Research Korner

The Effects the Balanced Scorecard Has on the Modern Day Organisations

Chapter 1 Introduction Developmental organizations embrace performance management processes that enable employees to become their greatest asset. When managers function as performance coaches, they become trainers, confronters, mentors, and counselors, providing positive feedback and reinforcement to improve skills and competencies that ultimately enhance overall employee performance. Performance management functions as an integral part of a comprehensive development strategy, although too few organizations subscribe to this philosophy ( 2000). . Hence, the business world overflows with mediocre, stagnant, or failing organizations that stubbornly or ignorantly overlook their employees' potential. We believe that well-designed and well-executed performance management provides an excellent vehicle for promoting continuous employee and organizational growth and development ( 2000).   A company does not need managerial supermen to build a high performance management system; the system performs because its design enables ordinary people to deliver extraordinary results consistently. High performance does, however, require managers who understand, use and improve the system ( 2002). Most organizations already have the building blocks in the form of management approaches and capabilities; they just stop short of linking what they have into a continuous cycle, which can amplify the performance of the whole. It is this connecting the dots and getting all parts working together that permanently boosts management effectiveness and business performance (2002).   The role of performance measurement is to help keep the organization on the operating on a straight and narrow track. The measures are used primarily by business specialists, and the action taken as a result of such analysis may also be exclusively good for the business. Nevertheless, it is also clear that evidence of business problems may occur because of deficiencies in other areas of business operations. In this case, the ratios can provide the company’s director with the information necessary to convince other managers that operating action needs to be taken in order to avoid any company problem. However, the primary role served by this type of performance measurement lies within the province of the business function, and is concerned with the effective and efficient use of the company’s resources (2002).   Performance management and measurement has become a vital part of an organizations operation. It came from the need of organizations to monitor how it performs certain actions and operations that aims to reach its goals.  Performance management and measurement was the prime motivator for companies to focus not only on business measures. Businesses have seen the effects to the company of relying too much on business measures.  It leads to downfall of the company. To check the performance level of the company it needs to use various methodologies and techniques. One method is the balanced scorecard.  The balanced scorecard was introduced by Robert Kaplan and David Norton to measure whether the activities of the company is meeting its objectives. The balanced scorecard have become a fertile field of theories and scholastic research, as times past the balanced scorecard was altered by various individuals depending on the need of the environment. When a company implements the balance scorecard it will translate the company’s vision into operating goals, the balance scorecard will communicate the vision and then link it to individual and organizational performance, the balance scorecard will also lead to a much strategized business planning process, lastly the balanced scorecard will help the company to know how to gain feedback and learn from such feedback.  This in turn will help the company adjust its strategy according to the feedback and what they have learned from it.    The balanced scorecard is seen as a strategic management system that helps to incorporate all measures that have importance to the organization.  The early styles of the balanced scorecard were seen as hard to design and because of this it was discontinued by organizations. Companies have various uses for the balanced scorecard. Companies use the balanced scorecard to drive strategy execution, others use it to clarify strategy and make strategy operational. There are some companies who use the balanced scorecard to identify and align strategic initiatives; others use it to link budget with strategy. There is also a group who makes use of the balanced scorecard to align the organization with strategy.  Another group is contented on using the balanced scorecard to conduct periodic strategic performance reviews to improve the company’s strategy.  The balanced scorecard is used by government agencies, various countries military troops, various segments within an organization and the whole business organization itself, non profiting organizations and school organizations as well.  The study will go further into the idea of the balanced scorecard. The study will determine the effects of the balanced scorecard on modern organizations   Problem Statement The statement of the problem is so important in researches that it should be stressed regardless of the point value assigned to it in the reviewer’s evaluation form. That is, even when the reviewer’s evaluation form allocates only a small percentage of the total allowable points to the problem section (2003). There are different factors that contribute for a business to be successful. One factor is the strategies the business use; another factor is its brand name and image, moreover a factor can be the quality of the product and lastly a factor that contribute for a business to be successful can be the relation of the company with the society. Business will not be successful if their goals will not be reached. For them to reach their goal, it has to make sure that the activities of the company are meeting its objectives in terms of vision and strategy.  The company has to focus not only on its financial performance but the issues faced by their personnel. One methodology used by a company to do such observation is the balanced scorecard.  In lieu of this the paper will examine the effect of the balanced scorecard on modern organizations.   Research Questions Generally the paper intends to examine the effect of the balanced scorecard on modern organizations. Specifically, the study will try to answer the following questions. 1.    How can a personnel performance be improved and sustained in an organization? 2.    How important the balance scorecard is on organizations? 3.    What personnel issues can be detected by the balance scorecard? 4.    What can the balance scorecard do to change the performance of modern organizations?   