HO CHI MINH UNIVERSITY OF BANKING ESSAY ON STRATEGY MANAGEMENT TOPIC: Applying The Balanced Scorecard BSC to The Evaluation and Control of Strategies at Phu Nhuan Jewelry Joint Sto
Specific Objective 18 n6 a aa
- To establish a theoretical framework system and research the process of strategic evaluation
- To identify the factors affecting the effectiveness of the strategy and build a set of key performance indicators for strategic evaluation
- Based on the above research analysis, to propose solutions to improve and adjust the strategy, and to suggest solutions to optimize the strategic adjustment process.
CHAPTER 2 FUNDAMENTAL ISSUES IN STRATEGY EVALUATION AND CONTROL AND
Overview of Strategy Evaluation and ConiroI che 9
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Strategic evaluation and assessment involves identifying issues that impact strategy implementation by comparing initial business standards with current performance This process utilizes theory, research, and comparative analysis to determine the causes of any deviations, leading to warnings and recommendations Consequently, businesses can make timely and flexible adjustments or develop entirely new campaigns to align operations with their vision and mission.
Determine Establish )ossng perfor- what to predetermined mance match measure standards performance stan- dards?
Figure 2: Strategic Evaluation and Review Process
2.1.2 Role and Objectives of Strategic Evaluation and Review
Strategic control and evaluation are essential components of the strategic management process, focusing on measuring and assessing outcomes, implementing corrective actions to meet strategic objectives, and adapting to changing environmental conditions.
Sometimes, a strategy may seem logical and sound, but it may prove ineffective during implementation due to several reasons such as a lack of resources or outdated information
Role and Obiectives of Strategic Evaluation and Review c.àeei 9
During the strategy implementation phase, businesses must consistently engage in monitoring and evaluation activities to make necessary adjustments This ongoing process aims to assist companies in identifying key performance indicators and areas for improvement.
- Deviations from the business's goals, mission, operating methods, strategy implementation, and adjustment solutions in previous strategies
- The direction and impact level of deviation s
- The factors causing deviations and reducing the organization's operational efficiency
- Proposed measures to adjust operations or strategies.
Objects of strategy evaluation and audit che 10
To evaluate and audit strategies, the following audit groups are commonly used:
- Independent groups: These are private entities that provide services to organizations and charge service fees Independent groups use a set of common audit standards
- Government groups: These are government auditors responsible for ensuring that organizations comply with laws and state policies.
Forms of Strategic COTntrOl - ch nh TH HH HH hệt 10
Implementation Plan REVICW : cece ee HH nh ky 11
Evaluating a company's overall strategy involves assessing the outcomes and performance of its gradual implementation This process emphasizes the importance of monitoring various steps, programs, investments, and actions over an extended period to ensure alignment with the established strategy.
This review aims to assess the activities within operational projects to align with the overarching strategic goals It enables the business to evaluate operational effectiveness at key milestones; if performance is satisfactory, the strategy should be maintained; if not, adjustments are necessary to enhance operational efficiency.
Overview of PN ch KH kh kh KH kg key 12
History of Formation and Developmeri . nhe 12
Founded on April 28, 1988, PNJ (Phu Nhuan Jewelry Joint Stock Company), originally known as "Phu Nhuan Gold and Silver Trading Store," has successfully operated for 36 years in Vietnam's evolving jewelry industry Despite starting in a challenging market, PNJ has grown to become a significant player, boasting total assets of nearly 2 trillion VND.
- The history of PNJ's formation and development can be divided into five phases: Formation and Strategy Definition (1988 - 1992)
Network Expansion and Business Diversification (1993 - 2000)
Brand Relaunch and Development of Premium Brands (2005 - 2008)
F5 - Refreshing to Create New Milestones (2018 - 2022)
+ Production and trading of jewelry made from gold, silver, gemstones, fashion accessories, and souvenirs
+ Business in watches and trading of gold bars; exporting jewelry made from gold, silver, and gemstones
+ Diamond, gemstone, and precious metal testing services
Vision, Mission, and Core Values of PNU .- Hs Hs rehe té 13
Phu Nhuan Jewelry Joint Stock Company (PNJ), founded by Ms Cao Thi Ngoc Dung, aims to become the leading jewelry crafting and retail company in Asia, celebrating the beauty of Vietnamese women Understanding the importance women place on their appearance, PNJ is dedicated to crafting jewelry that honors this beauty With a clear vision and ambitious goals, PNJ develops refined strategies to maintain focus and achieve its objectives, ensuring it meets global standards in the jewelry industry.
PNJ is dedicated to continuous innovation, offering exquisite products that embody true value and celebrate beauty in life With a clear mission that outlines its strategic vision, the company effectively determines its future direction As a leading jewelry brand in Vietnam, PNJ fulfills customer demands through superior quality, diverse designs, and meaningful messaging Despite its market dominance, PNJ remains committed to innovation, consistently enhancing existing products and developing new offerings to satisfy both domestic and international customer needs.
