Accounting for Sustainable Management

Assignment 3
Case Study of WML

Lecturer Name: Dr. Sophia Ji

Course Code:

ACCT 2229

Word Count: 2734

Students Name:
Fenghua Tu

s3326668

Huanxin He

s3558749

Naima Siddiqi

s3559701

Yang Wang

s3375437

Executive Summary
This report provides the Mission, Vision and discussion on the strategic objectives outlined
for WML. A strategy map and a sustainable balanced scorecard was generated, suggesting
certain objectives that WML aims to achieve its strategy goal. The methods used in this report
analyse the objectives and suggest relevant measurable indicators, the strategies that WML
will need to employ to achieve those objectives, as well as the subsequent implications of
said indicators. Further investigation reveal there are such many indicators that could affect
objective both in internal and external elements.

Table of Contents
Executive Summary.........................................................................2
Introduction.................................................................................4
Strategic map................................................................................ 4
Objectives under each of the Perspectives..................................................6
Financial Perspective................................................................................................... 6
Stakeholder Perspective................................................................................................ 6
Internal process perspective........................................................................................... 7
Learning and Growth................................................................................................... 8

Sustainable Balanced Scorecard..........................................................10

Discussion on Sustainable Balanced Scorecard..........................................12
Approaches for Balanced Scorecard......................................................12
WMLs SBSC Indicators and Sustainability Objectives.................................13
Stakeholder Perspective.............................................................................................. 13
Learning and Growth Perspective..................................................................................15

Causal Relationship Between Measures of BSC.........................................16

Conclusion.................................................................................16
Reference List:............................................................................. 17
Appendix................................................................................... 19

Introduction
In order to achieve sustainability in the company, WML should focus on its current business
activities and future planning with the business operations. WML is aim to achieve its
mission and vision in three to five years, one of the way to measure business process is by
using strategy map and balanced scorecard. According to Kaplan and Nortons (1996)
point of view, strategy map and balanced scorecard are the best tools used by company to
improve its internal and external performance in order to achieve its strategy goal.
The purpose of this report is to address WML with a strategy map and a balanced
scorecard to analysis any factors could help WML to achieve its goal. The scope of this
report will have an overview of strategy map with objectives in the first part, then an
overview of balanced scorecard with four perspectives will be address; last part of this report
is present the impact of indicators and indicators that will affect objectives.
The limitations of this report is there is only one approach to make the balanced scorecard
and the assumption of this report whether the owner of WML will satisfied with this report.

Strategic map
The development of strategy maps was first proposed by Kaplan and Norton (2001) and they
emphasized the importance of such maps to really understand the causal relationships
between a strategic objective and a wanted result. Strategic planning is dependent upon
predicting such connections and the map helps to visualize them.
The following is the proposed Strategy map for WML.

Strategy Map for WML

Enhancing
Asset
Utilization

Increase
Profitability on
Sustainable
Products

Reduce
Average Costs
and Risks

Financial
Perspective

Increase value for

Investors

Reduce
Carbon
footprint

Introduce new
product attributes:
Shark-repellent

Positive Image &

Reputation

Aim to be
50% green in
5 years
Reduce waste in
production process
Ideas for products that
are environment
friendly

Improve
Product Quality

Engage in Active
Corporate Social
Responsibility
Investment in R3D for
alternative materials to
make surf boards
Reduce
fiberglass usage

Employee taking
initiatives for
sustainability
Enhancing Employee
Capability & Testing

Stakeholder
Perspective

Recruiting
Quality Staf

Internal
Business
Processes
Perspective

Learning &
Growth
Perspective

Objectives under each of the Perspectives

There are four different perspectives that are involved in WMLs balanced scorecard and
helped in the formulation of the strategy map, which are financial, stakeholder, internal
business process and growth and learning. Under each of these perspectives various
objectives have been outlined for WML, based on a 5-year plan, to focus on in order to
enhance their capability processes to have better informed and more controlled outcomes.

Financial Perspective
The perspective emphasizes the stakeholder are concern whether the company using its
resources in effective way or not (Northcott & Taulapapa 2012). Financial objectives usually
concern strategies to increase profitability, and the targets set will show how the company
will utilize them to add to its bottom-line (Kaplan &Norton 2006).
The main objectives are:
1.

To increase value for investors over 5 years.

