BSC Analysis Bae Balanced Scorecard Performance Management Essay

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BSC Analysis

BAE Balanced Scorecard Performance Management Implementation

Facing the daunting challenge of staying competitive in rapidly consolidating industry segments of aerospace, defense and commercial aircraft components and assembly manufacturing and service, senior management at BAE Systems chose to completely re-architect the company. The comprehensive change programme included dismantling the global conglomerate and replacing its structure with a series of interlocking businesses that would strengthen and support each other, generating greater competitive advantage than the current structure allowed for (Murby, Gould, 2005). As British Aerospace had been privatized in 1979, and with the acquisition of Marconi Electronic Systems in 1999 the company changed its name to BAE Systems and become Europe's largest defense contractor and the second leading defense contractor in the world (Murby, Gould, 2005). Through both acquisitions and organic growth, the company had grown to over 100,000 employees in nine global markets including the UK, USA, Sweden, Saudi Arabia, France, Italy, Germany, Australia and Canada and had attained annual sales of £12 billion and an order backlog of £41 billion (Murby, Gould, 2005). Despite this significant success however the company was unable to sustain long-term growth and began to see a decline in revenues. These problems were addressed with major improvements in their control systems, upgraded manufacturing systems and machines, more of a focus on activity-based costing and systems analysis yet none of these strategies delivered sustainable long-term results (Murby, Gould, 2005).

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Senior management chose to implement a corporate-wide structural realigning of divisions including the most advanced Balanced Scorecard (BSC) initiative undertaken in the history of the company.

Analysis

Balanced scorecards (BSC) are most often used for aligning operational performance with strategic objectives and direction of an enterprise. The more advanced a BSC initiative, the more precisely they can determine the cause of variations between planned and achieved performance. Strategic BSC frameworks can provide insights into the operational level of a business and ensure the congruity or variance of operations and department-level performance relative to plan (Sim, Koh, 2001). The focus of BSC initiatives tend to be more on measuring and accounting for variation in performance relative to strategy, leaving little room for taking into account change management initiatives and programs overall (Sim, Koh, 2001). Often BSC programs are also seen as unwelcome reports cards or metrics on overall performance, not as a means to continually fuel greater levels of personal and corporate performance over time. These are factors that BAE Systems was well aware of in how they planned and implemented their own approach to….....

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