Free Paper Example on Balanced Scorecard Strategies for Global Competitiveness

Introduction

Organizations must operate under high-quality strategies that are robustly executed to meet the customers, stakeholders, and employees’ expectations. One indicator of organization success is its dynamism, which enables it to cope with the rapidly changing strategies and develop a way to measure these changes. To compete globally, organizations should formulate Balanced scorecard strategies that help the company establish actions that create value for the stakeholders, satisfy their expectations, and improve managerial services like innovation, internal processes, and learning. Jordao and Novas (2013) stated that the measures used traditionally were inadequate in capturing the companies' changes and intense business environment as these measures focused on physical and financial indicators only. Therefore, the balanced scorecard strategy provides a breakthrough to the shortcomings of the former approach used in the past century. Besides, most companies judged their success based on how much money they made. This focus on the amount of money earned is disadvantageous as it only gave a partial picture of the company's performance in the market. Therefore, a balanced scorecard is a managerial system that portrays the bigger picture of its strategic goals (Root, 2019). These strategic goals help the company’s management to choose the right criteria to measure the goal attainment. Omega Company is one of the biggest and most robust companies in the Brazilian energy sector. It is a strong example for all large organizations to model their balanced scorecard strategies.

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Overall Balanced Scorecard Strategies

Balanced scorecard strategies are crucial in any organization as they act as a bridge between developing desirable objectives and attaining them effectively. Besides, a balanced scorecard is a tool that most managers employ in assessing the organization's strengths and weaknesses. A strategy, therefore, describes the general direction that a company should take to achieve its objectives. These strategies could entail the distribution of resources within the company, the company's performance within a single task aims to promote diversification or expansion into several business units. Additionally, all the strategies adopted by a company are geared towards pursuing a competitive edge in the business primarily through cost reduction. BSC works hand in hand with managerial control systems, which act as the basis for delivering on the plans according to the stakeholders and management objectives (Jordao and Novas 2013). A balanced scorecard strategy insists on tracking four aspects of a company: finances, customer, internal business, and learning and innovation.

Omega

Omega is a Brazilian based company that deals with the generation, distribution, and transmission of electric energy and natural gas. This company is the largest in Latin America. Its vision is to become one of the two most prominent energy groups in Brazil in market value and relevance presence in global leadership in terms of sustainability. Moreover, the Group operates in several regions of Brazil, particularly the south region. Besides, the Omega company group possesses more than 100 corporations, 15 consortia (Jordao and Novas 2013). Jordao and Novas (2013) added that the company has more than 115 stakeholders in 44 countries with traded shares of the stock exchange in New York, and Madrid. The Omega company's strategy aims at maximizing the value of the stakeholders in a manner that will be sustainable as per the 2005-2035 master plan. The omega company strategy execution becomes effective through the investment in international projects and enlargement of the action area in which the company distributes electric power and gas.

One of the strategies adopted by Omega company to expand its territories globally is through the formation of consortia for the construction of power plants. Unlike in other companies, the omega company's BSC model is beneficial as it allows the management to follow the performance of financial and non-financial factors that contribute to the achievement of organizational strategic objectives. This BSC model has enabled OC to have structured strategic planning and timely adjustments through a system of essential alerts that can be activated in case of necessity. Jordao and Novas (2013) found that the implementation of BSC strategies in OC involves: Mobilization of executive management, construction of corporate BSC, operation of BSC through indicators, targets and initiatives and employee training, and the methodology and communication and strategic review meetings. Therefore, to remain competitive and on top of the list of largest companies, Omega company must keep its stakeholders and the customers happy to stay satisfied with the services offered by the omega company.

Problems Faced by Omega Company

The process of developing and implementing a suitable BSC strategy is, however, costly. Therefore, the Omega company is faced with a challenge of the non-manageable and manageable cost of electricity distribution. The values considered by the National Agency form Electric Energy (ANEEL), and those paid in tariff are consistent with the reference company. Suppose the cost regulation limits of the reference organization are breached. In that case, it cannot be considered y ANEEL, and this will consequently undermine the Omega company objectives from a financial perspective. If the OC reduces cost, investment, and expenses, then the level of quality provided will be significantly compromised, and thus penalties will be imposed by the regulators. Consequently, these penalties will negatively affect the financial goals and the reputation of the company. Besides, the OC finds it a challenge to comply with the regulatory requirements in many countries. For instance, the tariffs are revised every five years, and ANEEL determines the rate and adjustment for the next period (Root, 2019). For the OC therefore, the costs are evaluated by the regulatory agency, which establishes a new tariff.

Also, the electricity sector is faced with other problems which significantly affect service delivery. Changes in the way electricity is produced, stored, and managed have led to a rapid evolution in the way this sector operates. For instant, the issue of voltage control. IEEE changed its regulation from 1547 constant voltage and gave the distributors the authority to provide voltages required by different investors (Cyndy, 2009). Such voltage control became a challenge as most distributors lacked liberty on the amount of energy to supply to each investor. The technology to carry out the voltage control a steady voltage supply is also wanting and thus threatening the power quality for customers.

Solutions to the Identified Problems

To overcome the challenge of financial constraints experienced, the Omega company should strike a balance of cost quality and investment. Besides, the electricity distributors are remunerated for their assets. Thus, the company should develop a system of strategies that enable them to impose a maximum rate to charge the customers, which in turn will increase their gain. These gains will enable Omega company to improve on their assets and customer satisfaction of the services rendered. Also, proper financial planning will be beneficial in ensuring the execution of strategic initiatives. The company also needs to keep its costs below the organization's benchmark, under penalty of not being recognized in the tariff. Under such conditions, the company will share the costs of distribution with the customers. For example, the goal of operational efficiency that attempts to keep the values within limits and, at the same time, ensures good quality of services.

Besides, Omega company uses a licensed and internally developed software. This software enables the company to have its business map stored in and displayed through a warehouse. This software allows for reading from the database the company's resource planning, and this should be customized to feed information to BSC indicators automatically. The BSC model's use as the management system in the Omega company is fully aligned to the operational strategy. The issue of voltage control can be solved by adopting technologies like the use of switched capacitors, phase-shifting transformers, and synchronous condensers for fault current sources (Cyndy, 2009). The company can also use the static synchronous compensator and static var compensator.

Conclusion

The investment of money and time in formulating and implementing a suitable BSE strategy plays a significant role in offering a competitive advantage. Omega company has set a good pace in having one of the best and modern performance evaluation models, which collaborates with the SI and ensures continuous improvement of processes. BSC is, therefore, a fundamental model as it allows a follow-up of performance of all financial and non-financial aspects that contributes to the company's strategic objectives. Although flawed, BSC strategies proves to be overwhelmingly successful in large companies.

References

Jordao & Novas (2013) A Study on the Use of the Balanced Scorecard for Strategy Implementation in a Large Brazilian Mixed Economy Company. Journal of Technology Management & Innovation.

Cyndy, W. (2009). Challenges for the US Electric Distribution System: Opportunities for CMU. US Department of Energy. Retrieved August 08, 2020, from
https://www.cmu.edu/ceic/assets/docs/seminar-files/2014-2015/wilson-2014-cmu-challenges-for-distribution-11-12-14-revred.pdf

Root, C. E. (2019, June 28). Challenges of an Evolving Electric Grid. T&D World. Retrieved August 08, 2020, from https://www.tdworld.com/grid-innovations/generation-and-renewables/article/20972778/challenges-of-an-evolving-electric-grid