Module 4

Value-based management

1. Give Russian equivalents to the following words to tailor objectives, to boost earnings, analytical techniques, balance sheet,

income statement, to have an effect on, to quantify, specific targets, revenue growth, the right option, line managers, acquisition, merger, improve margins, target setting, performance measurement, incentive system, return on investment

2. Give English equivalents to the following words

поглощение компании, разница между ценами, система поощрений, отчет о финансовом положении, отчет о доходах, стратегические оперативные решения, денежный поток, влиять на стоимость компании, оценка работы компании, слияние компаний, доходность капитала, подогнать цели к потребностям клиента, выразить в цифрах

3. Before you read the text answer the questions.1. Do you know how to improve management of a company?2. Have you read anything about Value-based management?

Text 4A

Value-based management

Recent years have seen new management approaches for improving organizational performance. Many have succeeded - but quite a few have failed. Often the cause of failure was performance targets that were unclear or not properly aligned with the ultimate goal of creating value. Value-based management (VBM) tackles this problem head on. It provides a precise value upon which an entire organization can be built.

The value of a company is determined by its discounted future cash flows. Value is created only when companies invest capital at returns that exceed the cost of that capital. VBM extends these concepts by focusing on how companies use them to make both major strategic and everyday operating decisions. Properly executed, it is an approach to management that aligns a company's overall aspirations, analytical techniques, and management processes to focus management decision making on the key drivers of value.

VBM is very different from 1960s-style planning systems. It focuses on better decision making at all levels in an organization. It recognizes that top-down command-and-control structures cannot work well, especially in large multi-business corporations. Instead, it calls on managers to use value-based performance metrics for making better

decisions. It entails managing the balance sheet as well as the income statement, and balancing long- and short-term perspectives.

When VBM is implemented well, it brings tremendous benefit. It is like restructuring to achieve maximum value on a continuing basis.

Yet value-based management is not without pitfalls. It can become exercise that has no effect on operating managers at the front line or on the decisions that they make.

The focus of VBM should not be on methodology. It should be on the why and how of changing your corporate culture. A value-based manager is as interested in the important details of organizational behavior as in using valuation as a performance metric and decision-making tool.

Examples of VBM’s impact

When VBM is working well, an organization's management processes provide decision makers at all levels with the right information and incentives to make value-creating decisions. Take the manager of a business unit. VBM would provide him or her with the information to quantify and compare the value of alternative strategies and the incentive to choose the value-maximizing strategy. Such an incentive is created by specific financial targets set by senior management, by evaluation and compensation systems that reinforce value creation, and - most importantly - by the strategy review process between manager and superiors. In addition, the manager's own evaluation would be based on long- and short-term targets that measure progress toward the overall value creation objective.

VBM operates at other levels too. Line managers and supervisors can have targets and performance measures that are tailored to their particular circumstances but driven by the overall strategy. At the top of the organization, on the other hand, VBM informs the board of directors and corporate center about the value of their strategies and helps them to evaluate mergers and acquisitions.

Value-based management can best be understood as a marriage between a value creation mindset and the management processes and systems that are necessary to translate that mindset into action. Taken alone, either element is insufficient. Taken together, they can have a huge and sustained impact.

A value creation mindset means that senior managers are fully aware that their ultimate financial objective is maximizing value; that they have clear rules for deciding when other objectives (such as employment or environmental goals) outweigh this imperative; and that they have a solid analytical understanding of which performance variables drive the value of the company. They must know, for instance, whether more value is created by increasing revenue growth or by improving margins, and they must ensure that their strategy focuses resources and attention on the right option.

Management processes and systems encourage managers and employees to behave in a way that maximizes the value of the organization. Planning, target setting,

performance measurement, and incentive systems are working effectively when the communication that surrounds them is tightly linked to value creation.

The first step in VBM is value maximization as the ultimate financial objective for a company. Traditional financial performance measures, such as earnings or earnings growth, are not always good proxies for value creation.

Companies also need nonfinancial goals - goals concerning customer satisfaction, product innovation, and employee satisfaction, for example - to inspire and guide the entire organization. Such objectives do not contradict value maximization. On the contrary, the most prosperous companies are usually the ones that excel in precisely these areas. Non-financial goals must, however, be carefully considered in light of a company's financial circumstances.