Aims and objectives Typical research questions concern the effects of marketing instruments and household-specific characteristics on various marketing performance measures. Recent advances in data collection and data storage techniques, which result in large data bases with a substantial amount of information, seem to have changed the nature of marketing research (2001). While the research questions were stated, they nevertheless only referred to the information that the researcher intended to question. The objectives, however, will focus on the necessary problems and objectives that should be clarified in order to gather the intended information. The aims and objectives of the study include <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the history of the balance scorecard and what it has done to business over the years. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To determine how the balance scorecard works and its major strength and weaknesses. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To know whether balance scorecard has created a major change in business process. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> To identify how the whole procedure of the balance scorecard changed business processes.  </li>   Importance of the Study The study is important to businesses since they can know how the balanced scorecard can change their business processes.  The management of the businesses can see the difference of the time they were not using such technology. With the establishment of the goals given, this study may also be of importance to the goals that have been set. By fulfilling the aims and objectives of the study, this study will be helpful for other researchers who may be focusing on the way determine the effect of balanced scorecard to modern business organizations. Such data will hopefully be helpful for researchers in establishing their own means of conducting their study. The notable significance of this study is the possibility that it may be able to use the findings for the other studies that may wish to analyze the factors for the success or demise of a particular study. The methods that this study will take must also be credible and help researchers in knowing how to look for particular information and know how to analyze them. It is through this that researchers will then be able to find out how they will be able to focus on their particular investigation and also know the possible methods that they may choose in the possible time that they may choose to already conduct their study. Thus, another significance of this study is to serve as a guide for researches that focus on the analysis of the success of certain corporations as they venture into internationalization, and especially focus on the possible factors that may have affected these companies’ success or downfall.     Methodology Type of research The research process onion of (2003) will guide the study in order to come up with the most suitable research approaches and strategies for this study. The research process onion will be used as a basis to show the conceptualization of the most applicable research approaches and strategies that will lead to the gathering of the necessary data needed to answer the research questions stated, as well as to arrive to the fulfillment of this research undertaking’s objectives. Any approach that attempts to describe data might be referred to as a descriptive method. There is a range of sophistication possible in any description whether quantitative or qualitative. The simplest quantitative description reports the data in raw form. As the description gets more sophisticated, the researcher groups the data and presents it in tables and figures. The use of descriptive statistics is merely a convenient way of description. Data are reported in tables organized to give a suitable overall picture at a glance. These simplify the description and lend meaning to data which in raw form is hard to interpret (1998).   The research will use the descriptive method to determine effect of balanced scorecard on modern business. Descriptive research tries to explore the cause of a particular event or situation. In addition, such method tries to describe present conditions, events or systems based on the impressions or reactions of the participants of the research ( 2002). Furthermore descriptive research utilizes observations and surveys. For this reason, the study calls for the use of this approach because it is a goal of the study to gather first hand information that will determine the effect of balanced scorecard on modern business.   Primary and secondary source of data The primary source of data will come from an interview that will be conducted. The primary data frequently gives the detailed definitions of terms and statistical units used in the survey. These are usually broken down into finer classifications. The primary source of data will give actual responses from various people who encounter different kinds of things.  The primary source of data will provide answers not found in written documents or other written source of information. This kind of data will give a further understanding of the situation. After gathering the primary data, the information will be reviewed to see if the data is appropriate for the study. Afterwards the strength and weakness of the data will be evaluated. The secondary source of data will come from researches done by the organization, previous studies and surveys. Acquiring secondary data are more convenient to use because they are already condensed and organized. This kind of data can be found anywhere. The researchers work for same organization and because of this they would have access to the needed data at any time needed. It saves more time and effort.  The secondary source of data will come from various written sources such as books, magazines, journal and other printed sources.   Methods for Data analysis Data analysts have turned to data mining techniques when the size of their data has become too large for manual or visual analysis. What makes the analysis of these data sets challenging is not just the size, but the complexity of the data. Data sets provide a very rich environment for the application of data mining (2003). Data gathered will be analyzed through frequency distributions. This procedure of analyzing the data will give way to reviewing the data categories and the number of referrals in each category. With relation to data analysis, the indicators that will be used in evaluating the study include the age of the respondent; the gender of the respondent, the social status of the respondent; the educational attainment of the respondents; and the number of years the respondent served as an employee of the company. The other indicator that will be used in the study is the response on the interviews of the respondents.   Structure of dissertation There are different chapters for this project. Each chapter has a different focus for a specific course of action that will benefit the study. Each chapter will bring the study closer to gathering information about the goal of the study. The different chapters will contribute to the success of the study and it can be used as a starting point for further studies. The first chapter was the introduction part wherein general ideas and goals of the study were discussed.  