is not designed to be used as a blueprint because every company is
different. Companies have different goals, different customers, and different industries.
This is precisely the-reason why the Balanced Scorecard is needed to help form one
strategy for the business and bring all areas of that business to work in harmony for the
achievement of that one goal.
Financial Perspective
This is the most important perspective of the Balanced Scorecard since it is the
measurement basis of all the others. Financial objectives should be linked to the one
corporate strategy with a strong emphasis on the cause-and-effect relationships that every
change can have. Financial objectives are used to represent the long-term goal of an
organization. The business unit doesn't necessarily need to be the overall company. In
many cases, it is far easier to install a Balanced Scorecard to the strategic business units,
that can identify unique customers, strategies, and goals, then work upwards toward a
consolidation of all of the scorecards. In any case, the overall company strategy should
traverse through all four perspectives, thereby linking all towards a common goal. Often
one change in the financial perspective will have changes in the other areas because of
the cause-and-effect relationship. That is the reason why the overall strategy must be
consistent throughout the Balanced Scorecard implementation.
Customer Perspective
The customer perspective is designed solely to measure how well the company is
meeting the demands of the customer and its market segment. It is most critical to the
success of a company, but it is overlooked by traditional measures. The goal is to supply
the customers with what they want. By measuring customer satisfaction, loyalty,
acquisition, and profitability, a company can excel in their market segment and plan for
the future. The solution is the management of three classes of attributes:
1.
Product and service attributes: functionality, quality, and price.
2.
Customer relationships: quality of purchasing experience and personal
relationships
3.
Image and reputation.
Managing across these three classes will provide value for a company's customers..
A company must also be aware that in today's environment, they must provide a quality
product. Customers are now demanding quality, timely service, whether it is in the
delivery of the product or in customer service following the sale. Not to be forgotten is
the price of the product. The other two factors are more important than the price, but the
price plays a big role in the decision of the customer to contract with a company.
Internal-Business-Process Perspective
This perspective is usually formulated after the financial and customers
perspectives. This enables a business to focus on internal processes to deliver the goals
of the customer and shareholder. The approach should focus on finding completely
different solutions rather than improving existing ones. The first step involves
indentifying the market and creating the product. The second step the product is
constructed and delivered to the customer. The final step, and the most important, is
service to the customer. These three steps focus on specific external wants or needs of
customers and the processes in which to deliver them. This contrasts conventional
methods that focus on monitoring and improving costs, quality, and production time of
existing processes. The internal-business-process perspective sets itself apart from other
strategies by focusing on improving internal methods to achieve the goals set forth by
the one strategy of the company.
Learning and Growth Perspective
The last of the four perspectives is the one that cements all the others. The
learning and growth perspective is characterized, into three categories:
1.
Employee capabilities.
2.
Information systems capabilities.
3.
Motivation, empowerment, and alignment.
Employees are the key to growth of innovations. Resources must be allocated in
order to educate them on the processes of the company and the mission of the company.
This education must be coupled with the motivation to improve. This often starts by
granting more autonomy to the employee. This allows the employee to suggest or make
changes in the organization. An innovation on one side of the plant might work well on
the other side, but only by sharing the information can this knowledge be conveyed
efficiently. All of these working together can propel a company into the future by
giving the employees a sense of pride that they contributed to the organization, and that
contribution was appreciated.
There are many reasons why a company searches to implement a Balanced
Scorecard, but the most important concept to understand is that the Balanced Scorecard
is a management tool. The major focus of the Balanced Scorecard is to organize the
business toward a common goal. The process of developing a good Balanced Scorecard
gives an organization, usually for the first time, a clear picture of the future and a path
for getting there. Every step of the way provides insight on how to improve the business
process of achieving the one strategy.
4. Answer the questions
1.
What intangible assets aren’t given on a balance sheet?
2.
Why is it necessary to introduce “The Balanced Scorecard” in the work of
the company?
3.
What are the four perspectives included in the Balanced Scorecard
measures?
4.
Why does business need a Balanced Scorecard?
5.
Why are financial perspectives considered the most important?
6.
How can a company excel in their market segment?
7.
Why is the price of the product important?
8.
What should employees be educated on?
9.
Could you summarize the reasons why a company should implement a
Balanced Scorecard?
