The Balance Scorecard of Tesco

Topics: Balanced scorecard, Strategy map, Strategic management Pages: 8 (2503 words) Published: March 26, 2011
Tesco is the largest retailer in the UK and the third-large supermarket worldwide with total amount of sales exceeding £19.4 billion in 2010. It was originally specializing in food product, but in recent years it has provided different products and services from clothing, telecoms to financial services. Additionally, Tesco is the most extensive online grocery retailer in the world and it recognizes product images and pack information are essential for online shopping. In recent past, huge development has been made on international strategies. Its store are located in 13 countries and number would be still increasing as it has diverse strategies in order to satisfy different locations. The principle of Tesco is letting customers know they can pick what they want, when and where they want it.

Balanced Scorecard:
The Balanced Scorecard is a comprehensive framework to achieve the company’s vision and strategy. In addition to measuring the financial side, the work surface also is added to make up for traditional performance evaluation, which emphasizing on financial data. Therefore, the Balanced Scorecard can be said a new system of strategic management with the company strategy, vision and performance evaluation, and not just a performance evaluation system. The Balanced Scorecard is divided into four important perspectives, including financial perspective, customer perspective, internal perspective and innovation and learning perspective. Organizations design performance indices basis on the perspectives to measure the performance, the entire sector information and the organization's strategy and vision, which are matched together to achieve goals. It is to balance the implementation of organizational performance, seeking short-term and long-term goals, financial and non-financial measurable, and the balance between the performance of the external and internal perspectives (Kaplan and Norton, 1996).

1.The Financial Aspect:
It can be seen that a business which would be measured their performance by the growth of profit and the improvement of productivity; furthermore those activities can help for addressing the business goal and create the profit for their shareholder. The financial aspect in balance scorecard (BSC) which provides a different perspective for the business which can combine their vision and strategy, moreover it can tell the shareholders they will have better performance in the future. Therefore, this perspective that gives shareholder an indicator to understand that what achievements been improved by the strategies and implementation in business. There are many indicators can be measured such as operation profit margin, earning per share (EPS), dividend per share (DPS), return on capital employed (ROCE), profitability in business. Thus, following the case, Tesco, this paper try to exam those figure in order to understand their finance achievements, furthermore try to realize how to use the BSC to achieve the financial goal in Tesco that can ensure the shareholder profit would not loss at this time and the future.

In order to understand what should focus on Tesco’s balance scorecard. There are several general ideas in financial aspects should be understood that can improve the performance: 1. increase the number of customer. 2. develop new products or services. 3. decrease the expenditure. Turning to look the BSC in Tesco, it can be seen that the vision in Tesco’s financial aspect by Tesco’s wheel (graph.1). It focus on how to grow the sales, how to chase profit maximize and how to manage the investment, which help Tesco to pursuit the best performance that taking respond to their shareholders.

Base on the graph.2 that the shareholders can understand that the group sales increased by 6.8%, furthermore the group profit increased by 10.4%, EPS and DPS increased by 9.1%, return on capital employed increased by 12.1%. This entire chart could tell shareholders that their financial...
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