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Financial Perspective, Capstone Project Example

Pages: 2

Words: 643

Capstone Project

The organization selected for the purpose of this analysis is Wal-Mart Supermarkets Incorporation whose mission is “To be a market-leader in retail sales by providing goods and services to the customer satisfaction”. Wal-Mart has the vision “Excellence in retail selling with the ultimate goal of satisfying the customer wholly”. The company develops its strategies from the approach of Balanced Scorecard. It has developed strategies from four perspectives: Financial perspective perspectives, Customer perspective, Internal business processes perspective as well as Innovation and Learning perspective. These four perspectives wholly capture the richness of the Balanced Scorecard. Each of the perspective however is fulfilled by the strategies differently formulated from that of the other, though they ultimately complement each other because the goal is the same (Robin, ND).

For instance, in Wallmart the financial perspective strategy is to use financial means to achieve higher growth-revenue mix, reduce cost to minimum and improve productivity as well as achieving higher levels of asset utilization and investment strategy. On the other hand, customer strategy endeavors to achieve higher business performance through targeted business segments as to time, quality and value creation as well cost, from the viewpoint of the customer. In both the overall goal is to generate the highest return possible as the company’s market share widens.

Ample data and information about Wal-Mart financial perspective is accessible. The organization has the following three financial perspective objectives:

  • To achieve the highest possible revenue growth and expansion in the revenue mix
  • To reduce cost to the minimum and improve productivity
  • To improve asset utilization investment strategy

Growth in revenue and its mix goes to increase the retail sales of the Wal-Mart while cost reduction and productivity improvement reduces cash wastage and level of defects within the organization. Improvement in asset utilization and investment strategy reduces the cost of production in general thereby enabling the organization to offer products at lower prices hence increasing sales revenue (Greenhalgh, 2004).

Each of these objectives can be measured metrically which enable the management to assess progress as the activity continues. The revenue growth and mix objective can effectively be measured using Sales growth. The cost reduction and improvement in productivity, on the other hand, can be measured by the Economic value added to the organization. Finally, asset utilization and investment strategy improvement objective is measured using, ROCE (return on capital employed), ROE (return on Expenditure), ROI (Return on Investment) as well as a Economic value added (Niven, N.D.).

The Wal-Mart Company envisages achieving at least 10% increase in revenue growth and mix and at least 5% reduction in cost and level of defect, and to improve asset utilization and investment strategy by at least 8% within the next one year. To achieve this Wal-Mart will categorize the business sections as business units and then assign status to them according to a certain criteria. Money generating units will be increased while cost monitors and quality control measures will be installed. Finally, machine idle-time will be reduced to minimum as well as allocating more funds to money generating lines.

 

Objective Measure Target Action
Revenue growth and mix

 

Sales growth 10% increase in sales from the current level Increase fund allocation on money generating lines
Cost reduction and productivity improvement

 

Economic value added in terms of customer prices and reduced level of defects 5% reduction in costs and level of defects Install cost monitors and quality control systems
Asset utilization and Investment strategy improvement

 

ROCE (Return On Capital Employed) 8% improvement in asset utilization and investment Reduce machine idle-time and increase investment allocation in generating lines

 

References

Greenhalgh, C. (2004). Building a Strategic Balanced Scorecard: Saatchi & Saatchi Complementary Case Study. Business Intelligence Company.   Available at http://www.business-intelligence.co.uk/PDFdownloads/strat_bsc/Saatchisr.pdf accessed on October 7, 2011

Niven, P. (N.D.). Financial perspective.  EPM Review.  Available at            http://www.epmreview.com/Resources/Articles/Delivering-shareholder-value-growing-revenue-and-enhancing-productivity.html accessed on October 7, 2011

Robin, D. (ND). Vision, Mission and Values: Management Tools for Building a Better Workplace. Available at http://www.abetterworkplace.com/027.html, accessed on October 7, 2011

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