Posted on

Balanced Scorecards Strategy For Caffe Nero Business Essay

Introduction

The purpose of this essay is to plan a scheme and two balanced scorecards for a java store company called Caffe Nero to congratulate their mission statement. This will be done after carry oning extended secondary research to derive a clear penetration into what a balanced scorecard involves every bit good as looking into how Caffe Nero operates. This will hopefully supply cognition of possible benefits and troubles to see when trying to successfully implement scorecards for both Headquarter and Store Levels for Caffe Nero. In add-on to this, for each scorecard, a scheme map is used to show how each cardinal public presentation index ( KPI ) contributes to the overall vision of the company. Finally both degrees are so assessed on its parts to Cafe Nero ‘s scheme and a decision is drawn on the chief points outlined throughout the essay.

What is the Balanced Scorecard?

Kaplan introduced the balanced scorecard in 1992 with the purpose to interpret scheme into action, he stated,

“ The balanced scorecard translates an administration ‘s mission into a comprehensive set of public presentation steps that provides the model for implementing its scheme. ” ( Kaplan & A ; Norton, 1996: p88 ) .

Having understood an administration ‘s vision and scheme, the balanced scorecard AIDSs to develop originative aims to assist step public presentation. These aims can be split into four chief positions: Financial, Customer, Internal Business Process and Learning and Growth all of which link together to organize a scheme map.

Execution of the Balanced Scorecard – Benefits and troubles

Bourne & A ; Bourne ( 2007 ) nowadayss grounds to why one time implemented the balanced scorecard can neglect. It is good for Caffe Nero to be witting of possible jobs that may originate in the close hereafter when implementing their balanced scorecards. Looking at the troubles and jobs portrayed by theoreticians and other administration ‘s experiences should show Caffe Nero with a competitory advantage. The chance of being able to utilize other administrations failures and theoretician ‘s advice to get the better of the issues presented is valuable. It is peculiarly of import as big sums of clip and money from the company are being invested into this public presentation direction tool.

One possible job is the complexness of the system, ensuing in unachieved aims which will impact the overall vision and scheme of Caffe Nero. Administrations are faced with de-motivated staff as they steer off from the chief aims that are originally assigned. Although, this is a common job for the bulk of companies when presenting the scorecards, Caffe Nero is cognizant of this job and can therefore take this into consideration throughout the design phase. In peculiar consideration would be good, in footings of the scheme map when associating the aims together, so that they are easy to follow and comprehensive for the whole company. As for get the better ofing the complexness issue, Caffe Nero can concentrate on their employees with preparation, conferences, group and one to one meetings to guarantee that every employee within the administration to the full understands what a balanced scorecard is. Their aims and how they are being measured every bit good as how each position interlinks in accomplishing Caffe Nero ‘s scheme.

Drury ( 2004 ) suggests another trouble with the scorecard, he identifies that the premises of the cause and consequence relationships are being overly vague every bit good as missing empirical support. Further research has concluded that is it hard to associate non fiscal informations with future fiscal public presentation if at all. Caffe Nero needs to see this, as their chief aim is to accomplish future gross growing both within the UK and internationally. So possibly with steps and aims that are assigned, should be more focussed around gross and fiscal facets where possible.

An extra trouble refering the positions shown within the direction tool is that it does non factor in other facets of the concern to integrate clients, employees, providers and other environment positions. Although Caffe Nero is non restricted to adding extra positions, it could perplex the scorecard further doing it hard to accomplish all aims assigned and some may overlap with bing aims.

Traditionally, when implementing a scorecard the premise is, the determinations sit with the senior direction throughout the design phase as they to the full understand the Immigration and Naturalization Services and outs of the administration. Although this may be the instance, it is non ever in the best involvement of the administration to plan a scorecard that merely looks at all degrees of the concern from a top heavy attack. To get the better of this Caffe Nero can be smart and guarantee that all functional representatives of their hierarchy from store-level to headquarter degree are included within the design. This in bend will demo teamwork in working together to understand where each single tantrums in to the overall scheme in order to run into the company ‘s aims.

Although the scorecard demonstrates assorted troubles that Caffe Nero should be cognizant of. Not all is bad ; the ongoing popularity of the balanced scorecard from other administrations makes it highly difficult to non detect some of the benefits of this direction tool.

