Daimler is among the most successful automotive companies in the world. The Company was founded in 1886 by Gottlie and Carl Benz during the era of automobile invention. It main products include Mercedes Benz cars, Dailmer tracks, Daimler Financial services ,Mercedes Benz Vans and Daimler Buses. The Company is renowned for its long trucks commercial vehicles that have a global reach .Apart from producing automobiles; the company also provides financial services in financing, leasing, innovative mobility service, fleet management and insurance services. Its ability to diverse in many areas has boosted its success in achieving sustainability. The driving force of the Company is to inspire its customers by producing state of art, comfortable and environmentally compatible automobiles (Kaplan and Norton, 1996).
The success of the Company in fulfilling the customers taste and satisfaction and a leader in its industry is related to a number of factors. Some of them include investor relations, corporate social responsibility, financial management, human resource management, marketing and advertisement among others. One of the ways through which the Company has succeeded in making profits and attaining customer loyalty despite the financial slowdowns' that are experienced in the market is through using the Balance Score Card model. A balanced Scorecard measures a Company's performance n the key areas of financial processes, customer management, the learning and growth curve of the company/organsation and the internal processes of the company (Carr and Nanni, 2009).
Daimler Balance scorecard
Daimler has undertaken a number of strategies that places it ahead of other players in the market. For instance, the Company has continously invested in the inestment of alternative dirve systems with the bid of protecting the environment form emmission. Currently, it holds the highest number of electirc (emmission free) automobiles in the market. The company also has over 100 individual automobile models which are distriubted in more than 40 countries. Daimler has listed its shares on the Franfurt and Stuttgart stock exchanges. The Company also ensures that it implement responsible corporate social responsibility. The figure below illustrates an analysis of Dailmler Vision and a balanced score card in the four domains (Dailmer, 2012).
Perspective
Target
Rationale
Financial Perspective
Profitability growth ; To increase the annual revenue for the Company
Increase market share
Increase the earnings per share
Cost leadership
Customer Perspective
Increase and enhance cultural diverstiy
Enhance customer loyalty and increase customer data base
Increase sales revenue in the long truck market segment
Enhance employee satisfaction
To increase the monthly revenue by increasing the sales, in addition, the operating and production cost can be minimised to increase the net profit. On the average Daimler spent up to 18,416 million Euros in total expenditure, the average net profit ranges between 4,500 to 5,600 million Euroroes. The Company anticipates to have 5% increase in net profits.
To increase its market share and achive a global present to boost the sales and revenue (Dailmer, 2012).
The current basic earnings per share is 5.32 whereas the diluted earning per share stands at 5.31 euros. Increasing earnings per share (EPS) through investment strategies.EPS= Net income -Dividents on preffered stock/avarage outstanding shares
To reduce the overall product prices and improve the overall performance of the Company thus raising the revenue
To increase innovation , embrace globalisation and promote peace
To have a reliable market presence thus preventing volatility of revenue and stock
Increase the revenue and profits from selling the long vehicle such the whether trucks. These segment of customers have a higher profit margin which the Company should capitalise on
Investment in employee growth and development to enhance productivity. Reduction of high turn over rates.
The Company will introduce cost cutting measures .For example, it can hire out some of the production processes to third parties. This will reduce the amount of wages and salaries. Daimler plan to invest in natural energy and pratise recyling to reduce the production expenses.The time frame for this is within 2013/2014 financial year. This will be reviewed by analysing mothly, quartely and annual financial statement and reports
The Company plans to venture into new markets through mergers and acquistions or joint ventures.Currently it operates in 40 countries in Europe, Asia, America and Australia. It is targeting the African market.This is a five year plan.
One of the ways of attaining this is through improving on the management style. The Company will hire competent strategic managers at various stations to improve its performance. Alternatively, it plan to aquire other companies especially those that are listed on the stock exchanges.
The Company shall introduce international labour laws that will ensure that the management team has been selected competitively. The number of leaders shall be reasonable to cut down the leadership cost.
Make sure that its Board of Directors is a representative of all the sharehoders on a global point of view. To implement this, the constitution should be ammended to include this clause.This should be implemented within a 2-year span
Introduce customer retention programs such as discount cards, Company clubs and conduct customer surveys to evalauate their ratings in customer satisfaction. This is an ongoing process (Kaplan and Norton, 1996).
A marketing campaign targeting new markets should be carried to showcase the advantages of whether trucks .Some of the marketing tools that will be used include promotion, electronic media advertisement, giving out pamplets with brief description of the product and the use of billboards. The marketing plan will also target major logistic companies such as Kuhne and Nigel, Bar Yusuf and sons' amog others.The company will allocate funds for the same during the next five financial years.
There will be capacity builling programs during each quarter, recogntion of talent and good perfromance through programs such as bonus and free holidays
BUSINESSES PROCESS
Entrench proper channels of communication and transparency with shareholders
To ensure that there is a reliable management team in place
Upgrade the Company's network infrastructure to reduce bureaucracy, promote faster and more efficient transfer of information
Put a clearly defined structure in place
To promote teamwork and collaboration among the business units and partners. It will create a friendly business culture (Kaplan and Norton, 1996).