Objectives must also be tailored to the different levels within an organization. For the head of a business unit, the objective may be explicit value creation measured in financial terms. A functional manager's goals could be expressed in terms of customer service, market share, product quality, or productivity. A manufacturing manager might focus on cost per unit, cycle time, or defect rate. In product development, the issues might be the time it takes to develop a new product, the number of products developed, and their performance compared with the competition.

Even within the realm of financial goals, managers are often confronted with many choices: boosting earnings per share, maximizing the price/earnings and increasing the return on assets. We strongly believe that value is the only correct criterion of performance.

Notes to the text

1. value-based management – ценностно-ориентированное управление, нацеленное на создание стоимости

2. quite a few – большое количество3. to tackle the problem head on – занимать твердую позицию при

решении проблем4. discounted future cash flow – дисконтированные будущие денежные

потоки5. to invest at returns - получать отдачу от инвестированного капитала6. to align aspiration - объединить усилия7. key drivers- главные стимулы8. performance metrics - показатели эффективности9. staff-captured exercise – упражнение для персонала10. line-managers – среднее звено руководства

4. Answer the questions to the text.1. What do discounted future cash flows mean?2. What are the principles of VBM?3. What are the benefits of implementing VBM?4. What are the pitfalls of using VBM?

5. How does VBM operate at the management level?6. In what way do management processes and systems encourage employees

to work better?7. How must objectives be tailored to different levels of an organization?

Text 4B

Who would you rather work for?

Discuss these questions.

1) Which would you prefer to work for?a) A mail bossb) A female bossc) Either – you don’t have a preference2) What are the characteristics that are attributed to female managers?3) Which ideas do you agree with?

Women are more efficient and trustworthy, have a better understanding of their workforce and are more generous with their praise. In short they make the best managers. The survey of 1,000 middle and senior managers from across the US showed that women had a more modern outlook on their profession and were more open minded and considerate. A majority of those questioned believe that male managers are egocentric and more likely to steal credit for work done by others.

According to the research conducted by Management Today magazine women have become role models for managers. Male bosses were rated by their staff to be self-obsessed and autocratic. Female managers use time more effectively. They also appear to make good financial sense for penny-pinching companies (unwilling to spend money): most people would rather ask for a rise from a man. “If men want to be successful at work they must behave more like women”, said the magazine editor. So-called feminine skills are vital for attracting and keeping the right people.

Business psychologist John Nicholson is surprised by the survey’s findings, asserted that the qualities valued today in a successful boss are feminine, not masculine. Women make better bosses, because they are less status-conscious, conduct better meetings, are more effective negotiators and display greater flexibility.

Women are no longer scarce in the boardroom - they occupy a third of the seats round the conference table. Women directors are still relatively uncommon in older age groups, but among young directors the proportion is growing. In the past women who worked in management were encouraged to be more manly. It looks now as if the boot is on the other foot.

The boot is on the other foot – a situation has changed so that somebody now has authority over the person who used to have power or authority over them.

Text 4C

Translate this text into English in writing

Value-Based Management – концепция управления, направленная на качественное улучшение стратегических и оперативных решений на всех уровнях организации.

Все люди, которые принимают решения, концентрируют все усилия на ключевых факторах стоимости. В рамках концепции VBM выбирается максимизация стоимости компании. Стоимость компании определяется ее дисконтированными будущими денежными потоками. Новая стоимость создается тогда, когда компания получает такую отдачу от инвестированного капитала, которая превышает затраты на привлечение капитала. Для того, чтобы управлять чем-либо, необходимо это измерять: это означает, что необходим инструмент, позволяющий оценить результат от инвестированного капитала. Мы можем определить основные факторы, влияющие на стоимость компании. Эти факторы должны учитываться при создании стоимости – затраты на собственный и заемный капитал и доходы. Доходы генерируются существующими активами и могут выражаться в различных формах: прибыль, денежный поток и.т.д.

В 80-х – 90-х годах появился целый ряд показателей, отражающих процесс создания стоимости.

Market Value Added (MVA)

MVA - самый очевидный критерий создания стоимости, рассматривающий в качестве последней рыночную капитализацию и рыночную стоимость долгов компании.

MVA рассчитывается как разница между рыночной ценой капитала и инвестированным в компанию капиталом:

MVA = Рыночная стоимость долга + рыночная капитализация – совокупный капитал*

* следует учитывать, что в балансовую оценку совокупного капитала должны быть внесены поправки для устранения искажений, вызванных методами учёта и некоторыми учётными принципами. Данные поправки будут более подробно рассмотрены при описании показателя EVA.