One of import trait of the scorecard is its usage of efficaciously uniting all the separate elements of the company into one simple theoretical account, with aid from the scheme map. The tool is besides able to assist employees and the company to understand how everything interlinks and contributes to the overall scheme. For illustration, looking at how employees from Caffe Nero store-level are able to lend and work with central offices aims by bettering client service at store-level in assistance to cut down client ailments for headquarter degree at the other terminal. This direction tool is besides enabling directors to see all aims and measures together as a whole by looking at the bigger image. Therefore Caffe Nero can take advantage of these benefits and do necessary betterments to the costs of the company with cost decreases at headquarter degree.

Lynch ( 2009 ) remarks that the existent benefit of the scorecard is the linkage between scheme and execution. Most theoreticians argue that the chief end of the bulk of administrations is a signifier of stockholder value added. Caffe Nero should see this when implementing both scorecards. By looking into both quantitative and qualitative steps within the scheme, they should hopefully find the outlooks of their stockholders within public presentation steps in their scheme and scorecards to accomplish growing in stockholder value.

Caffe Nero Strategy

Grant ( 2008 ) outlines assorted schemes an administration can follow when seeking to accomplish growing. Having viewed this, Caffe Nero is more geared towards a concern scheme, as it concerns the company with viing within a peculiar java store market. To thrive within this market it is of import to concentrate on set uping a competitory advantage over challengers.

To back up this Caffe Nero should establish their scheme around merchandise distinction, by supplying clients with choice scopes of espresso that is sole to Caffe Nero shops, will merely lend to concreting a competitory advantage for the company. It besides works on screening Caffe Nero from their monetary values being levelled down to the bottom portion of the monetary value spectrum, due to possible competitory monetary value wars of the same merchandise between their rivals. This is an of import scheme to implement as due to the addition of popularity of java stores it is likely for these monetary value wars to happen. As a consequence, Caffe Nero can look to better further, with the quality of their merchandises every bit good as establishing new merchandises in the hereafter as portion of their scheme. This can be achieved with merchandise invention to provide to larger consumer base within the market, hopefully lending to the growing in both gross and size within the UK and internationally.

Cafe Nero is good known for its acquisition of Aroma which increased the sum of sites they owned to 106 by 2002 ; this made them the largest independent owned java store. The company now has 400 shops runing in assorted locations within the UK, Turkey and the Middle East. Caffe Nero should now look towards the hereafter of the company, by spread outing the figure of sites owned. Therefore it is of import that portion of the scheme should reflect in accomplishing enlargement both internationally and UK based. Caffe Nero will integrate this in the scorecard within the fiscal position at headquarter degree, as Kaplan and Norton ( 1996 ) states that the designing of the scheme of the company is combined with the procedure of the balanced scorecard.

However Caffe Nero may be faced with great trouble with seeking to implement their scheme due to the diverseness of locations they operate in. As it is harder to standardize a scorecard for all site degrees throughout the concern internationally, as civilization and outlooks of clients and employees may be different throughout locations. This can be said the same about different locations within the UK. For illustration London ‘s aims may integrate a faster gait of service to congratulate their busy, on the spell clients in comparing to another site in a quieter location that may prefer much more of a laid-back attack, at a slower gait and friendlier atmosphere where everyone is a community. Caffe Nero tries to integrate all of these elements within the overall scheme.

Balanced Scorecard & A ; Strategy Map

The undermentioned theoretical accounts demonstrate Caffe Nero ‘s scorecards for both headquarter degree and store-level. Equally good as scheme maps to exemplify how each aim will associate together. It is of import to observe that although the scorecards produced are for the same company, they may differ in aims for each degree, to integrate all forces throughout the company. Aims of headquarter degree will concentrate more on the overall public presentation of the company, in footings of how they can turn in gross, size and clients. The theoretical account will besides concentrate on innovating merchandises and keeping rates of employees and clients. Where as, with the store-level aims will be more centred around single shops in footings of client service, bringing times and authorising and actuating staff with preparation and inducement programmes. Once the undermentioned scorecards have been implemented for Caffe Nero, it is so of import to guarantee that everyone throughout the company understands the balanced scorecard and where they are lending to accomplishing Caffe Nero ‘s vision. Equally good as sing how all of the aims from each degree will complect between the two scorecards. This can be done through preparation Centres, conferences and meetings.