PNu's core values focus on integrity, goal orientation, mutual growth, customer satisfaction, and innovation PNJ emphasizes five key factors that create the company’s unique value
PNJ places a strong emphasis on integrity as a cornerstone of its operations, prioritizing honesty in all customer interactions, including products and services By fostering a culture of integrity, PNJ not only builds lasting trust with its customers but also paves the way for sustainable growth and ongoing development.
-. Second, PNU highlights perseverance in pursuing its dreams and goals, not allowing the company to give up but always striving to develop alongside them
- Next, PNJ aims not only to develop independently but also to share common benefits with everyone and society, addressing issues like environmental protection and other community activities
- Fourth, PNJ seeks to lead in creating differentiation compared to competitors When people think of PNJ, they associate it with a unique and prestigious jewelry brand
PNJ is dedicated to prioritizing customer care, focusing not only on producing high-quality products but also on enhancing customer satisfaction throughout the shopping experience This commitment has established PNJ as a reputable and esteemed brand in the market.
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Overview of the balanced scorecard BS LH HH HH ki 17
The balanced scorecard serves as a crucial tool for leaders to transform vision and strategy into measurable performance indicators While numerous companies utilize mission statements to convey their core values and beliefs, these statements must be linked to a shared vision to be genuinely inspiring Peter Senge has identified that many leaders struggle to establish this connection.
Norman Chambers, CEO of Rockwater, spearheaded a two-month initiative with senior leaders and project managers to create a comprehensive mission statement Following its release, he received feedback from a project manager eager to embody the statement's spirit However, Chambers recognized a significant disconnect between the mission's theoretical ideals and the everyday practices of employees.
The Balanced Scorecard effectively translates an organization's mission and strategy into clear objectives and metrics across four key perspectives: Financial, Customer, Internal Processes, and Learning and Growth It serves as a common language for communicating the mission, utilizing measurement to inform employees about success drivers Rather than functioning solely as a control tool, the Balanced Scorecard acts as a communication and learning system, aligning individual and organizational initiatives towards shared goals This approach fosters a balance between long-term and short-term objectives, ultimately enhancing overall performance.
Vision Transforming society through ease of access to ultra-high speed mobile information services
Purpose Deliver the best ivity and inf ion services ibuting to i living while behaving ethically and responsibly
Strategic on vê Content Partnerships Customer Service % Brand Awareness
Strategic Strong supply chain for content and Clarity in offering that surpasses anything in Reinvigorated brand based on successes,
Results information services, exclusive agreements the market today, best user interface attract a wider and younger audience
Financial + Net profit * † 5% per year + Implement new financial
+ Operating costs * | 3% per year accounting system
— + Revenue in target * 1 12% per year * Simplify billing operations markets
Customer + % Market share + 1 3% per year + Competitive end user index requirements market studies
* % Customer * 85% this year for new UK regions satisfaction index * “Improve the Offering” two
* _ Focus groupuser + > 90% each focus year programme dex session
Internal + New products as% - 12% this year + Create improved offering of sales selection process
Processes atta Tớ awareness * † 5% per year * Hook into ‘Improve the
= Cont efficiency + > 90% every * Training programme for new
\dex reporting period offerings and user interface
Organisational + Employee + 95% in place + Product and marketing
Capacity development plans training programme
T1 1 * Technology training * 90% efficient * 2 year content supply caren MÔ) Preise index agreements ơ + Supply chain + 95% + Technology improvement efficiency index programme
Customer Focus - Integrity - Quality - Helpfulness - Community - Efficiency
Figure 4 : The balanced scorecard model was first introduced
Aspects in the BSC model and cause-and-effect relationships
3.2.1 Aspects in the BSC model
The four perspectives of a “Balanced Scorecard include: Financial, Customer, Internal
Processes, innovation, and learning are essential for businesses to monitor financial performance and track the development of capabilities and intangible assets necessary for future growth (Kaplan & Norton, 2011) The Balanced Scorecard serves three primary functions: it acts as a measurement tool, facilitates strategy evaluation (Kaplan & Norton, 2011), and functions as an effective communication tool (Niven, 2002).
The effectiveness of the Balanced Scorecard (BSC) is enhanced when it evolves from merely a measurement tool into a comprehensive management system within an enterprise Achieving consensus among senior management is crucial, along with ensuring strategic communication of goals to all employees This approach aligns organizational objectives with individual goals, facilitates optimal resource allocation, and incorporates a system for regular strategic evaluations Additionally, it allows for necessary adjustments based on insights gained during the implementation and assessment of the strategy.