С точки зрения теории корпоративных финансов MVA отражает дисконтированную стоимость всех настоящих и будущих инвестиций.

Economic Value Added (EVA)Наверно, из всех существующих показателей, предназначенных для оценки

процесса создания стоимости компании, EVA является самым известным и распространённым. Причина этого в том, что данный показатель сочетает простоту расчёта и возможность определения стоимости компании, а также позволяет оценивать эффективность как предприятия в целом, так и отдельных

подразделений. EVA является индикатором управленческих решений: постоянная положительная величина этого показателя свидетельствует об увеличении стоимости компании, тогда как отрицательная – о её снижении.

Cash Flow Return on Investment (CFROI)Одним из недостатков показателя EVA, рассмотренного выше, является

игнорирование денежных потоков. Данный недостаток устраняется при расчёте показателя CFROI:

CFROI = Скорректированные денежные притоки (cash in) в текущих ценах / скорректированные денежные оттоки (cash out) в текущих ценах

Другим преимуществом данного показателя по сравнению с EVA является тот факт, что как денежные потоки, генерируемые существующими и будущими активами, так и первоначальные инвестиции выражаются в текущих ценах, т.е. учитывается фактор инфляции.

Вывод: в силу того, что каждый из рассмотренных показателей имеет свои ограничения и недостатки, а также потому, что область стоимостных показателей является относительно новой отраслью знаний, некоторые авторы предлагают комбинированное использование нескольких показателей при оценке процесса создания стоимости. На наш взгляд, такой подход не будет оптимальным, т.к. эффективность системы VBM может быть достигнута при подчинении всех значимых управленческих решений единой цели, что предполагает наличие единого критерия, на основе которого строится и оценка эффективности, и соответствующий стоимостной показатель исходя из соображений оперативности, выгод и затрат, связанных с получением информации, необходимой для его расчёта.

Mini-presentation

You are asked to give a short talk. Choose one of the topics from the three below and talk about it for three minutes.

1. How to encourage employees to work better.2. What are benefits and disadvantages of using VBM.3. Successful implementation of VBM.

Module 5

SWOT analysis

1. Give Russian equivalents to the following words and word combinations business venture, to set the objective, achievable goals, improve performance, to highlight, internal appraises, to determine relevance, strategy implementation, to amend

objectives, competitive advantages, impact on objectives, to compile lists, a profit-seeking organization, viability study, to be involved in a project, landscape analysis, underlying factors

2. Give English equivalents to the following words and word combinationsобъект исследования, внутренняя и внешняя среда, возможности и угрозы,

сильные стороны организации, ключевые факторы успеха, достичь цели, определить главные факторы, оценка данной ситуации, жизненный цикл товара, стратегические вопросы, ставить цели, делать поправки в целях

3. Before you read the text answer the questions.1. What do you know about SWOT analysis?2. What do the letters in the word SWOT stand for?3. What steps does SWOT analysis include?

Read the text, translate it and answer the questions

Text 5A

SWOT analysis

SWOT analysis (alternately SLOT analysis) is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.

Setting the objective should be done after the SWOT analysis has been performed. This would allow achievable goals or objectives to be set for the organization.

• Strengths: characteristics of the business, or project team that give it an advantage over others

• Weaknesses (or Limitations): are characteristics that place the team at a disadvantagerelative to others

• Opportunities: external chances to improve performance (e.g. make greater profits) inthe environment

• Threats: external elements in the environment that could cause trouble for the businessor project

SWOT ANALYSIS

Helpful Harmful

Inte

rnal

or

igin Strengths Weaknesses

Exte

rnal

or

igin Opportunities Threats

SWOT analysis, with its four elements in a 2x2 matrix.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs.

First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.

The SWOT analysis is often used to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development.

Matching and converting

One way of utilizing SWOT is matching and converting. Matching is used to find competitive advantages by matching the strengths to opportunities. Converting is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. An example of conversion strategy is to find new markets. If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.

Internal and external factors

The aim of any SWOT analysis is to identify the key internal and external factors that are important to achieving the objective. These come from within the company's unique value chain. SWOT analysis groups key pieces of information into two main categories:

• Internal factors - The strengths and weaknesses internal to the organization.• External factors - The opportunities and threats presented by the external

environment to the organization.