WML should aim to increase their market share for existing products as well as focus on the
development of new profitable product streams (The International Integrated Reporting
Council 2015).

2.

To reduce average costs and risk by 10% each year over 5 years.
Reducing per unit material cost will be powered by investment in R&D, taking place in the
internal processes of WML, which will yield better and cheaper ways to utilize new
materials, contributing to increasing overall profit figures.

3.

To increase profitability on sustainable products by 20% over 5 years.

WML can aim to improve their activities by focusing on profitability indicators like Return
on equity, return on sales, return on investment, and the factors that directly impact them.

4.

Enhance asset utilization

WML can work towards improving the productivity, reliability and safety of their machinery
through regular maintenance (Mourafetis and Kamat 2014).

Stakeholder Perspective
In this perspective managers identify the core target segments based on stakeholder
expectations in which the company will strive and seek to improve performance based on
indicators later outlined. The objectives will aim to target different stakeholder groups

depending upon what criteria is of significance to them, for example, customers may value
consistent succession of innovative services and products (Kaplan & Norton 2006), while
environmental activists would be more interested in how WML plants to adopt green
strategies.
The main objectives are:
1.

Engage in active CSR.

Currently, customer preferences are driven by more than just price and product quality. They
want to know whether companies are involving themselves in local communities and aiming
to engage in environmental related projects (Smith 2013).

2.

Reduce carbon footprint

The above objective directly relates to this one, as WML needs to outline steps in order to
reduce their carbon footprint, be it by planting more bamboo trees or reducing waste creation.

3.

Positive image and reputation

The first two objectives will go towards improving the image and reputation of WML.

4.

Improve product quality

Customers rely on getting the most out of the goods they buy, as WML invests more in R&D,
that will also contribute towards improving the quality of their products. Using total quality
management techniques, the number of defects in products can also be reduced.

5.

Introduce new product attributes.

Through investment in R&D, new product features can be realized, like developing
surfboards designed for safety, and that can repel sharks (as shark attacks are a major cause of
concern for surfers).

Internal process perspective

In this perspective, managers identify for the company, the critical changes that need to come
from within that will help it to achieve the subsequent financial and stakeholder objectives.
These procedures empower the business to convey the quality suggestions that will help to
satisfy customers, and fulfil shareholder desires, in monetary terms (Kaplan &Norton 2006).
The main objectives are:
1.

Investment in R&D for alternative materials to make surf boards

This will help to reduce average costs, improve product quality, and introducing new product
features.

2.

Reduce fiberglass usage

As fiberglass is identified as a major input material, reducing its usage (powered by
investment in R&D) will contribute towards reducing internal waste and reducing WMLs
carbon footprint.

3.

New environmentally friendly products

As employees take initiatives there will be an increase in ideas for products that are good for
the environment and that involve minimal usage of non-renewable resources.

4.

Reduce waste in production process

This refers to both internal and external waste; R&D will help to highlight environmentally
friendly processes that can be used in production.

5.

Aim to be 50% green in 5 years

Learning and Growth

In this perspective, management concentrates on activities that help shape and enhance the
techniques that increase company value and long-term development and growth (Olsen
2016).
Owing to massive global competition, it is imperative that companies expand their
competencies in order to provide value to consumers and shareholders (Kaplan & Norton
2006).
The main objectives are:
1.

Enhancing employee capability and testing

Through the development of employees, WML can increase their capacity to realize the goals
of the organization and work towards them in a sustainable manner (Opic.com.au 2016). This
can be done by engaging them in staff training, having mandatory quarterly work shops and
regular testing.

2.

Employee taking initiatives for sustainability

Employees should be encouraged to find new uses for household items each week, doing this
will stimulate their critical thinking and aid them in coming up with new sustainable ideas for
WML products.

3.

Sustainability application and Culture

WML will need to observe how much they understand the overall message, what is expected
of them, and how are they proactively applying it within the general work culture.

4.

Recruiting quality staff

It is important to make sure that any new potential employees are the right fit for WML. This
can be done within the interview process by asking dedicated questions that can ascertain
their existing values and beliefs towards sustainability.