An effective management team will utilize the resources of the Company, promote efficient running of the company and initiate strategic growth within the company
To improve the communication process by eliminating software incompatibility, hasten the production process ,improve customer support, and improve the overall performance (Dorothea , 2008)
To improve the flow of work, motivate employees and keep proper track record of staff performance. Improve employee satisfaction (Carr and Nanni, 2009).
Put the right communication channels in place. The Company plans to launch an information based journal that will be updating the shareholder and the general public at large of all investment plans and undertakings. This should start in the following financial year upon which the journal shall be published on a quarterly basis. With this in place, cases such as lawsuits filed by private investor Kirk Kerkorian of $300 million are minimized or completely done away with.
There will be a transparent selection of leaders through a competitive process. Elections will be conducted after three years to allow proper showcase of leadership ability by the incumbent. Exemplary performing leaders /CEO will be given another opportunity
but through a consensus.
The Company plans to hire IT specialists with knowledge in automobile production. Networking with other companies in the same industry such as Toyota Kenya to attain a competitive advantage in the IT domain. Once the IT specialists have been hired it will be an ongoing process.
The Company will start changing the current organizational structure. Every employee will be aware whom he or she is answerable to.
Learning and growth perspective
Promote sustainability issues in the Company
Develop a programme that nature's talent among existing and new employees.
Technology and innovation for comfort
Enhance the procurement process and improve on the financial services provided
To enable the Company integrate issues of sustainability in the normal operation of the business and to promote good relationship with the community surrounding the company
To have a reliable employee base, reduce turnover rates, increase performance rates and prevent redundancy.
To satisfy the market by ensuring that the production process is in itself a state of art that utilizes Company recourses to produce the best automobile products in the market
To ensure that there is a smooth procurement process in place ,reduce unfruitful bureaucracies and promote professionalism in service provision
The Company will invest towards putting the right structures, processes and systems in place that will promote the inclusion of sustainability into the company. The Company will work with its partners to continuously dialogue towards achieving a sustainable future.
The Company will develop an internship programme where well performing members are recruited into the Company on an ongoing basis. The leadership style by the top management should encourage freedom of expression and thoughts which is the mother or innovations. Staff ideas should be supported both financially and emotionally to the final stages .Conducting training, capacity building and refresher courses to from time to time .some items may be implemented immediately such as training, others should be a going concern scenario.
Daimler assumes responsibility for its future. The Company plans to put in place measures that will see to it that its automobile reduce emission and place the best mobility solutions on the road. It plans to recruit additional designer to ensure it comes up with classic,
safe and green vehicles.
Revise the current procurement process to remove bottlenecks and at the same time check on the quality of the raw material to ensure that it is of the highest quality. The Company plans to build the capacity of the current staff members and motivate them to improve their performance.
Task 2; Company's Balanced Scorecard
According to Johanson et al (2006 p. 843) a Balanced Scorecard is a model that is used to measure the performance of an organisation or company in a holistic way "The BSC idea is to communicate a holistic model, linking individual efforts and accomplishments to business-unit objectives". Although most Companies base their performance on the level of profitability attained, adopting an all inclusive perspective is more reliable than basing one's argument on specific areas within the organization.
The Balanced Scorecard is a management system that places an organisation strategic objective into four main performance metrics in the financial, internal processes, learning and growth and customers. The balanced scorescard is used in providing relevant feedback that would be used in strategising the growth and development of the organisation. The BSC is used to measure both financial and non financial elements of an organisation, analyse the leading and lagging indicators and at the same time evaluate both the internal and external perfromance perspectives. There are many reasons why the BSC, is among the best models to measure the performance of an organisation compared to other models that are one faced (Dorothea, 2008)
One of the advantages of using BSC over other indicators is that is can be used to measure both long term and short term objectives. BSC can be used to evaluate the current perfomance of an organisation .For example, by analysing the financial statement of an organisation; the rate of returns can be deduced from it. The current financial information obtained can be used to strategize the future project of the organisation (Voelpel et al, 2006).
Even though some organisations may not be making a lot of profits, it may have a large customer base that makes it more attractive. For example, such company may be a quick sale for an organistion that is targeting a large customer base. It is not uncommon for a company to take over a competitor with the plan to discontinue the competing product line and convert the customer base to its own products and services. The balance sheets of such takeover targets do not reflect the value of the customers who nonetheless are worth something to the acquiring firm. Clearly, additional measures are needed for such intangibles (Dailmer, 2012).
