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Chinese Business Organisation

The circumstances of complexity and continuous change that characterise the current economic and production context have led companies to modify how their systems operate. Approaches such as Total Quality Management (TQM) and Just-In-Time (JIT) production both helps in developing more efficient and effective processes, thus, resulting into an improvement with respect to the generic parameters of quality, cost and time. It was precisely these actions in the area of production which brought to light the shortcomings of information derived from the use of only financial indicators to measure the success of organisations.

It is increasingly recognised that measuring the success of organisations using purely financial criteria is no longer appropriate. As a result, many organisations are spending considerable amount of time, effort and resources in redesigning their measurement systems. Survey data suggests that between 40 and 60% of companies will have significantly changed their measurement systems between 1995 and 2000. (from: http://www. som. cranfield. ac. uk/som/cbp/Evolut. htm) In order to overcome the limitations of financial indicators, there is a need to monitor non-financial indicators both quantitatively and qualitatively.

There is no doubt that the use of Balanced Scorecard, which focuses on the different dimensions of performance, is the best-known technique (Valentin, Azofra,

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2003) to carry out such task. Balance Scorecard helps translate the organisation’s strategy into tangible objectives and measures encompassing customers, internal process, learning and growth and financial perspectives. China is currently one of the most progressive countries in Asia. With more and more companies investing and expanding, monitoring of both financial and non-financial indicators are inevitable to prevent possible losses.

This monitoring can be accomplished through the use balance scorecard as it is one of the important tools to performance measurement that would be able to ensure a continuous progress and growth of a company . This research will explore how the integration of performance monitoring using balance scorecard affect the operation of a Chinese business organisation. Robert Kaplan and David Norton first developed the Balanced Scorecard in 1990. It was developed to communicate the multiple, linked objectives that companies must achieve to compete on the basis of capabilities and innovation, not just tangible physical assets (Robert.K , David. N, 1998).

The balanced scorecard is a management system (not only a measurement system). It provides feedback around both on the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. Kaplan and Norton describe the innovation of the balanced scorecard as: “The balanced scorecard retains traditional financial measures.

But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation. ” As a summary, the Balanced Scorecard provides a means of communicating and disseminating the strategy to all levels of the organisaiton.

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