Could a Balanced Scorecard approach enable Tesco to realign its strategy and vision that will allow it to navigate through the challenges it’s facing today. Strategy is the most important component of a scorecard and forms the basis for communicating the organization’s approach for gaining a competitive advantage and for improving mission effectiveness for stakeholders. Before building a scorecard system it is important to understand organization’s customers and stakeholders and equally importantly their needs.
According to Kaplan and Norton (1992), customers tend to concern about four main things: time, quality, service and the cost. At present the customer perspective at Tesco is articulated by taking these concerns into their objectives and is then measuring them through its ‘Steering wheel’ (Tesco CRR, 2012). The main objectives of the Tesco regarding the customer are:
Customer satisfaction through product quality and price
Tesco's main aim or goal is to earn lifetime loyalty of the customers by giving them highest quality products. It is measures this by the percentage of defective products returned to them by customers. To further improve their quality and decrease their cost, Tesco can use Total Quality Management, which many grocers have successfully adopted. Moreover, customer loyalty can be increased by further lowering the prices and making them even more competitive compared to its closest rivals. The most important objective is customer satisfaction with product quality and price.
Customer retention is another key success factor in assessing repeat purchases by same customers at Tesco. The Tesco ClubCard is a world-leading loyalty card scheme, with over 16 million active cardholders (telegraph). This ClubCard enables Tesco to better understand their customers and say a big thank you for shopping with them. But more importantly, using the data from ClubCard, Tesco can predict consumer trends and react to them.
The main objectives of the Tesco regarding the financial perspective are sales growth and maximisation of profits. Every organisation wants to grow and increase profits; it is no different with Tesco. Tesco measures its sales growth by comparing the sales of the company as a five year summary.
According to Kaplan and Norton (1992), the internal perspective of a balanced scorecard consists of the factors that affect the cycle time, employee skills and productivity of the company. The main objectives of Tesco regarding the internal perspective are:
Improve product quality
Employee skills are one of the main objectives of any company. Tesco…