Purpose:
The Individual Reflective Journal is to ensure each student is able to contribute to document a critical reflection of their personal learning process, as experienced during this unit. A significant aspect of the learning journal will be your reflections on what you discovered from your group assignment
Assignment Task:
1. Reflections on any one topic covered in the unit that interests you the most from this unit. Why was it interesting and what had you learnt from it?
2. Reflections on your experience as a group member in the group assignment. What went well, what did not go to plan and what had you learnt from it?
3. Reflections on what you had learned from the group assignment. What insights had you gained and what had you learned from this experience?
Required individual reflective journal
Performance Measurement Systems - Implementation of the Balanced Score Card (BSC)
Executive Summary
This report is prepared to research, analyses, and perform academic work within the field of management accounting. From this report description of AXS listed company is conducted which is, National Australian Bank along with the calculation of return on investment of NAB by using net profit divided by total assets method and has also discussed the ways to improve return on investment. Furthermore, it gives more insight into the description of the balanced scorecard with its key component including the ways for implementation of the BSC which can improve the competitive advantages of NAB. The last part suggests the balanced scorecard which is suitable for the National Australian bank.
Table of Contents
Executive
Executive Summary 2
A. Introduction to National Australia Bank 4
B. Return on Investment (ROI) and ways to improve ROI 4
Calculation of return on investment 4
Ways to Improve ROI 5
C. Balanced scorecard definition and its components: - 6
Financial component 7
Customer components 8
Internal business 8
Innovation and learning 8
D. Implementation of BSC and BSC’s ways to improve the competitive advantage of NAB 9
Steps of BSC implementation 9
Terms and their meaning 9
Understanding the expected results 9
Discussion around the strategy 10
KPIs and action plans 10
Cultural shift 10
E. Suitability of BSC for National Australian Bank 12
Conclusion 13
REFERENCE 14
A. Introduction to National Australia Bank
XXXXXXXXXXNational Australia Bank (NAB) is an international financial and banking service company operating in more than 900 locations worldwide with headquarter in Melbourne, Australia. The company was founded in 1858 where the company operated under the name of National Bank of Australasia and was converted to National Australia Bank after the merger with The Commercial Banking Company of Sydney (Fo
es Media LLC, XXXXXXXXXXNow the company is serving more than 9 million customers including small, medium, and large businesses around the globe with more than 30,000 employees (National Australia Bank Limited, XXXXXXXXXXFor over 160 years of operation, it has been providing services like banking; leasing, housing, and general finance; credit and access card facility; investment banking; international banking; wealth and funds management; custodian trustee and nominee services. The company has been operating with five segments: Consumer Banking and Wealth for providing access to independent advisors to customers; Business and Private Banking for providing NAB business franchise and specialist services; Corporate and Institutional Banking for supporting financial and debt capital market, custody and alternative investment; NZ Banking for providing retail, business, corporate and institutional services in New Zealand and Corporate and Other Functions related to treasury, technology and other supporting functions (Fo
es Media LLC, XXXXXXXXXXThe company has been in business for so long due to its ability to build relationships with the customers along with being good at managing money. And now the company is one of the leading banks in Australia being the third largest bank in Australia (Australian Associated Press, 2020).
B. Return on Investment (ROI) and ways to improve ROI
Calculation of return on investment
XXXXXXXXXXReturn on investment is a tool for measuring business gain from the use of capital or investment. So, it measures the efficiency of the investment and is also used to select an investment from the analysis of various investment alternatives (Botchkarev & Andru, XXXXXXXXXXSo, ROI evaluates the net financial benefits of an investment and areas of investing in the organization’s resources. In other words, ROI measures the costs of the investment against the returns obtained from that investment.
The return on investment for NAB is calculated as per the given formula as:
ROI= Net profit/total assets
Table 1: Calculation of ROI of NAB
Yea
2019 ($ m)
2018 ($ m)
Net Profit
4,798
5,554
Total Assets
847,214
806,510
ROI (Net Profit/Total Assets)
0.57%
0.69%
Source: National Australia Bank Limited, Annual Financial Report 2019
Total Assets are considered as the total amount invested by the company and from table 1, it is found that the ROI of NAB is near to zero. It means that in 2018, the company’s investment could only generate 0.69% of total investment as earnings and in 2019 it further reduced to 0.57%. This indicates that the company could not even generate $1 on investment of $100. So, the company has not been efficient to utilize its investment productively.
