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Role of KPI and Balanced Scorecard in business decision making

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Analysis Of Various Balanced Scorecards and KPI's

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Introduction

Balance Scorecard and KPI helps in decision making within oil and gas industry so that continuous improvement and innovation can be attained. Balance Scorecard is the measure through which the performance is measured which assist the employees to focus upon quality and aids in improving business performance (Wu, 2012). Further, KPI's are another performance management measure which has been adopted by the top management to make effective decisions so that productivity of the firm can be improved. Both these methods aid in developing innovative and learning perspectives so that competitive success can be attained.

Effects of Balance Scorecard and KPI's on decision making

Following are the effects of balance scorecard and KPI's on the final decision of top management such as:

Financial Perspective

It is essential for the top management to make effective decisions regarding finance so that balance scorecard and KPI's can measure the performance of individual to attain success within oil and gas sector (Sainaghi, Phillips and Corti, 2013).

Customer Perspectives

Both these methods helps the top management to make decision regarding identifying customers needs and providing them with innovative products so that satisfaction can be attained. Thus, introducing new methods within oil and gas sector helps in evaluating the customer enhancement.

Learning And Growth Perspective

Effect of Balance Scorecard and KPI on the final decision aids the management of oil and gas sector to obtain effective learning and growth perspective so that best results can be attained (Grigoroudis, Orfanoudaki and Zopounidis, 2012). Thus, it facilitates the firm to create value and innovation to achieve maturity stage within the product life cycle.

Internal Business Processes Perspectives

It affects the top management to improve and identify the measures so that customers can be satisfied. Such methods assist the internal processes and help the company of oil and gas industry to yield and develop new product innovation to enhance the performance (Northcott and Smith, 2011).

Marketing Effect

It is essential for the organization to make decision regarding marketing and promotional strategies so that oil and gas industry can attain the desired success. Improving marketing opportunity aids in improving performance of the company in market.

Human Resource Management

HRM effect also plays a crucial role within oil and gas sector to measure the productivity of the workers. Thus, it is essential for HR manager to effectively measure workers performance and enhance their skills towards organizational goals (Niven, 2011).

Improving Implementation Of Strategies And Objectives

Through implementing balance scorecard strategy, it assists in significantly implementing the strategies and tactics so that proper monitoring can be done over business success. With regard to this, it aids in making effective decision which results in obtaining high performance (Elyna Myeda, Nizam Kamaruzzaman and Pitt, 2011).

Management Effect

Balance Scorecard and KPI affects the business performance and thus aids value to the firm to bring improvement in achieving the desired success. It is essential for oil and gas sector to enhance the operations of the firm towards business goals.

Team Work

Balance Scorecard and KPI helps in developing effective team work and enhance the overall team performance. Also, such objectives facilitate employees in working as a team and which enhances the sales and profitability of the organization.

Strategic Goals

It assesses that business is required to develop effective strategic goals as it affects the functioning of enterprise and thus employ skilled candidates so that they can efficiently work towards business goals (Soderberg and et.al., 2011).

Causal Delays

It can be assessed that if such factors are not carried out effectively by the firm it will impact the performance of individuals and carries out causal delays that affects the working culture of firm.

Long Term Profit Generation

Managers of oil and gas industry assesses that the organization is required to execute the balance scorecard and KPI's which results in attaining long term profits. Thus, it will affect the business if profit maximization situation is not attained in an effective way (Kurien and Qureshi, 2012).

Total Quality Management

It can be stated that balance scorecard and KPI's affects the total quality management of firm if employees are not rendered appropriate training programs. Hence, it is essential for the oil and gas sector workers to employ effective strategies to maintain appropriate quality within firm and attain success.

Improve Stakeholder Value

It also affects the organisation if they does not value the stakeholder appropriately. As it is essential for the enterprise to value their stakeholders and provide them with proper information regarding business operations so that desired targets can be attained.

Process Innovation

It is important for the oil and gas sector to measure its product or service so that specific improvement can be attained within the existing processes. It impacts the corporate in developing innovative products within firm and thus influences the operations of company in the market.