The internal factors may be viewed as strengths or weaknesses depending upon their impact on the organization's objectives. What may represent strengths with respect to one objective may be weaknesses for another objective. The factors may include all of the 4P's; as well as personnel, finance, manufacturing capabilities, and so on. The external factors may include macroeconomic matters, technological change, legislation, and socio-cultural changes, as well as changes in the marketplace or competitive position. The results are often presented in the form of a matrix.

SWOT analysis is just one method of categorization and has its own weaknesses. For example, it may tend to persuade companies to compile lists rather than think about what is actually important in achieving objectives. It also presents the resulting lists uncritically and without clear prioritization so that, for example, weak opportunities may appear to balance strong treats.

The importance of individual SWOTs will be revealed by the value of the strategies it generates. A SWOT item that produces valuable strategies is important. A SWOT item that generates no strategies is not important.

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired objective has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study.

SWOT - landscape analysis

The SWOT-landscape grabs different managerial situations by visualizing and foreseeing the dynamic performance of comparable objects.

Changes in relative performance are continually identified. Projects (or other units of measurements) that could be potential risk or opportunity objects are highlighted.

SWOT-landscape also indicates which underlying strength/weakness factors that have had or likely will have highest influence in the context of value in use (for ex. capital value fluctuations).

Corporate planning

As part of the development of strategies and plans to enable the organization to achieve its objectives, the organization will use a systematic process known as corporate planning. SWOT can be used as a basis for the analysis of business and environmental factors.

• Set objectives - defining what the organization is going to do• Environmental scanning Internal appraisals of the organization's SWOT, this needs to include an

assessment of the present situation as well as a portfolio of products/services and an analysis of the product/service life cycle

• Analysis of existing strategies, this should determine relevance from the results of an internal/external appraisal. This may include gap analysis which will look at environmental factors

• Strategic Issues defined - key factors in the development of a corporate plan which needs to be addressed by the organization

• Develop new/revised strategies - revised analysis of strategic issues may mean the objectives need to change

• Establish critical success factors - the achievement of objectives and strategy implementation

• Preparation of operational, resource, projects plans for strategy implementation

• Monitoring results - mapping against plans, taking corrective action which may mean amending objectives/strategies.

Answer the questions to the text

1. What is SWOT analysis used for?2. What steps does SWOT analysis involve?3. Why is it important to indentify SWOTs?4. What is a SWOT-landscape analysis?5. Could you enumerate the steps used in corporate planning?6. Why are internal and external factors important to achieve the objective7. What is the weakness of SWOT analysis?8. Can you determine the usefulness of SWOT analysis?

Read the text and answer the questions

Text 5BJapanese industry in Europe

The growing role of Japanese manufactures in Europe has attracted critical or even fearful comments. Japanese investment overseas started about thirty years ago. Japanese companies which had become cash-rich from their exporting activities realized that in order to expand markets overseas they needed investment sites, manufacturing sites within the markets. The first investment from Japan started in the US, and they started making all kinds of consumer goods. A second wave of investment was concentrated in East Asia, Korea, Thailand, the places where labor is very cheap but the quality of the skills available is high and education and resources are very good as well.

In terms of Japan’s total investment, the UK has attracted the lion’s shares, about 40%, followed by France. Even Iceland boasts a Sumitomo plant, though more of the executives are Japanese. The only major European country without a Japanese manufacturing presence is Norway. What matters to most investors is a good location for distribution, good infrastructure, quality of labor and availability of English speaking staff.

The government in Britain has been historically very much in favor of foreign investment. It has always has always been promoted in Britain. The cost of labor is a relevant factor. Now British labor is cheaper than labor in Germany. But the problem that they are finding at the moment is that there aren’t really enough engineers in Britain, skilled and highly trained people to fulfill the requirements of new investment.

That is starting to have an impact on new investment coming into Europe. Japanese companies are introducing their own management styles and working practices into Europe.

The thing is that the British culture and the Japanese cultures are quite different. Communications, social organizations, even language determine or have influence o n how a business will operate. Japanese companies have brought in the best practices, the best philosophies they can from Japan, but they have combined them with the best philosophies and practices that are available in the UK. You will find that if you go to

somewhere like Nissan, which is making cars in the north east of England, they are quite proud, and the British workers and the British managers there are quite proud to say that Nissan brought in a number of revolutionary ideas, but they have been implemented by British managers and they have been worked by British workers using a lot of lessons from British industry.