Figure 1: Balance Scorecard at Headquarter degree

Figure 2: Balance Scorecard at Store-level

Scorecard Evaluation

Having designed both scorecards ( Figure 1 and 2 ) an rating will be conducted to research both the similarities and differences presented within each theoretical accounts. Extra to this, back uping grounds will add weight to warrant grounds for choosing aims and index to lend to Caffe Nero ‘s overall scheme.

Fiscal Position

The first nonsubjective shown in the fiscal position ( figure 1 & A ; 2 ) is gross growing this relates to accomplishing an addition in growing in some signifier or another. To drive gross growing Caffe Nero objectives concentrate on diversifying into new markets internationally and within UK. Equally good as ramifying out into new client markets and increasing the figure of shops owned by Caffe Nero. Each of these aims chosen all tie in with Caffe Nero ‘s overall scheme of enlargement of the concern in the close hereafter.

The cardinal public presentation indexs incorporated into this position aid to mensurate each aim for the company. The chief similar step here is ( F1 & A ; F4 ) per centum of addition in gross growing in the overall company and single store-level ( F5 ) . To accomplish these aims they would hold to be based upon implementing fillip and inducement strategies for employees so that they are motivated to accomplish marks set. They would besides necessitate to aim larger sections of new client markets by advertisement in new locations such as near to universities to appeal to pupils or offices to appeal to the working clients. However a drawback of this step is due to the population enduring from the effects of the recession and the economic system ensuing to a lessening in disposal income. Meaning growing in gross for Caffe Nero will be delicate as new possible clients may non be every bit opened to seeking new java stores so their norm every bit good as lifestyle alterations that will impact the sum of gross that each shop generates. This is why a grade up % was non included in assistance to restrict other jobs such as the affect on stockholder value, as incorporating per centums would set farther force per unit area on the company in instance they were unable to accomplish ensuing to stockholders outlooks to worsen.

Another of import aim within the fiscal subdivision is ( F6 ) improve operational efficiency, which is cut downing wastage costs for the concern. It is of import to accomplish this aim as it saves the company money and better for the environment. This can be done by supplying more consciousness of how to cut down wastage i.e. non go forthing lights-outs of H2O on merely for the convenience component for java stores. Bing cognizant of waste jobs presents benefits as in bend this will keep the companies overall trade name image, which links in will the client position ( C3 figure 1 ) of keeping trade name image.

Customer Perspective

It is of import to mensurate this aim ( C3 ) , as it involves the populace with collating feedback and consequences in mention to how the general public perceive Caffe Nero as a company. This aim besides gives the company an chance with take parting in charity and environmental work that will assist several administrations every bit good as portraying a better image for the company. This is with the purpose to increase in gross and client satisfaction, as clients like to be involved in back uping good causes. This is why it was of import to integrate this within the headquarter scorecard.

Figure 2 besides looks at client keeping ( C5 ) , client satisfaction ( C6 ) and client profitableness ( C4 ) as chief aims to accomplish. Each of these aims link with each other, for illustration if the clients are satisfied with the service and merchandises offered by staff so they are likely to come back clip after clip. Making client loyal will ensue in increasing client keeping rates hopefully taking to client profitableness. Therefore guaranting clients are provided with great client service and high criterions of quality merchandises will cement this relationship with clients and employees. Where the employees are concerned this is incorporated into the internal procedure and acquisition and growing positions.

It is important to observe that both degrees differ in aims as the store-level is more involved with direct client betterment as they adopt a more personal attack with more of a face to face relationship. Therefore aims will be focused around the service component. In comparing to the central office that will look more to indirectly bettering service by site quality, cut downing ailments and activities affecting bettering trade name image. However one similarity between them is that they are measured by client feedback in one signifier or another.

