According to Kaplan and Norton, financial perspectives are important while non-financial perspectives are also important, since through firms financial performances, effects from other three perspectives can be reflected.
Kaplan and Norton (1996) said that financial goals of the company are profitability, growth and shareholder's value[åŒreturn on investment?].
The main financial objectives of M&S are maximizing profit, reducing cost and growing sales.
Profit may be one of the main objectives of a company since every company wants to maximize the profit, M&S is no exception. M&S's main objectives include maximizing their profit, which could be measured through income statement from their annual report. Profit before tax was £780.6m in 2011, with a 15.7% decreased to £658.0m in 2012.
Reducing cost is another important objective of M&S. The company focused on managing their costs tightly in order to keep profitability. This cost management helps the company build a stronger platform and becomes a support to the company's investment in their future plans.
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it can be clearly justified by the increasing
When it comes to the sales growth
Marks & Spencer case study
The experience of the major UK retailer, Marks & Spencer, in 1999 illustrates the issues. They were making annual profits of over £1Bn and their share price was close to an all time high. They had an air of indestructibility or even arrogance. But within a year, profits had slumped, their share price had collapsed and takeovers were mooted. Why didn't they see it coming? They were unaware that they were rushing towards a cliff.
The problem was that while revenues and profits were at an all time high, these were the product of past decisions and efforts. They were lagging measures. Over the previous two to three years, M&S had been falling behind in many areas, which over time, finally affected their bottom line. Thus they were changing their clothing ranges twice yearly while their up-and-coming competitors such as Next were changing theirs quarterly or monthly. Relationships with suppliers were poor and logistics inadequate.
Information on customers was also poor, despite being one of the earliest organisations to have their own store card - however, they'd never analysed the data effectively. And staff were demotivated. As their Finance Director Alison Read said at the time; "If we'd had a balanced scorecard, the results quadrant would have been green, but all the other quadrants, [Customer, Process and People], would have been red. It would have given us early warming.
Revenue - continuing operations
Operating profit - continuing operations
Total operating profit
Net interest payable
Pension finance income
Profit on ordinary activities before taxation - continuing operations
Underlying profit before tax
Adjustments to operating profit
Income tax expense
Profit after taxation
NetÂ underlying operating margin
Basic earnings per share1
Basic earnings/Weighted average ordinary shares in issue
Underlying basic earnings per share
Dividend per share declared in respect of the year
Always on Time
Marked to Standard
Profit attributable to shareholders/Dividend payable
Retail fixed charge cover
Operating profit before depreciation and operating lease charges/Fixed charges
Table 4-4Balanced Scorecard(Garrison, Noreen, & Brewer, 2008)
Measures of BA
Improved financial performance
- Sales growth
- End of year financial accounts
- Profitability and liquidity ratios
Share price, Dividends per share
Quality of airline service
Quality control, Customer feedback
Customer questionnaires and feedback
Increased brand awareness
- Customer feedback
- Increased passenger volumes
Security and speed of check-in services
- Positive feedback
- Time efficiency of check-in service
Increased sales volumes
Expansion into new markets
Profitability of competitors in the new markets
Innovation and learning perspective
Integration of UK and emerging market cultures
Investment into technological innovation
Increase spending in R&D
Highly skilled staff
Spending on staff training