1. What did the Director of the Nissan Motor Company mean when he said, ”We have to globalize, and to globalize we must localize”?

2. Why have Japanese manufactures invested heavily in Europe in recent years?

3. What are the benefits and drawbacks of a Japanese presence in Europe?4. Would you like to work for a Japanese company? Give your reasons.

Text 5C

Render this text in English or translate in writing

Предприятие в процессе своей деятельность является открытой системой: оно тесно взаимодействует с окружающей его средой. Искать причины успехов и неудач фирмы только в ее внутренней организации было бы неправильно. Поскольку окружающая среда является поставщиком ресурсов и потребителем готовой продукции, она очень сильно влияет на деятельность фирмы. Следует анализировать факторы среды как объективного окружения фирмы с целью выяснения и предсказания возможностей и угроз с ее стороны. Инструментом такого анализа является методика SWOT - анализа. Это инструмент комплексного исследования внутренней и внешней среды организации, который предоставляет возможность выработки гибкой стратегии. SWOT - анализ позволяет производить комплексное тестирование маркетинговой среды для осуществления выбранной стратегии, согласно целям собственника, бюджету и наличию материальных и человеческих ресурсов.

Существуют некоторые модификации этой методики. Для оценки силы влияния факторов на предприятие используются количественные методики SWOT- анализа. SWOT - анализ не бывает абстрактным. Силы и слабости, возможности и угрозы – понятия относительные и зависят от времени, места и характера действий субъекта. Рыночные возможности во многом определяют стратегию компании. В зависимости от условий отрасли возможности могут быть как многообещающими, так и бесперспективными.

Mini-presentation

You are asked to give a short talk on one of the topics given below.

1. What threats should worry the manager and which strategic actions he/ she has to take?

2. Successful fulfillment of SWOT analysis.3. Opportunities which can give a company a chance of achieving success.

Module 6

The Balanced Scorecard as a strategic management tool.

5. Guess the meaning of the words from their description.1. tangible assets-assets which have material form and can be turned into cash2. intangible assets-assets which are valuable but not easily turned into cash3. critical-important, serious, crucial4. to gage-to measure? Calculate5. blueprint-a plan for managing the economy6. to traverse-to cross an area7. consistent-happening for a period of time8. to excel at sth- to be very good at doing sth9. allocation of resources- choosing the particular use to which a resources is

put10. to propel a company-to force a company to move in a particular direction11. insight-an understanding of what sth is like12. acquisition-the act of buying

6. Give Russian equivalents to the following words and word combinationsto contribute to sth, timely service, specific words and needs, to set forth the

goals, a common goal, insight, information environment, a blueprint, a business unit, cause-and-effect relationship, solely, to excel in sth, empowerment, alignment.

7. Before you read the text answer the questions.1. What management tools do you know?2. Have you read anything about the Balanced Scorecard?

Read the text and answer the questions.

Text 6A

The Balanced Scorecard* as a strategic management tool

(* сбалансированная система показателей)

"The Balanced Scorecard" addresses an ever-increasing accounting problem. We are now in the information age and the old accounting from the industrial age doesn't properly measure a company. The theory is that there are many other intangible assets that a company possesses that are not reflected on the balance sheet but do contribute greatly to the performance of the company. "The Balanced Scorecard" describes a method in which a company can measure and even manage using the intangible assets. A Balanced Scorecard involves developing one strategy or mission for the company. The idea is to incorporate every aspect of the company that will contribute to achieving this mission. In the process, a company gains a new understanding of their business and a new way of managing it.

Measurement and Management in the Information Age

The Balanced Scorecard measures a company's performance through a balance of four perspectives: financial, customers, internal business processes, and learning and growth. The four perspective of the Balanced Scorecard must be held together, dependently working towards the overall corporate strategy. Without this, the four perspectives may work against each other creating more problems. These measurements include the traditional financial measurement of past transactions, but they also give a measurement strategy for future operations. The business environment has changed from industrial based to an information based one. This change has brought the focus from tangible assets to intangible ones. Operations must be conducted in real-time, which means they must operate without boundaries of intercompany segment or even the supply chain. Traditional methods of measuring performance don't work today. The Balanced Scorecard is designed to take a balanced look at all of the company's business factors and formulate performance measures accordingly. The goal is not to have a new measurement system; the goal is to have a management system.