A scorecard that is not balanced is limited in perspective compared a balanced scorecard that is more than a collection of measures used to identify problems. Scorecard intergrates a firm's strategy with a purposely limited number of metrics, however, a balanced scorecard analysis customer elements, internal processes, the financial elements and learning and growth perspectives (Dorothea, 2008). If numeric or financial infromation is the only one that an organisation uses to evaluate itself, it is likely to miss other important perspective of the organisation. The addition of new metrics to existing financial ones only leads to the creation of information overload. For example, adding the number of customers per base to get the anticipated revenue may be misleading compared to analysing the type of customers with specific needs, their characteristics, economic status to get the anticipated revenue. To avoid this problem, a BSC that focuses on four major areas of performance and a limited number of metrics within those areas should be preffered. The total number of measures should be limited to somewhere between 15 and
20, or three to four measures for each of the four perspectives. These measures are selected as the ones deemed to be critical in achieving breakthrough competitive performance which is inclusive of all the success indicators.
To prevent the numeric workload, BSC is prefered compared to financial measures because financial measures are in suffeceint. While financial accounting is suited to the tracking of physical assets such as manufacturing equipment and inventory, it is less capable of providing useful reports in environments with a large intangible asset base. As intangible assets constitute an ever- increasing proportion of a company's market value, there is an increase in the need for measures that better report such assets as loyal customers, proprietary processes, and highly-skilled staff (Dorothea , 2008).
A BSC incorporates the cause and effect relationship which is vital in developing strategic plans for the company. Apart from the Balanced Scorecard, some companies used a collection of both financial and non-financial measures of critical performance indicators. However, a well- designed Balanced Scorecard is different from such a system in that the four BSC perspectives form a chain of cause-and-effect relationships. For example, learning and growth lead to better business processes that result in higher customer loyalty and thus a higher return on capital employed (ROCE) ((Dorothea , 2008).
When used effectively, the cause-and-effect relationships illustrate the hypothesis behind the organization's strategy. The measures reflect a chain of performance drivers that determine the effectiveness of the strategy implementation. The BSC model is best placed in achieving a cause -effect relatioship in an organisation.
The Balanced Score Card model is indepth and has reach content that maps an organisation on its stratetegic mission and vision. Within each of the Balanced Scorecard financial, customer, internal process, and learning perspectives, the firm must define its strategic objectives, this entials the activites or goals that the organisation wishes to accomplish within that perspective. It also analyses that measures and initiatives tha will be taken to achieve t he defined goal, the main targets to be achieved in terms of output.For example
the customer perspective addresses the question of how the firm is viewed by its customers and how well the firm is serving its targeted customers in order to meet the financial objectives. Generally, customers view the firm in terms of time, quality, performance, and cost. Most customer objectives fall into one of those four categories that is introduction of new products which is measured by the volume of sales after the product hits the market, timely supply of the product in the market, customer relationship and customer satisfaction.
Whereas strategy is articulated in terms meaningful to top management, to be implemented it must be translated into objectives and measures that are actionable at lower levels in the organization. The Balanced Scorecard can be cascaded to make the translation of strategy possible. For example, increased profitability might get translated into lower unit cost, which then gets translated into better calibration of the equipment by the workers on the shop floor. Ultimately, achievement of scorecard objectives would be rewarded by the employee compensation system. The Balanced Scorecard can be used in this manner to align the strategy though out the organization (Dorothea, 2008).
Apart from the mentioned aspects of the Balanced Scorecard, there are other advantages that are directly related to the use of the model. It is easy to translate the strategy into measurable parameters; this implies that it can be conducted by any person within the organisation as long as he or she understands its vision. The strategy is simple and can be communicated to any person within the organisation. For instance, the financial or accounts management cannot be the only beneficiaries of the organisation rather, it affects every department of the organisation.This implies that , the Balanced Scorecard model promotes team work and collerboration towards achieving a unified course as it influences and is affected by all the employees of the orgnisation.
Since its inception as a performance indicator for organisations, the Balanced Scorecard has evolved into a strategy implementation system that not only measures performance but also illustates, describes, communicates, and aligns the strategy in all sectors of the organization.
Even though the Balanced Scorecard is among the best perfromance measurement models used by organisations in measuring its performance,it has a number of pitfalls that should be prevented. Some of the disadvantages, one of them is that , it can fully function without pointing out the four core areas ,thus a gap in one of the elements implies failure . In addition, it focusses more on the past perfromance rather than concertrating on the future indices on the organisation. The use of generic metrics does not conform to flexibility in a dynamic society, thus the model does not adapt to organisational changes in a fast manner. Despite the few mentioned disadantages, BCM has prooved to be one of the best indices to measure an organisations performance and strategise its future perfromance (Dorothea, 2008)
Conclusion
As one of the leading automobile manufacturers, Daimler AG has incorporated best practises in designing and developing sophiscated and safe vehicles for its clientale. The provision of financial services has also diversified the Company's investment and increased the investor's wealth. By adopting the Balanced Scorecard in assessing its performance, the Company is set to introduce new technology, venture into new markets, improve its performance and invest in specific segments to increase profits among strategies. With proper implementation of the plan, Daimler is set to succeed in the coming years (Carr and Nanni, 2009).