Ways to Improve ROI
XXXXXXXXXXThe revenue of NAB in 2019 was $30 billion where its total assets were $869 billion (National Australia Bank Limited, 2019) which shows a huge gap and it has caused low ROI of NAB. So, the company could improve its ROI by increasing its revenue or by reducing its costs. To increase revenue for NAB, the company needs to provide new banking and financial product or services to the customers as per their needs and expectations. The company could use predictive analytics, surveys, conjoint analysis, and journey maps to understand the customers and their needs, wants, and expectations so that new banking and financial products and services could be introduced and provided to the customers that could increase the revenue. But a focus should be made on not increasing the cost of introducing new products or services.
The other way to increase revenue is through marketing. And a special focus needs to be given to internet-based marketing in this digital age. NAB offers a variety of products and services to different customers due to which relevant messages are required to be communicated to the right customer. Thus, direct mail would be an appropriate option to communicate about the company’s products and services that are needed by that customer. Email marketing would not be the best option for NAB as customers receive hundreds of promotional emails daily and NAB’s email may not be considered by the customers. Content marketing aligned with pay per performance marketing would be another marketing strategy that the company could use to increase revenue. Top-quality and relevant content that keeps the customers engaged could enable more people to view the content. So, an entertaining, relevant, educational, and informative content could increase the probability of buying the company’s product or service by the customer that increases the revenue and thus, helps in increasing ROI.
The other variable that could help to increase the ROI of NAB is by reducing the costs of the company. For this, NAB needs to identify the value-adding and non-value adding activities in the company so that non-value adding activities that had been incu
ing cost could be eliminated from the company. For the identification of such activities, NAB can use the value chain model proposed by Michael E. Porter or introduce lean thinking in the company. So, as the costs are reduced, returns will increase, and it will improve the ROI of the company.
C. Balanced scorecard definition and its components: -
The balanced scorecard (BSC) is defined as a management system used by most organizations to communicate the aims and goals of the company and assigned day to day activities to the lower level management to improve internal and external communication and to monitor the performance against strategic goals (Kaplan, 1992)c. This system helps to choose the right option to obtain the goal to reach a bigger picture of strategies. BSC helps to get away from the traditional view of the market(short-term) to a balanced view (long run) performance where business lasts in the market for longer than determined and expected.
Balanced scoreboard focused on high- and low-level measures apart from management methods where strategies are taken and
oken into actionable steps to ca
y on the day to day activities. Along with that, Balanced scorecard links performance measures such as: -
a. How do customers see us?
. What must we excel at?
c. Can we improve for a great value?
d. Shareholders position?
For example: - Balanced scorecard is used by NAB’s short term incentive plan to approach and rewards the employees using scorecard objectives delivered by NAB’s strategy and values. NAB employees are rewarded using a balanced scorecard of customers' feedback, type of risk, quality of the product, and financial position of the company. Mr. Dean stated that they started using a balanced scorecard approach to measure and reward the staff based on ‘how’ the staffs demonstrate NAB’s values and not just ‘What’ (Anon., 2018).
Advantages of Balanced scorecard have some benefits such as: -
a. It helps to evaluate performance measures at all levels of organizations
. Provision of details of business about how, when, and where the business performance is being done.
Disadvantages of the balanced scorecard: -
a. Inco
ect decision making for long term basis such as loss of quality, loss of custome
. The measurement of non-financial performance is not possible with a traditional performance system.
Balanced scorecard components are a tactical tool and technique used to
ing the company’s performance towards its objectives and develop communication to monitor the goals of the organization. These components are used to evaluate other aspects like customer problems, learning tools, etc (Anon., n.d.). The balanced scorecard is divided into 4 main components and the balance among these components guarantees the company’s success. The main purposes of the balanced scorecard are: -
a. To strengthen great conduct by assembling 4 separate regions such as legs, learning and development, business procedure, clients, and money.
. To utilize estimation, destinations, and objectives.
Diagram of balanced scorecard key components: -
These components are described below: -
Financial component: - These components consist of investment and operating cost of the company such as: -
a sales revenue (increase in revenue/income)
lower operating costs
c