In today's information environment, a company can no longer be measured solely on past performance. The financial perspective is critical to the success of the Balanced Scorecard. It accurately measures how well improvements in the other three perspectives have worked. The Balanced Scorecard is needed because there are limitations on financial measurement of business performance. By its very nature, financial measurement is not forward-looking. To better gage a company's performance, one must balance all areas of the business. The Balanced Scorecard helps form a strategy for this implementation, but it is not designed to be used as a blueprint because every company is different. Companies have different goals, different customers, and different industries.

This is precisely the-reason why the Balanced Scorecard is needed to help form one strategy for the business and bring all areas of that business to work in harmony for the achievement of that one goal.

Financial Perspective

This is the most important perspective of the Balanced Scorecard since it is the measurement basis of all the others. Financial objectives should be linked to the one corporate strategy with a strong emphasis on the cause-and-effect relationships that every change can have. Financial objectives are used to represent the long-term goal of an organization. The business unit doesn't necessarily need to be the overall company. In many cases, it is far easier to install a Balanced Scorecard to the strategic business units, that can identify unique customers, strategies, and goals, then work upwards toward a consolidation of all of the scorecards. In any case, the overall company strategy should traverse through all four perspectives, thereby linking all towards a common goal. Often one change in the financial perspective will have changes in the other areas because of the cause-and-effect relationship. That is the reason why the overall strategy must be consistent throughout the Balanced Scorecard implementation.

Customer PerspectiveThe customer perspective is designed solely to measure how well the company is

meeting the demands of the customer and its market segment. It is most critical to the success of a company, but it is overlooked by traditional measures. The goal is to supply the customers with what they want. By measuring customer satisfaction, loyalty, acquisition, and profitability, a company can excel in their market segment and plan for the future. The solution is the management of three classes of attributes:

1. Product and service attributes: functionality, quality, and price.2. Customer relationships: quality of purchasing experience and personal

relationships3. Image and reputation.Managing across these three classes will provide value for a company's customers..

A company must also be aware that in today's environment, they must provide a quality product. Customers are now demanding quality, timely service, whether it is in the delivery of the product or in customer service following the sale. Not to be forgotten is the price of the product. The other two factors are more important than the price, but the price plays a big role in the decision of the customer to contract with a company.

Internal-Business-Process Perspective

This perspective is usually formulated after the financial and customers perspectives. This enables a business to focus on internal processes to deliver the goals of the customer and shareholder. The approach should focus on finding completely different solutions rather than improving existing ones. The first step involves indentifying the market and creating the product. The second step the product is constructed and delivered to the customer. The final step, and the most important, is service to the customer. These three steps focus on specific external wants or needs of customers and the processes in which to deliver them. This contrasts conventional methods that focus on monitoring and improving costs, quality, and production time of existing processes. The internal-business-process perspective sets itself apart from other strategies by focusing on improving internal methods to achieve the goals set forth by the one strategy of the company.

Learning and Growth Perspective

The last of the four perspectives is the one that cements all the others. The learning and growth perspective is characterized, into three categories:

1. Employee capabilities.

2. Information systems capabilities.

3. Motivation, empowerment, and alignment.

Employees are the key to growth of innovations. Resources must be allocated in order to educate them on the processes of the company and the mission of the company. This education must be coupled with the motivation to improve. This often starts by granting more autonomy to the employee. This allows the employee to suggest or make changes in the organization. An innovation on one side of the plant might work well on the other side, but only by sharing the information can this knowledge be conveyed efficiently. All of these working together can propel a company into the future by giving the employees a sense of pride that they contributed to the organization, and that contribution was appreciated.

There are many reasons why a company searches to implement a Balanced Scorecard, but the most important concept to understand is that the Balanced Scorecard is a management tool. The major focus of the Balanced Scorecard is to organize the business toward a common goal. The process of developing a good Balanced Scorecard gives an organization, usually for the first time, a clear picture of the future and a path for getting there. Every step of the way provides insight on how to improve the business process of achieving the one strategy.

4. Answer the questions1. What intangible assets aren’t given on a balance sheet? 2. Why is it necessary to introduce “The Balanced Scorecard” in the work of

the company?3. What are the four perspectives included in the Balanced Scorecard

measures?4. Why does business need a Balanced Scorecard?5. Why are financial perspectives considered the most important?

