Management Strategic Operationsadmin / January 1, 2019
According to Kaplan and Norton (2006), the best method which can be used to align operational structures with strategy is through a management system based on a balanced scorecard framework (p.103).
In this method managers from all the levels of the organization, from regional settings to the CEOs can utilize the tools of this framework to derive their unit performance. This method has proved to be a powerful tool in the management and monitoring of the unit`s strategy.
Managers can therefore communicate the cause-effect relationship which delivers the preposition of the values of their units. This method thus develops both a template and a form of communication which can be used for decimating information involving the creation of value.
According to Kaplan and Norton (2006), it is through a mix of operational perspectives that a company can succeed in its operations currently in the world. Financial, customer, process, learning and growing perspectives do affect corporate strategy.
In the financial perspective, companies can bring about an enterprise value through the allocation of resources while using an effective method (Kaplan and Norton 2006, p. 103). The aims of resource allocation can range from corporate governance, merging and acquisition of new businesses and negotiation with external stakeholders such as governments, other businesses, shareholders and suppliers.
If this activity is done in the best way possible then a company will have created strong financial strategies. By doing so a company will have a strong financial base that will enable it to grow and expand the size of its business (Fitzsimmons, 2000 p. 14).
In the consumer perspective companies which produce the same goods or offer the same services can integrate their services so as to lower the prices of their products (Kaplan and Norton 2006, p. 104). This moves aim at making their services or products to be affordable by consumers.
This move creates corporate synergies across multiple businesses in the market. In doing so the businesses and consumers will have goods and services at better prices and at a greater convenience than what an individual competitor would have offered (Wheelwright 2001, p. 122).
Hilton Hotel and McDonalds for example have entered in this form of agreement to offer the same form of proposition in their chains of hotels and restaurants all over the world where they are found (Kaplan and Norton 2006, p. 104).
The third method in the balanced scorecard perspective is called the process perspective. In this method, corporate synergies can save a lot of money by reducing their costs through the sharing of costs such as manufacturing, transportation, research, storage, advertisement and purchases (Kaplan and Norton 2006, p. 104). This can only be possible if and only if these processes are common for the companies involved.
In the past, businesses had a competitive advantage by owning relevant resources which other companies in the industry did not have. However, in the present times most companies are consolidating together to share costs of conducting common processes even though they are competitors (Swamidass and Newell, 1997 p. 515).
The learning and growing perspective enable corporations to partner up and develop methods to recruit personnel in the industry and come up with refreshed knowledge and skills which will enable the industry to grow and develop in the right direction.
These activities include recruiting and training of personnel, coming up with ideas and innovation and the use of IT in the operation of businesses. Currently, intangible assets account for around 80% of a company’s value therefore companies should develop synergies that will enhance the development of the human capital (Kaplan and Norton 2006, p. 104).
Fitzsimmons, J.A. (2000) Service Management: Operations, Strategy, and Information Technology. Boston. McGraw-Hill
Kaplan, R.S. and Norton D.P. (2006) How to Implement a New Strategy without Disrupting Your Organization. Harvard Business Review 84 (3), 100-109.
Swamidass, P.M. and Newell, W.T. (1997) Manufacturing Strategy, Environmental Uncertainty and Performance. Management Science 33 (4), 509–524.
Wheelwright, S.C. (2001) Restoring Our Competitive Edge: Competing Through Manufacturing. New York.Wiley,