Sustainable Balanced Scorecard

Objectives
1. Financial
Reduce average
costs and risks by
10%
Increase

Lag indicators

Reduce
production cost by
20%
Increase

profitability on

surfboards

sustainable

profitability by

product by 20%

30%

Lead indicators

Reduce unit cost

by 10%
Increase sales of
new sustainable
product

2. Stakeholder
Improve product
quality by 20%
Reduce carbon
footprint by 20%

Reduce emission
from transport by
50%
Increase product
innovation by

Numbers of
website hits
Increase number of
trees planted by
20%

15%-20%
3. Internal business
process
Investment in

Increase of

R&D for

investment in

alternative

R&D for making

materials to make
surfboards
Reduce waste in
production process

surfboards by 20%
Reduce energy
consumption by

Increase
sustainable
materials by 30%
Reduce internal
waste by 10%15%

20%

4. Learning and
growth
Employee taking

Emphasizing

Number of

initiative for
sustainability
Enhancing
employee

sustainability

initiatives

culture for

proposed by

employees
Increase new

employees
Number of

capability and

quality hires by

questions asked

testing

10%

related to
sustainability

Discussion on Sustainable Balanced Scorecard

The balanced scorecard is a strategy tool that can be used for companies to managing its
strategy into performance measures and it was created by Robert Kaplan and David Norton in
1992 (Kaplan & Norton 1993). The purpose of making balanced scorecard is to help
companies convert its strategy into specific objectives and use benchmark to measure its
objectives, it also measures both of current business performance and the indicators of future
performance (Lipe & Salterlo 2000). The figure below shows the four management processes
involved in balanced scorecard that allowed managers help companies to linking its shortterm actions in the business in order to achieve its long-term objectives (Kaplan & Norton
1996).

Source: http://www.paca-online.org/cop/docs/Kaplan+Norton_Balanced_Scorecard_-_3_articles.pdf#page=36

The first process is translating the vision which helps managers to focus on the companys
mission and vision. Therefore, a manager has ability to set out a system of strategy for
company in a short time. The second process is communicating and linking which give a
manager responsibility to communicate its strategy to each department in the company. The
third process is business planning which enables manager to set goals to measure its internal
resources. The last process is feedback and learning which requires manager give feedback
to each department in the company, or give feedback to individual employees on overall its
performance.

Approaches for Balanced Scorecard

There are three different ways to develop of balanced scorecard. The first approach is
measure of performance based on the original framework. The second approach is to adding
an additional perspective to the balanced scorecard. The third approach is to creating a
separate sustainability scorecard for a company.
The first approach could be the best one for WML, because it is easier method to use by
companies, therefore, managers in WML can align strategy with employees on day-to-day
basis (Perkins, Grey & Remmers 2014). Second, this updated balanced scorecard that
contains basic elements such as specific objectives under each perspectives and include lead
and lag which affects objectives; therefore, WML will improve its performance by
measuring indications (Perkins, Grey & Remmers 2014). Last, WML wish to improve its
sustainability within the company, therefore, this approach will give WML a insight on how
to measure its sustainability in business process.

WMLs SBSC Indicators and Sustainability Objectives

In the previous section, several indicators were listed. This part will explain the implication
of those indicators in detail. Any positive or negative outcomes need be considered because
there is no right or wrong decision in real world business.

Financial Perspective
There are three objectives in financial part, firstly is to increase value for investors. To
achieve this goal the main indicator is increasing market share in bamboo surfboard by 30%.
Secondly is to average cost by 10% with 20% decrease in production cost and 10% decrease
in unit cost. Lastly is to increase profitability of sustainable product by 20%, the indicators
for it are increasing the surfboard profitability by 30% and also increase ROE of WML. ROE
is a percentage measurement shows how well a company invests its capital to generate profit.