6. How can a company excel in their market segment?7. Why is the price of the product important?8. What should employees be educated on?9. Could you summarize the reasons why a company should implement a

Balanced Scorecard?

Text 6B

Western and Japanese approaches to business

This Text compares western and Japanese approaches to business in terms of leadership and behavior. Before you read, try to predict some of the differences. Read the text and complete the chart: Differences in attitudes and behavior.

Westerners tend to value a tough individualistic and dominating leadership style including the ability to take independent decisions and have them successfully implemented. The higher a Japanese manager rises in a company the more he tries to hide his ambition and capability and not to be seen as a forceful leader. A Japanese manager concentrates on getting his group to work together. He is expected to be accessible, to work as an integral part of the group and to share whatever information he has.

One of the problems Japanese managers often have with western subordinates is getting them to show initiative. They complain that Europeans need to be told what to do all the time. And when they have done it they need immediate assurance that they have done it right and a pat on the back. This would be embarrassing to the boss and offensive to a Japanese subordinate who expects no more than an indication of the job to be done. Their western subordinates on the other hand without defined responsibility, clear direction and realistic goals find their job boring.

Japanese are very punctual when politeness requires it and especially with senior people. A meeting will carry on until it is finished or interrupted by the demands of a senior person. The working day can be very long. Japanese may regularly work on Saturdays, rarely take more than a week’s vacation and count sick days as holidays.

Japanese are extremely polite. Their manners are based on a sense of mutual respect. Relationships between all levers are build on exchange, whether gifts, help, information and so on. Politeness does not exclude openness in relationships. Europeans may be surprised at the personal nature of conversations, because Japanese need to know people well before they can be comfortable with them. In some European countries you need not trust people to work with them as long they do their job. In a Japanese environment there is a higher tolerance of professional and human weaknesses, but it is compensated whit a greater demand for loyalty and trust.

The most common complaint among westerners is that most major decisions seem to be made outside office hours by their Japanese colleagues. While in day-to day activities they are kept well informed, they are kept in the dark about the overall direction of the company. For aa westerner to progress in a Japanese managed company it is essential to work late in the evening and at the weekends.

It is this level of dedication to the organization which is probably the biggest difficulty in making a successful career in a Japanese company. The emotional and practical commitment that Japanese expect is incomprehensible to most westerners. The term “British disease” means idleness and extended to most western countries. The Japanese disease is death by overwork. The difference between the British and Japanese diseases is perhaps the biggest cultural difficulty for each side to overcome.

Text 6C. Render in English or translate the text into English

Сбалансированная система показателей

Сбалансированная система показателей (ССП) (Ваlапсed Scorecard (ВSС)) — концепция переноса стратегических целей для планирования операционной деятельности и контроль их достижения. ССП - это механизм взаимосвязи стратегических замыслов и решений с ежедневными задачами, способ направить деятельность всей компании на их достижение. На уровне бизнес-процессов контроль стратегической деятельности осуществляется через так называемые ключевые показатели эффективности (КПЗ) (англ. — Кеу Реrformance Indicator (КРI)). КРI являются измерителями достижимости целей, а также характеристиками эффективности бизнес-процессов и работы каждого отдельного сотрудника.

Преимущество ССП состоит в том, что организация, внедрившая эту систему, получает в результате «систему координат» действий в соответствии со стратегией на любых уровнях управления и связывает различные функциональные области, как, например, управление персоналом, финансы, информационные технологии.

В мире бизнеса существует целый ряд примеров успешного внедрения сбалансированной системы показателей. Именно благодаря этим успешным примерам методология постоянно развивается и совершенствуется за счет накопления различного опыта. Консорциум «Ваlаnсed Scorecard Collaborative» (ВSСol) работал с более чем 200 клиентами по разработке и внедрению систем управления, базирующихся на ССП. Среди наиболее известных и хорошо документированных примеров — американские корпорации «Mobil U.S. Marketing and Refining» и «Cigna Property and Casualty». Первая переместилась по показателю прибыльности с последнего места в отрасли на первое, а «Сigna Р&С» превратилась из убыточной фирмы в специализированную страховую компанию, имеющую годовой оборот более 3 млрд. долл..

Mini-presentationYou are asked to give a short talk on one of this topics given below.1. Examples of successful usage of BBC2. Three generation of Balanced scorecard.3. Six obligatory elements of Balanced scorecard.