The second chapter will be the literature review part. The second chapter used various resources to gather necessary data. This data have a relation to the goal of the paper which is to determine the effect of balanced scorecard on international business. The literatures presented will come from books and other sources that are deemed to be helpful in the advancement of awareness concerning the subject. The third chapter will focus on the presentation of data, the ideas of the respondents, and analysis of data. The third chapter will demonstrate how the results from the surveys and Interviews link to the literature review results. The last chapter will focus on discussing the Summary of the data acquired, Conclusions and Recommendations.  This part will discuss about what the data means and what can be done by the topic of the study for it to reach the goals it intends to achieve. Chapter 2 Review of related literature This section of the study primarily focuses on the different researches and other literatures that focused on several aspects that will help with the progression of this study. With the topic mainly concerning on the effects of the balanced scorecard on modern organizations.the paper’s main aim is to determine appropriate information that can help in the study of the effects of the balanced scorecard on modern organizations.The literatures presented will come from books, journals, and reports that are deemed to be helpful in the advancement of awareness concerning the subject.   Changes in accounting and management accounting Present accounting rules and their extant justifications abide uneasily alongside these specifications of the nature and responsibilities of professional groups. Specifying that the rules are needed to overcome market failures pertaining to the provision of accounting information appropriates, without replacement, the basic rationale for sanctioning accountants’ professional authority. The contention that the rules are the means by which accountants administer their professional authority is similarly unconvincing. Accounting rules are not the instruments of cognitive intendance that justifies a professional jurisdiction the need for accounting rules is not independent of the style of accounting in use. If the contents of financial reports were determinable and verifiable by recourse to commercial evidence then accounting practice would have an innate disciplinary mechanism: establishing correspondence between the reports and the phenomena (2003). This internationalization of accounting rules has drawn its rationale from a claimed need for accounting practices to be consistent across national boundaries. Accounting rules can only function to protect the users of accounting information when their development proceeds as a technical task overseen by those with relevant expertise. An intention to rely on professional authority as the primary means of disciplining the quality of accounting information is evident in the law relating to companies. Traditionally such legislation has specified the general nature of financial reports that must be prepared but not the detailed technical accounting procedures to be applied in their preparation (2003).   The identification of management accounting with the development and operation of effective budgetary control systems may initially appear to portray only one, albeit a major, aspect of this branch of accounting. In most texts equal attention is paid to product and variable costing and invariably the study of budgeting is shared with standard costing and variance analysis (1992). Then there are the more advanced topics: opportunity costing, performance measurement, transfer pricing and those associated with the information economics approach to decision-making (1992).  Management accounting and accounting itself has been internationalized to meet the needs of the environment.  The concepts management accounting and accounting face have more global implications. It concentrates on making global business perform better and it encourages an international organization to have concern on financial stability.  Management accounting assists organizations to perform better on a global platform. Management accounting helps an organization to organize its financial and non financial strategies to perform well in its industry. It makes use of various concepts such as the balanced scorecard, activity based costing, total quality management, and transfer pricing.   Balanced scorecard The requirements of ideal performance measurement are very stringent, far more stringent than the requirements of the balanced scorecard (BSC). The balanced scorecard imposes only the two requirements on measures, parsimony and predictive ability: in principle, scorecard measures are more parsimonious than the potpourri of measures tracked by most large firms, and non-financial scorecard measures predict financial results. The scorecard does not address pervasiveness other than acknowledging that scorecards and scorecard measures are likely to vary across different parts of the organization. Nor does the scorecard address the stability of measures. The running down of performance measures forces changes in some measures and leaves the remainder largely uncorrelated with the new measures, creating some ambiguity as to how performance should be measured (2002).   BSC is a performance measurement system focused on results. It is flexible and possible to apply differently in different organizations. In general, there are no directives on which performance is to be measured. BSC only provides guidance. The application of BSC should be unique to each organization and to levels in the organization. People should of course be careful when using different models at different levels of management to avoid confusion in the interpretation of the results. Nevertheless, the BSC, as presented by Kaplan and Norton, is not without limitations (2002). The causality links suggested among the four perspectives are particularly problematic and ambiguous. Additionally, it fails to explicitly recognize the contributions of important stakeholders, such as employees and suppliers. The BSC includes financial measures that tell the results of actions already taken. And it complements the financial measures with operational measures on customer satisfaction, internal processes, and the organization's innovation and improvement activities operational measures that are the drivers of future financial performance (2002).    