Cost reduction of 20% is a great way to increase the profitability of WML, however by
reducing the production cost WML needs to prepare a lot to achieve it. For example, buying
new factory equipment or hire high skilled works and import cheaper material even outsource
from Asian countries like China or Vietnam. All these actions cost large number of resources
such as time, labor and capital. There will be risks too such as weak of AUD would cause the
cost of import and outsource higher than before. And invest in social media to expand the
business is the main trend of todays business.
Stakeholder Perspective
There are four goals are represented in the stakeholder perspective, which are improve
product quality, reduction of carbon footprint, increase customer satisfaction and set up the
positive image and reputation of WML. In the performance of these goals, lag indicators
include reduce emission from transport by 50%, increase product innovation by 15%-20%
and participating in sustainability awards and sustainability activities. For lead indicators,
following are increase investment on social media on Facebook and YouTube by 20%,
number of website hits per month, number of surfboard returns and increase the quality
management system more efficient and effective by 20%. The other lead indicators also
contain such as increase green energy usage by 50%, increase number of trees planted by
20%, number of sustainability award, produce and release 2-3 sustainable products as well as
participate in donated event to help sustainable.
Heavily investing in social media (Facebook & YouTube etc.) can help to improve companys
performance of marketing, moreover, catching peoples attention, especially those young
people when they surfing online. Checking website hits per month via background system so
that to know how many people visit official website and pay attention on WMLs product.
According to the ISO: 9004:2009, increasing the quality management system tend to be more
efficient and effective which is good for companies to improve the quality of product and
strictly obeyed the standard to meet customers need and satisfaction. In addition to, as the
mode of transportation for WML nowadays still relies on trucks, so it is necessary for trucks
increasing green energy usage to reduce carbon footprint. Finally, it is important for WML
improve its positive image and reputation to acquire the trust from society and customers via
participating donated event to help sustainable society.

Internal business process perspective

There are three objectives in this perspective, firstly is to invest more in R&D of surfboard
and the indicator is to increase investment of R&D by 20%. It is crucial for companies to
invest in R&D and aim towards being competitive, if they want to achieve long-term survival
and stay ahead of the technology curve. (CNBC 2014) Secondly, reduce production waste is
the key objective that related to sustainable management. In order to achieve this objective,
WML aim to reduce energy consumption by 20% and reduce internal waste by 10-15%.
Waste minimization is related to reducing the amount of waste made through the production
process, helping to eliminate pollution, and supports the efforts to build a more sustainable
society (USEPA 2012). The last objective is to be 50% green in 5 years. The indicators for
this objective are increasing green products by 50% and use green material.

From internal business process perspective, some indicators need to be concerned because it
may bring benefit to WML but also cost large amount of resource to achieve. For example,
reduce energy consumption by 20%. Reduce energy consumption is not just simply cut down
the usage of energy to produce goods, it means use the energy in a more efficiency way. With
the same amount of energy to produce 1000 surfboards, now WML would be able to produce
1200 surfboards. To achieve that WML need to invest more in energy saving equipment and
replace the old production line. In the long-term view this is a great choice to both WML and
the environment. However, the challenge in this case would be obtain the support and
understanding from shareholders and investors.
Learning and Growth Perspective
There are two lag indicators are provided, emphasizing sustainability culture for employees
and increase 10% of new quality hires. Lag indicators include the number of people who
passed the test, number of initiatives proposed by employees and numbers of questions asked
in the test related to sustainability. Taking the objective of enhancing employee capability for
example. In order to achieve this, a test would be provided to employees every two months.
We would statistic how many people passed the exam and examine the sustainability level of
each employee in each different time period. The standard of test could be set to 70 score out
of 100 which could pass the test. If numbers of employees failed during this test means they

need to keep learning and more practice, then have a test again. Smallwood and Ulrich (2004)
said that there are all kinds of capabilities for employee to improve and study, such as the
collective skill, and communication skill which could help company solve out problems. So,
in this way, testing enable employees to summarize their weakness and strengthen their
capability in time.
Company could take advantage of employees capabilities like the organizational capabilities
because employees high capabilities are the significant intangible assets of each organization
(Smallwood and Ulrich 2004). If a company own a huge number of high quality staffs means
its intangible assets is huge as well even though they can not see and touch. Also, the lag of
indicator of increasing 10% of new hires could help company bring to more new ideas in
terms of innovation.

Causal Relationship Between Measures of BSC

Conclusion
In general, the strategy map provides the overall direction for WML and helps to visualize the
causal relationships between the perspectives, and will help company complete its mission
and objectives one by one. So, it is important for company have a strategy map before
implementation. Companies would have good performance if they using Balanced scorecard
tool.

Reference List:
CNBC 2014, Viewed on 27th May 2016, <http://www.cnbc.com/2014/08/14/why-docompanies-invest-in-rd.html>.