Internal Business Processes Perspective

The first aim presented in figure 1 is ( IP1 ) innovating merchandises involved, this aim is of import for concerns to keep as their scheme and trade name image pride themselves on bring forthing alone high quality merchandises in espresso and nutrient. Therefore it is of import for Caffe Nero to introduce new merchandises in order to vie within such a popular market. To mensurate this nonsubjective Caffe Nero will look at addition in gross revenues from new merchandises in order to mensurate if they are successful or non. For that ground employee should be cognizant of the new merchandises that are available by offering them at wage out countries in order to publicize new merchandises, which links into nonsubjective ( IP4 ) developing internal merchandise cognition. This will be achieved by day-to-day staff meeting and work brochures to prove staffs knowledge. Again, this position demonstrates some similarities between figures 1 & A ; 2. Aims are set to better on bringing times for clients ( IP2 & A ; IP5 ) , this is assistance of accomplishing high quality of service to associate to client satisfaction ( C6 ) , keeping ( IP3 ) and profitableness ( C4 ) . If clients are dissatisfied they will travel elsewhere which will impact growing in gross ( F1 ) . To mensurate bringing times, focal point as obtain comparing where Caffe Nero are in footings of the market, as clients will hold a certain degree of outlooks. However if Caffe Nero are able to stand out over this, it will make client satisfaction which in theory will take to more concern from that client. Besides by guaranting there is a balanced client to employee ratio in each site helps to better bringing and client service for clients as waiting times will diminish.

Learning and Growth Perspective

This country focuses on employees in footings of making aims to keep preparation, in assistance of retaining employee trueness ( LG1 ) , bettering both occupation and employee satisfaction ( LG2 ) , increasing employees capablenesss in accomplishments ( LG4 ) every bit good as motivation and authorising employees ( LG5 ) . In theory these aims should take part to keeping a client centric focal point ( LG3 ) .

Within this position, there are many differences between the scorecards as store-level focal point on single demands of employees to drive employee satisfaction. In comparing to central offices which looks at overall accomplishing programmes to help employee satisfaction, showing a common aim in both scorecards. To mensurate these aims appraisal and one to one meetings are used to measure their public presentation and how to better in growing in gross for the concern. Each degree is assessed by single employees at store-level and persons shops for headquarter degree.

Olve ( 2003 ) looked into how incentive and reward programmes can be aligned with scorecards in order to advance realisation of intended scheme. This has been incorporated into the acquisition and growing phase of the scorecards. In assistance to pull employee ‘s attending, to execute good at shop degree, lending to the overall aim of increasing gross growing for the company.

Although there are many differences between the theoretical accounts as each scorecard targets a different audience, it is of import to observe that they both interlink to together to accomplish Cafe Nero ‘s aims. As store-level focal points on direct client service it is of import that they get it right to accomplish gross revenues, keeping every bit good as maintain a happy working environment for staff as acquiring these nonsubjective aid to accomplish aims set for headquarter degree. In footings of employee keeping, developing programmes, client profitableness and satisfaction every bit good as merchandise invention

Decision

To summarize the chief points of this essay, it is indispensable to see the information available in order to successfully plan and implement a scorecard for a company. As statics show that 70 % of balanced scorecards fail due to miss of research within their ain single company and the scorecard.

The 2nd point was to to the full understand what Caffe Nero wanted to accomplish in respects to their scheme, as it is critical to non integrate everything as this will merely show more jobs so benefits.

Third, when planing the scorecards for Caffe Nero, it was important to guarantee that they were easy to follow for all members of the administration, as every nonsubjective interlinks and filters up the theoretical account in a signifier of a concatenation. If one aim is non met so this will impact the remainder of the theoretical account making a cause and affect relationship throughout the scorecard. For illustration effects may take to losing clients due to bad client service, deficiency of high quality merchandises and merchandise cognition due to limited preparation.

As to measurings within the scorecards Caffe Nero tried to be realistic so that they are able achieve their scheme as unrealistic measurings can disfavor a concern, as the costs of implementing balanced scorecards is a big investing to do as big sums of money and clip is needed. It is besides of import that Caffe Nero adopted a ‘trial and mistake ‘ attack so they could maintain reexamining their scorecards to guarantee they were aligned with their scheme. Overall a balanced scorecard is an affectional direction tool to interpret scheme into a vision.

Word Count: 3299

Leave a Reply

Your email address will not be published.