Text 6B
Western and Japanese approaches to business
This Text compares western and Japanese approaches to business in terms of
leadership and behavior. Before you read, try to predict some of the differences. Read
the text and complete the chart: Differences in attitudes and behavior.
Westerners tend to value a tough individualistic and dominating leadership style
including the ability to take independent decisions and have them successfully
implemented. The higher a Japanese manager rises in a company the more he tries to
hide his ambition and capability and not to be seen as a forceful leader. A Japanese
manager concentrates on getting his group to work together. He is expected to be
accessible, to work as an integral part of the group and to share whatever information he
has.
One of the problems Japanese managers often have with western subordinates is
getting them to show initiative. They complain that Europeans need to be told what to
do all the time. And when they have done it they need immediate assurance that they
have done it right and a pat on the back. This would be embarrassing to the boss and
offensive to a Japanese subordinate who expects no more than an indication of the job
to be done. Their western subordinates on the other hand without defined responsibility,
clear direction and realistic goals find their job boring.
Japanese are very punctual when politeness requires it and especially with senior
people. A meeting will carry on until it is finished or interrupted by the demands of a
senior person. The working day can be very long. Japanese may regularly work on
Saturdays, rarely take more than a week’s vacation and count sick days as holidays.
Japanese are extremely polite. Their manners are based on a sense of mutual
respect. Relationships between all levers are build on exchange, whether gifts, help,
information and so on. Politeness does not exclude openness in relationships.
Europeans may be surprised at the personal nature of conversations, because Japanese
need to know people well before they can
be comfortable with them. In some
European countries you need not trust people to work with them as long they do their
job. In a Japanese environment there is a higher tolerance of professional and human
weaknesses, but it is compensated whit a greater demand for loyalty and trust.
The most common complaint among westerners is that most major decisions
seem to be made outside office hours by their Japanese colleagues. While in day-to day
activities they are kept well informed, they are kept in the dark about the overall
direction of the company. For aa westerner to progress in a Japanese managed company
it is essential to work late in the evening and at the weekends.
It is this level of dedication to the organization which is probably the biggest
difficulty in making a successful career in a Japanese company. The emotional and
practical commitment that Japanese expect is incomprehensible to most westerners. The
term “British disease” means idleness and extended to most western countries. The
Japanese disease is death by overwork. The difference between the British and Japanese
diseases is perhaps the biggest cultural difficulty for each side to overcome.
Text 6C. Render in English or translate the text into English
Сбалансированная система показателей
Сбалансированная система показателей (ССП) (Ваlапсed Scorecard (ВSС))
— концепция переноса стратегических целей для планирования операционной
деятельности и контроль их достижения. ССП - это механизм взаимосвязи
стратегических замыслов и решений с ежедневными задачами, способ направить
деятельность всей компании на их достижение. На уровне бизнес-процессов
контроль стратегической деятельности осуществляется через так называемые
ключевые показатели эффективности (КПЗ) (англ. — Кеу Реrformance Indicator
(КРI)). КРI являются измерителями достижимости целей, а также
характеристиками эффективности бизнес-процессов и работы каждого
отдельного сотрудника.
Преимущество ССП состоит в том, что организация, внедрившая эту
систему, получает в результате «систему координат» действий в соответствии со
стратегией на любых уровнях управления и связывает различные
функциональные области, как, например, управление персоналом, финансы,
информационные технологии.
В мире бизнеса существует целый ряд примеров успешного внедрения
сбалансированной системы показателей. Именно благодаря этим успешным
примерам методология постоянно развивается и совершенствуется за счет
накопления различного опыта. Консорциум «Ваlаnсed Scorecard Collaborative»
(ВSСol) работал с более чем 200 клиентами по разработке и внедрению систем
управления, базирующихся на ССП. Среди наиболее известных и хорошо
документированных примеров — американские корпорации «Mobil U.S.
Marketing and Refining» и «Cigna Property and Casualty». Первая переместилась по
показателю прибыльности с последнего места в отрасли на первое, а «Сigna Р&С»
превратилась из убыточной фирмы в специализированную страховую компанию,
имеющую годовой оборот более 3 млрд. долл..
Mini-presentation
You are asked to give a short talk on one of this topics given below.
1.
Examples of successful usage of BBC
2.
Three generation of Balanced scorecard.
3.
Six obligatory elements of Balanced scorecard.