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Source: Kaplan & Norton, 2011 3.2.2 Causal relationships
Causal relationships in a strategy are essential for understanding cause and effect, requiring a measurement system that clarifies the connections between objectives and measures across various perspectives To effectively manage these relationships, it's crucial to encompass all four perspectives of the Balanced Scorecard For instance, return on capital employed (ROCE) serves as a key financial measure, with customer loyalty identified as a significant driver of ROCE due to its influence on repeat revenue Thus, customer loyalty is highlighted in the customer perspective of the Scorecard, underscoring its impact on overall financial performance.
To foster customer loyalty, timely delivery (OTD) is crucial, as it significantly impacts financial performance Organizations must identify and optimize internal processes to enhance OTD rates This involves reducing cycle times and improving process quality, which are essential elements from the internal process perspective Additionally, investing in employee training and skill enhancement is necessary to support these improvements, aligning with the goals of the learning and development perspective.
A well-structured Balanced Scorecard effectively communicates strategy and clarifies the connections between outcomes and performance drivers, enabling the entire organization to comprehend and implement the intended strategy.
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Figure 6: Cause and effect relationships between BSC aspects
Establishing Performance Measurement Indicators (KPIs) in Combination with the
Key Performance Indicators (KPIs), which emerged in the 1980s, are essential tools for measuring work effectiveness through quantitative data and ratios, as highlighted by Peter Drucker's principle that "what gets measured gets managed." These performance evaluation systems reflect the effectiveness of an organization, department, or individual and are utilized across diverse business models and industries KPIs are adaptable to meet specific organizational needs while consistently serving the primary purpose of assessing work performance.
The integration of Key Performance Indicators (KPIs) in business management has emerged as a crucial trend, enabling leaders to effectively measure and evaluate performance By periodically tracking KPIs, organizations can assess their progress towards achieving specific goals, ensuring continuous improvement and strategic alignment.
According to David Parmenter (2020), KPIs connect daily activities with the organization's success factors, supporting the alignment of all internal efforts towards predetermined directions
There are four main types of measurement indicators: Key Result Indicators (KRI), Result Indicators (Rl), Performance Indicators (Pl), and Key Performance Indicators
Key Risk Indicators (KRIs) quantify business actions, enabling companies to monitor progress toward both financial and non-financial goals Reporting Levels (Rls) provide a summary of group performance, offering insights into specific areas Performance Level Indicators (PLs) focus on non-financial operational metrics, typically assessed on a regular basis Key Performance Indicators (KPIs) are essential for measuring organizational objectives and evaluating work effectiveness through quantitative data.
3.3.2 Process and Requirements in Establishing KPIs
The goal of KPls is to succinctly communicate results, enabling managers to make strategic, evidence-based decisions
"Strategic focus" necessitates that KPIs align with the company's strategic objectives, ensuring that all evaluation criteria effectively assess the achievement of these goals This alignment does not imply that activities lacking KPIs are overlooked; instead, they serve as the essential groundwork for realizing desired KPI outcomes.
Key performance indicators (KPIs) can be categorized as internal or external, with internal KPIs focusing on departmental goals that support the company's core objectives, while external KPIs evaluate departmental performance in relation to overall company goals To effectively implement KPIs, they should be deployed in a "waterfall" model, cascading from the company level down to individual departments and positions, becoming increasingly specific and less impactful as they progress, thereby motivating employees to achieve essential business objectives Moreover, the establishment of goals and sub-KPIs should follow the "SMART" criteria—Specific, Measurable, Attainable, Realistic, and Time-bound—first introduced by George T Doran in 1981 and later refined by Professor Robert S Ruben, ensuring that businesses set clear and measurable targets.
21 attainable, realistic, and time-bound Specifically, the significance of the criteria in supporting businesses to establish measurable goals:
Goals need to be clearly defined
Goals should be measurable, assessable, and able to aggregate specific data Goals must be attainable
Goals should be within the organization's capabilities and resources
Goals must have a specific timeframe.
Setting Objectives and Developing the Corporate Strategy Map for PNU 22 3.5 Process of Implementing and Developing Indicators and Metrics in the Balanced Scorecard Model at PNJ LH KH KH KH KĐT kh tk“ 23
Astrategy map helps management visualize the cause-and-effect impacts of investments from the development aspect to the improvement of the company’s financial results
The author integrates Key Performance Objectives (KPOs) into a Strategy Map, aligning them with the four perspectives of the Balanced Scorecard (BSC) to illustrate the cause-and-effect relationships among the company's goals This approach highlights the interconnectedness of objectives across various dimensions, ensuring they meet leadership expectations By incorporating KPOs into the Strategy Map, redundancies are removed, allowing the company to concentrate on essential capabilities and core objectives critical to its strategic direction.
The Strategy Map for PNJ, endorsed by expert consensus and management approval, effectively outlines the connection between Key Performance Objectives (KPOs) from 2012 to 2022 This framework demonstrates how interrelated goals support the company's overall strategy, highlighting the cause-and-effect relationships among the four critical dimensions: "Learning and Growth," "Internal Process," "Customer," and "Financial."
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