Investigating the possibility of using a balanced scorecard to implement its strategies in Saipa Automobile Company

Dissertation for Master's Degree

Field: Executive Management

Strategy: Strategic

Abstract

The purpose of this research is to investigate the possibility of using a balanced scorecard to implement its strategies in Saipa Automobile Company. Balanced scorecard is one of the performance evaluation techniques of organizations that evaluates the organization from four perspectives: financial, customer, internal processes and learning and growth. The main problem in organizations is the implementation of the developed strategy. A balanced scorecard eliminates the gap between strategy formulation and implementation. The research site of Saipa company and the statistical population includes 58 senior managers, middle managers, executives working in Saipa company. Descriptive-survey research method and data collection tool is questionnaire and library studies and statistical method is inferential statistics. The results of the research indicate that it is possible to implement a balanced evaluation by using a balanced scorecard in Saipa Company. And by using this technique, it is possible to overcome the obstacles of strategy implementation in Saipa company.

Key words: balanced scorecard, strategy, SAIPA, organization

Chapter one: General

1-1- Introduction

Many definitions have been provided about organization. The classics emphasize the role of structure in the organization, and the neoclassics pay basic attention to people. Mechanical organizations, organic organizations, learning organization, organization as a culture and different types of other definitions that look at the organization from different angles. But one of the interesting metaphors about the organization is the analogy of the organization to human beings, in this way of thinking, the organization is seen as a living being. But in all living beings, especially humans, there are factors that are called vital signs. Does the organization also have vital signs? As human blood pressure and pulse can carry the message of life and death, can it be known about the health or lack of health of the organization by measuring the pulse and blood pressure of the organization? The balanced scorecard framework is one of the new and useful methods that enables strategic control in the organization based on its vital factors.

1-2- Research title:

Investigating the possibility of using a balanced scorecard to implement its strategies in Saipa Automobile Company

1-3- Statement of the problem:

Until a few decades ago, strategic planning and strategy development had no meaning and meaning for organizations, and organizations only They were doing operational planning and maybe they have achieved some successes. But after that era, especially from the 1970s onwards, organizations came to the conclusion that they cannot continue their activities with only operational planning. Because the new economic developments, including the increase in inflation and unemployment, competition between organizations and the importance of services in the economy, caused organizations to turn to strategic planning and formulation of strategies to solve problems. Because no organization has the full ability to shape the environment in which it works. But he can create situations and get the best opportunities from them. The duty of management is to always see the company as it can be. Not as it is now (Cutler, Principles of Marketing, 86)

But implementing these strategies formulated in strategic planning is difficult because there are many obstacles in the way of implementing each strategy, including technical obstacles, skill obstacles, and structural obstacles. Many methods have also been proposed to overcome the obstacles to the implementation of strategies. One of the proposed methods is called the balanced evaluation technique, which was presented by Kaplan and Norton in 1992. Based on Kaplan and Norton's theories, the balanced evaluation method enables companies and organizations to eliminate the significant gap that used to occur between the phases of strategy formulation and implementation. They believed that this lack of correct communication between the stages of strategy formulation and implementation is caused by the following obstacles: 1-3-1- The first obstacle: the vision and strategies are incomprehensible. 1-3-2- The second obstacle: The lack of connection between strategies and the goals of the roles, groups and people of organizations.  

1-3-3- The third obstacle: the lack of connection between strategies and the allocation of short-term and long-term resources of the organization.

1-3-4- The fourth obstacle: receiving tactical feedback instead of strategic feedback (that is, the feedback that exists is based on skill, not based on strategy). (Kaplan and Norton [1], 1996)

Based on the above 4 obstacles with 5 hypotheses, this research tries to determine whether it is possible to use the balanced evaluation technique to overcome the obstacles to the implementation of Saipa Automobile Company's strategy? Basically, organizations try to create a satisfying cycle within themselves, the correct implementation of such a cycle is in its correct evaluation. In this regard, the balanced evaluation technique is one of the first techniques that has paid attention to the importance of evaluating the organization's performance and activities. The traditional performance evaluation system was mainly based on financial metrics. At first, absolute financial indicators such as total income, net income, operating profit and net profit were used to evaluate operations. With the passage of time, and the expansion and complexity of the organization's activities, the use of relative financial metrics, such as return on investment and residual income, became popular. In recent decades, models such as economic added value and cash flows were introduced as more suitable criteria for evaluating the results of operations. (Namazi, 2016, 56)

In traditional performance evaluation systems, on the one hand, all the evaluation criteria are financial and purely quantitative, and they basically indicate a quick summary of the operations and activities of an organization, and in some cases, they are so cumulative that they can only be used for certain levels of managers and employees. Also, the financial criteria in the fields that are able to be evaluated, indicate the historical events of the past and because they are often obtained with a delay, it does not provide complete information in the field of accountability and obligations of the organization towards shareholders and beneficiaries, and introducing the best annual, six-monthly and even monthly performance results is not a reason for the continuation of these results in the future. Traditional financial statements at their most advanced levels are able to reflect the performance of different units and departments of an organization, which is obtained by summing up the performance of the entire organization. And they don't have the ability to reflect the effects of cooperation between different units, and this is despite the fact that today most of the value-creating activities of organizations are the result of cross-functional cooperation, and traditional financial systems are not able to calculate the real value or the cost of these cooperations in relationships (Bakhtiari, 2016). They pay attention and do not rely on structures and processes that create financial returns. Meanwhile, optimal performance evaluation systems should be based on long-term reviews and factors that include future planning. In addition to the limitations of the traditional method of performance evaluation, the acceptance of the principle of customer orientation and customer satisfaction by organizations, the importance or fascination of intangible assets in organizations and the valuation of organizations based on intangible assets (such as customer satisfaction, improving the quality of service provision, the use of efficient human resources), the emergence of new information technologies, new changes in the field of service delivery, as well as the new demands of organizational customers have caused the use of traditional evaluation techniques to avoid problems and therefore support management programs and Especially the strategic plans of the organization are weak. Therefore, in this research, financial perspectives are not enough to advance performance and a more balanced approach is necessary. Balanced evaluation techniques in this method refer to the following: 1) Balance between financial and non-financial criteria 2) Balance between short-term and long-term goals 3) Balance between internal and external stakeholders, i.e. employees, customers and shareholders

4) Balance between leading indicators (prospective performance indicators) and functional or outcome indicators (financial and retrospective indicators)

5) Balance between internal and external perspectives

It will not be possible to formulate and implement targeted strategies, regardless of the internal and external forces affecting automobile companies, including Saipa Automobile Company. Because the main philosophy of balanced evaluation from the beginning to the end emphasizes on strategic management and creating strategy-oriented organizations and it is used as a tool to realize the strategy.