An Assignment

on
“Analysis the elements of Balanced Scorecard”

Course Name: Strategic Management Accounting

Course Code: 5201

Submitted to:
Dr. Md. Salah Uddin Rajib
Associate Professor
Department of Accounting & Information Systems
Jahangirnagar University

Submitted by:
Sadia Islam
ID: 1501
Department of Accounting & Information Systems
Jahangirnagar University

Submission Date: 5th May 2021

Introduction

The Balanced Scorecard provides a framework that continues to measure organizational

performance across financial outcomes but supplements these with nonfinancial measures derived
from the company’s strategy. The basic model of balance scorecard consists of four perspectives
which use to measure the performance of a company during the past, present and future.

▪ Financial Perspective: Financial measures convey the economic consequences for the
actions already taken by the organization and focus on the profitability related measures
on which the shareholders verify the profitability of their investment. Under this
perspective the most common performance measures are: return on investment (ROI), net
operating income, revenue revenues-to-asset ratio etc.
▪ Customer Perspective: The customer perspective describes how a company intends to
attract, retain, and deepen relationships with targeted customers by differentiating itself
from competitors. Typical measures are: customer satisfaction, market share, customer
retention rate, customer lost/won, sales from new product, etc.
▪ Process Perspective: The process perspective identifies the critical operations
management, customer management, innovation, and regulatory and social processes in
which performance expectations may be accomplished. Commonly used measures for this
perspective are: cost of quality, cost of non-conformance, process innovation, time savings
etc.
▪ Learning and Growth Perspective: This perspective executives target improvements in
their intangible assets, human resources, information technology, and organizational
culture and alignment that will drive improvement in the various process objectives.
Measures used under this perspective are: employee empowerment, employee motivation,
employee capabilities, and information systems capabilities.
Elements of balance scorecard in Premier Cement Mills Ltd.
Premier Cement Mills Ltd is a renowned & leading cement brand in the country. It strives
for sustainable growth and aligns its development strategies accordingly. To analysis the element
of balanced scorecard I go through the annual report of Premier Cement Mills Ltd for the year
2018-2019 and 2019-2020, The findings of the analysis are presented below:

Learning and Growth Perspective

Objective:

Premier cement objective is to develop strategic competence, attract and retain top talent
employees to their organization to improve process quality, cycle times and deliver the value
proposition to customers.

Measure:

▪ Premier Cement human resources is an integral part of its business which is improving
gradually by recruiting people, training, performance appraisals, motivating employees as
well as workplace communication, safety etc. In 2018-2019 it had a total number of
employees 1,673 including both corporate office and factory and in 2019-20 it had 1652
permanent human resources. Though the number of employees is decreasing last year, it
was gradually increase in previous periods which help to attract and retain top talent
employees.
 ▪ Premier Cement Mills Ltd also provides training facilities to both new and existing
employees for improving their skill and performance. It generates 8,004,551 Taka for
Training on an average of 4,785 Taka per employee in 2018-19 which increased in
9,165,431 Taka in 2019-20 on an average of 5548tk.

Process Perspective

Objective:

For organization success premier cement process objective is to improve process quality, develop
innovative products and service, reduce process cycle times, and improve environmental health and
safety for the worker to achieve its customer, revenue growth, and profitability.

Measure:

▪ To increase the production capacity the company installing and commissioning the most
environmentally friendly and cost effective & latest technology-VRM. After the
completion of the project another 9,200 MT per day will be added to the Company’s total
production capacity.
▪ To improve process quality premier Cement emphasizes quality control which is
continuously monitored by our own laboratory and simultaneously, test results are also
obtained from BUET. For elemental Analysis it use Energy Dispersive X-ray Fluorescence
(EDXRF.) which aids conduct basic quality control (QC) tests and its more sophisticated
variants - such as

-analytical quality control (AQC),

-quality assurance (QA) or

-statistical process control like Six Sigma - the NEX QC+ QuantEZ

▪ Premier cement has been emphasizing on Health & Safety issues and this is on top of its
priority list. Company’s safety measures, continuous risk assessment policy ensures a
healthy and hazard free work environment for all employees in the workplace. It is a
certified Company from the Department of Environment, Government of People’s
Republic of Bangladesh and has been successfully abiding by all the laws and regulations
 exerted by the above-mentioned authority for improving health and safety. In the face of
the COVID-19 pandemic it maintains social distancing, minimized strategic allocation of
human resources, good hygiene practices, sanitation protocols and providing medicines in
consultation with doctors to protect employees, contractors and all our stakeholders.
▪ The process perspectives components of balance scorecard for premier cement mills ltd
can visualize through its revenue generation capacities. Because efficient operation
management, buyer management, new innovation and effective regulatory framework has
significant impact on the revenue of an organization. in the FY 2018-2019 the revenue
was 11,999.43 million Taka which is comparatively higher than the last few years. But in
2019-2020 year because of Covid-19 around the world effects its process perspective
elements as it is unavoidable risk but the falls in revenue was not devastating for the
company which was 10,450.67 million Taka.

