Page 21 - CIMA SCS Workbook August 2018 - Day 2 Suggested Solutions

CIMA AUGUST 2018 – STRATEGIC CASE STUDY

The CSR details on our website at the moment don’t seem to refer to any economic factors, but
we could look to present information here on things like:

comparison of wage rates to other firms locally
proportion of senior managers hired from the local community

proportion of spending with local suppliers

Conclusion
Presenting all this information alongside the financial information in our annual report would
enable us to give our key stakeholders a comprehensive view of the financial and non-financial
performance of FNG.

THE BALANCED SCORECARD

Introduction

The Balanced Scorecard provides a broad range of both financial and non-financial performance
measures designed to reflect the complexity and diversity of business circumstances.
It was created as a response to traditional performance measurement which had tended to focus
on a narrow range of performance measures and caused management to adopt a short-term
focus.

Four perspectives
The balanced scorecard approach brings together a wide range of measures under four headings
(called perspectives), to give managers a broader view of their business performance.
Gains in one area need to be considered with the losses that may arise in other areas, so that the
manager's view is broadened and the tendency to concentrate on one measure is reduced.
The four perspectives of the Balanced Scorecard are:
Financial perspective

Internal business perspective
Customer perspective

Innovation, learning and growth perspective

Application to FNG – current position
At the moment, FNG has presented five key performance indicators (KPIs) in its annual report.
The first four of these five KPIs look at profitability and revenues, so all four of these would
appear under the financial perspective heading of the Balanced Scorecard.
The fifth KPI focusses on audience growth, so would appear under the innovation, learning and
growth heading.
This clearly shows that FNG is currently focussing on a very narrow set of KPIs. The managers are
not being forced to consider the customer perspective or the internal business perspective.
80 KAPLAN PUBLISHING