Kaplan, R. S & Norton, D. P 2001, The strategy-focused organization: How balanced

scorecard companies thrive in the new business environment, Harvard Business Press.
Kaplan, RS & Norton, DP 1993, Putting the balanced scorecard to work includes related
articles on establishing a balanced scorecard, on the impact of a balanced scorecard and a
related interview with Larry D. Brady of FMC Corp, Harvard Business Review, Vol.71,No.5,
p.134.
Kaplan RS & Norton DP 1996, Using the balanced scorecard as a strategic management
system, Harvard Business Review, Vol.74,No.1, p.75.
Lipe, MG, & Salterio, SE 2000, The Balanced Scorecard: Judgmental Effects of Common
and Unique Performance Measures, Accounting Review, Vol.75,No.3, p.283.
Mourafetis, J & Kamat, U 2014, Improve asset utilization and reduce costs through better
enterprise asset management, NEW PATHS TO PROFIT/ABILITY, Argo Consulting, p.1.
Northcott, D & Taulapapa, T 2012, Using the balanced scorecard to manage performance in
public sector organizations: Issues and challenges, International Journal of Public Sector
Management, Vol.25,No.3, pp.166-191.
Norton, D & Kaplan, R 2006, The Balanced Scorecard : Translating Strategy Into Action,
Boston, Mass: Harvard Business Review Press, viewed 25 May 2016.
Olsen, E 2016, Objectives and Goal Setting: OnStrategy, Viewed on 27th May 2016,
<http://onstrategyhq.com/resources/objectives-and-goal-setting/ >.

Opic 2016, Why staff development is about capability not competency, Viewed on 27 th May
2016, <http://www.opic.com.au/improve-your-people/develop-more-capable-staff/>.
Perkins, M, Grey, A & Remmers, H 2014, What do we really mean by Balanced
Scorecard?, International Journal of Productivity and Performance Management,
Vol.63,No.2, pp.148-169.
Smallwood, N & Ulrich, D 2004, Capitalizing on capabilities, Viewed on 28 th May 2016,
<https://hbr.org/2004/06/capitalizing-on-capabilities>.
The International Integrated Reporting Council 2015, Creating Value: Value to investors,
Thomas and Trotman Design, p.1.

United States Environmental Protection Agency 2012, Waste-Hazardous Waste-Waste

Minimisation",

Viewed

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<http://www.epa.gov/waste/hazard/wastemin/index.htm>.

28th

May

2016,

Appendix
Detailed Balance Score Card
Objectives
5. Financial
Increase
market share
30% in bamboo
surfboards
Reduce average
costs and risks
by 10%
Increase
profitability on
sustainable
product by
20%
Enhancing
asset utilization

Lag indicators

Lead indicators

Increase ROE of
WML by 20%
Reduce
production cost
by 20%
Increase
surfboards
profitability by
30%

Increase asset turnover

by 15%
Reduce unit cost by
10%
Increase sales of
surfboard
Increase sales of new
sustainable product

Reduce emission
from transport by
50%
Increase product
innovation by
15%-20%
Participating in
sustainability
award and
sustainability
activities

Increase investment on
social media on
Facebook and YouTube
by 20%
Numbers of website
hits
Number of surfboards
return
Increase the quality
management system
more efficient and
effective by 20%
Increasing green energy
usage by 50%
Increase number of
trees planted by 20%
Produce and release 2-3
new sustainable
products
Number of
sustainability award
Participating in donated
events to help

6. Stakeholder
Improve
product quality
by 20%
Reduce carbon
footprint by
20%
Increase
customer
satisfaction and
attention by
30%
Positive image
and reputation
Engage in
active
corporate social
responsibility
Introduce new
product safety
design

sustainable society
No added chemical
substance into wetsuit
Increase numbers of
employees in terms of
the after-sales service
On time delivery
7. Internal
business
process
Investment in
R&D for
alternative
materials to
make
surfboards
Reduce waste
in production
process
Aim to be 50%
green in 5 years
Ideas for
products that
are
environmentall
y friendly

Increase green
production by
50%
Increase of
investment in
R&D for making
surfboards by
20%
Reduce energy
consumption by
20%

Increase sustainable
materials by 30%
Reduce internal waste
by 10%-15%
Reduce external waste
by 10%-15%

Emphasizing
sustainability
culture for
employees
Increase new
hires by 10%

Number of initiatives
proposed by employees
Number of people who
passed the test
Number of questions
asked related to
sustainability

8. Learning and
growth
Employee
taking initiative
for
sustainability
Enhancing
employee
capability and
testing
Recruiting high
quality staff