Customer Perspective

Objective:

To satisfy its customers’ needs better than competitors premier cement objective is to improve market
share; enhance customer profitability, retain customers, achieve customer satisfaction and loyalty,
acquire new customers, provide right quality products at a competitive price etc. which lead to
improvement in the financial perspective objectives for growth in revenues and profits.
Measure:

❖ Without customer satisfaction and loyalty and ensuring permanent clients no organization
can sustain in its smooth operation. To retain permanent customer, organization create
competitive advantages for itself compared to its competitors. Premier cement in customer
perspectives components always try to create permanent customer by fulfilling the
commitment to parties and maintain exceptional customer relations built on mutual trust,
respect and loyalty and to constantly and consistently meet its customers’ expectations.
❖ To improve market share and acquire new customer, premier cement provide three
categories of products, namely: Portland Cement (PC); CEM I, Strength Class 52.5N,
Portland Composite Cement (PCC); CEM II, Strength Class 42.5N and Portland Pozzalana
Cement. Diversify products helps it to grab new customer and attain large market share
than the competitor.
❖ To enhance customer profitability, premier cement tries to provide good quality product to
their customer at a competitive price so that it can retain its existing customer. Customer
profitability can be measured by the quantity of sales and percentage growth in revenue
from existing customers.
 Premier Cement sold total 1622786 units in the year 2019-20 in which 1607066 units were
sold in local market and 15720 units were from export. In the year 2018-19 its sale was
1863818 units where 1814072 came from local market and 49746 came from exports. So,
its generate total 10225107669tk in the year 2019-20 and 11808217750tk in 2018-19. Due
to pandemic in 2020 every business has faced worst situation in every country so,
maintaining proper customer relationship was too difficult. Revenue decrease by 13.40%
due to less quantity sales because of pandemic covid-19. Though revenue are lower than
the last year it doesn’t mean it loses its customer rather it was a big challenge to achieve
this in time of world pandemic.
❖ Premier Cement produce high quality products by maintaining European Standards and
use the best raw materials and provide technical excellence for our Customers.

Financial Perspective

Objective

Premier Cement financial perspective objective is to increase shareholders value, asset utilization,
profits and ROI, enhance existing customer value, expand revenue opportunities that represent the
ultimate success measures for profit-seeking companies.

Measure:

Premier cement mills ltd matches with the financial perspective of the measurement techniques of
balance scorecard. Financial perspective focus on the profitability related measures on which the
shareholders verify the profitability of their investment. Observing the annual report and analyzing
the financial statement the relation to financial perspective of balance scorecard are given below:

➢ ROE: Return on equity is one of the measures of financial perspective of balance

scorecard. The company expects to generate increased revenues for improving its ROE
financial measure by retaining and expanding sales to existing customers. Premier Cement
ROE was 4.6% in 2019-20 which was 12.10% in the year 2018-19. Premier cement ROE
decreasing last year because of covid-19 pandemic so it cannot succeed to increase the
shareholder value properly.
 ➢ ROA: Asset productivity would enable Premier Cement to handle the anticipated higher
volumes from its growth strategy without expanding its asset base. For this objective, it
selected the return on assets ratio to indicate the benefits from generating more revenue
from existing assets, plus any benefits from inventory reduction.

Premier cement return on asset showed downward sloping which was 1.05% at 2019-20 and 3.09%
at the previous year. So, it indicates that premier cement does not utilize its asset properly.

➢ Other Ratio: To measure the objective of increasing profits , enhance existing customer
value, expand revenue opportunities premier cement use profitability ratio like gross profit
 margin, EBIT margin, pretax profit margin ,net profit margin, return on capital employed
and inventory turnover ratio.

Particulars 2019-20 2018-19 2017-18 2016-17

Gross profit 14.37% 14.3% 15.1% 17.0%
margin
EBIT Margin 9.92% 10.7% 10.0% 10.0%
Net profit margin 2.59% 5.1% 4.4% 5.8%
Return on capital 10.7% 14.5% 19.4% 17.7%
employed
Inventory 9.7 14.99 12.24 8.57
turnover ratio
(times)

This table shows the financial scenario of premier mills limited for FY 2018-2019 and FY 2019-
2020. All those ratio is decreasing than the previous year because of covid-19 pandemic so premier
cement could not achieve productivity improvement and revenue growth as they desired. But if
we see all previous year data till 2016 it showed that profitability and productivity had upward
sloping. So, the operation process of Premier Cement Mills Ltd. has sign of implication of financial
perspective element of balance scorecard.

Conclusion
A balanced scorecard creates the right balance between the organization's objectives and actual
operation. It's a mechanism that helps the management to track down the performance of the
organization and can be used as a management strategy.