Cost Effect

Balance Scorecard and KPI's impacts the cost of the firm and thus it is essential for top management to make effective decision regarding using performance measures to enhance productivity of the organization (Wu, 2012).

Quality

Top management of the organization is required to maintain its quality as it gets affected if employees are unable to perform at the desired level. Therefore, it is essential for the management to make effective decision regarding maintaining quality so that success can be attained.

Leadership

Balance scorecard and KPI's impacts the leaders as they are under pressure to make effective decisions upon firm's performance to attain leadership goals.

Controlling Performance

Top management needs to take correct decision so that performance can be controlled in an effective way. Further, KPI's and balance scorecard are the effective measure that assists in affecting individual performance towards business goals (Northcott and Smith, 2011).

Individual Performance

It affects the firm to make effective decision regarding effective balance scorecard and KPI so that performance of employees can help in increasing sales and profitability.

Enhance Capabilities

Effect of balance scorecard and KPI's assesses top management to take effective decision so that capabilities and skills can be improved.

Strategic Performance Management

It evaluates that that KPI’s and Balance Scorecard upon enhancing the strategic performance management towards success.

Spread Sheets

It impacts the top management of oil and gas sector to make effective spread sheets to influence firm's performance and make optimum utilization of resources (Grigoroudis, Orfanoudaki and Zopounidis, 2012).

Decision Engineering

Such factor affects the decision of top management as they need to make best decisions regarding implementing balance scorecard and KPI towards obtaining success.

Process Mining

KPI's and Balance Scorecard impact on improving process mining factor so that top management can make their final decisions.

Data Warehousing

It also affects the final decision of top management and thus bring positive outcomes which helps in attaining success in the organization.

Business Processes

It affects the final decision of top management in relation to develop effective business processes (Elyna Myeda, Nizam Kamaruzzaman and Pitt, 2011).

Creating New Future

Here, the firm also aims to develop effective future by adpting innovative ideas and thus implement the same to obtain best results.

Local Information System

Firm aims to develop effective information and technology system and communicate with each other otherwise which positively impacts the performance of the organization.

Developing Reporting Tools

Such tools need to be developed effectively by the top management otherwise it affects firm's decision to gain better outcomes.

Conclusion

It can be concluded from the study that there are various factors which impact the decision making of top management. Therefore, it is essential for them to undertake effective final decision in relation to attaining organizational objectives. Balance Scorecard and KPI's facilitates in measuring employee productivity so that business targets can be attained. Both these methods also assist in improving financial performance of firm and thus specific measures can be achieved.

References

  • Elyna Myeda, N., Nizam Kamaruzzaman, S. and Pitt, M., 2011. Measuring the performance of office buildings maintenance management in Malaysia. Journal of Facilities Management. 9(3). pp.181-199.
  • Grigoroudis, E., Orfanoudaki, E. and Zopounidis, C., 2012. Strategic performance measurement in a healthcare organisation: A multiple criteria approach based on balanced scorecard. Omega. 40(1). pp.104-119.
  • Kurien, G. P. and Qureshi, M. N., 2012. Performance measurement systems for green supply chains using modified balanced score card and analytical hierarchical process. Scientific Research and Essays. 7(36). pp.3149-3161.
  • Niven, P. R., 2011. Balanced scorecard: Step-by-step for government and nonprofit agencies. John Wiley & Sons.
  • Northcott, D. and Smith, J., 2011. Managing performance at the top: a balanced scorecard for boards of directors. Journal of Accounting & Organizational Change. 7(1). pp.33-56.
  • Sainaghi, R., Phillips, P. and Corti, V., 2013. Measuring hotel performance: Using a balanced scorecard perspectives’ approach. International Journal of Hospitality Management. 34. pp.150-159.
  • Soderberg, M. and et.al., 2011. When is a balanced scorecard a balanced scorecard?. International Journal of Productivity and Performance Management.60(7). pp.688-708.
  • Wu, H. Y., 2012. Constructing a strategy map for banking institutions with key performance indicators of the balanced scorecard. Evaluation and Program Planning. 35(3). pp.303-320.
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