Therefore, it enables companies to track financial results while simultaneously monitoring progress in building the capabilities and acquiring the intangible assets they would need for future growth. The main benefit of the BSC is its ability to translate an organization's vision and strategy into tangible objectives and measures. The BSC uses indicators to communicate a strategy and to measure the success of its implementation. To translate the corporate goals into operational terms, the company's balanced scorecard should be deployed to each business unit (2002). The balanced scorecard is not a template that can be applied to a business in general or even industry wide. Different market situations, product strategies and competitive environments require different scorecards. Business units devise customized scorecards to fit their mission, strategy and culture'. Therefore, the specific content of the four boxes of the BSC must be adapted to the circumstances of each organization (2002). An important part of a business transaction is the satisfaction of the needs and wants of clients. Satisfaction of clients cannot come easily and may take some time before finally realized by the clients. To satisfy clients is to provide them with an appropriate service and usable products. This can be done when a company and the employees work well together. The use of BSC helps the company maintain a communication with its personnel. The use of BSC also helps the company know the action it has to do to motivate an employee.  BSC concentrates on the firm and different issues surrounding it.  It takes a look at the internal and external problems faced by firms and what can be done by a firm to change the threats of the problems and realign it with the overall goal of the organization.   Modern business operations and BSC Typical inputs to an operations system would include capital, raw materials, labor, and money. Increasingly, information is also being thought of as a resource. Outputs would include the organization’s products and services. Of course, organizations produce many less obvious and sometimes undesirable outputs, such as pollution and traffic congestion. Generally, though, the operations manager is striving to maximize the system’s outputs relative to its inputs. In other words, the goal is to produce the most products and services for the least cost, to the extent that this goal doesn’t interfere with the other goals of the organization (1998) The operations system can be seen as a system which converts inputs from outside the system, such as raw materials, money, people, and information, into outputs, such as goods and services. The operations system, though, is but a subsystem of the overall organization, along with other subsystems such as marketing, finance, personnel, and accounting (1998).The operations system of a company can be improved by finding out new processes and using it for the benefit of the company. The operations system of a company can be improved by maintaining quality as the main concern of the company. Through BSC operations can be improved through having fewer problems on personnel issues. BSC assists the operations run smoothly without concern for additional problems from the outside forces; BSC guides the company in making the best decisions with regards to internal and external activities. Once the best decisions are made the company is directed into a better path of achieving the company’s goal.   Advantage of the Balanced Scorecard The balanced scorecard promotes the establishment of tangible objectives and measures that relate to an organization’s mission, vision, and strategy. The balanced scorecard emphasizes strategic process over routine processes. Priorities are set within the major categories, first at the corporate level and then at division, department, team, and even individual levels. The balanced scorecard is a performance-measurement system that combines traditional financial metrics with three additional types of operational measures that drive future financial performance, customer satisfaction, internal processes and innovation and learning activities. For each of the four perspectives tracked within the scorecard approach, the user develops a set of goals and the associated measures needed to assess goal achievement. The outcome measures and performance drivers in the four perspectives should incorporate only these activities (2001).   The balanced scorecard has a strong alignment with the concept of strategic trade-offs and it is argued as the essence of strategy. The cause and effects embedded in the four perspectives of the balanced scorecard are, in effect, these same strategic trade-offs. The balance scorecard encourages management to explicitly recognize and manage these trade-offs during strategy formulation ( 2001). Market validation of the correct choice of trade-offs will be revealed through the causal links to the financial metrics in the balanced scorecard. This motivates management to craft strategy responsive to the market forces that determine whether the firm’s competitive resources are truly valuable, and thus capable of securing a sustainable competitive advantage (2001). The balanced scorecard helps an organization to create reachable objectives. This performance measurement tool focuses more on the strategic process. The balanced score card makes sure that a firm knows about strategies that will make the firm lose its quality.  Disadvantage of using the balanced scorecard One of the problems in using the balanced scorecard is the lack of studies that can link the balanced scorecard to better decision making.  Decision making is a repeating process because no decision is always perfect. Decision making is not an easy task and it requires lots of analysis. Decisions cannot be rushed because it might lead to more problems. The whole decision process takes some time before completion because it has to be repeated to avoid any more problems and to fix problems that already came out in the initial stages. Some of the studies of decision making within international organizations demonstrated that international bureaucracies can have an individual impact on the policies adopted. These studies thus preceded later investigations into the relative policy autonomy of international organizations. Moreover, those with a focus on the relationship between an organization and its member states in the representative subsystem anticipated the portrayal of that relationship as one between an agent and its principals (2004).   Most studies are poorly informed by general theories of decision making, despite the sporadic use of middle-range theories, such as bureaucratic politics from foreign policy analysis and socialization theory from sociology. Furthermore, important elements of decision making remain absent these include the role of non-state actors such as NGOs and international businesses, the connection between international policy making and domestic politics, the nature of the preferences put forward by the international bureaucracy, and the independent role of norms and of international laws (2004). One of the primary concerns of the analytic approach to governance is who actually plays what role in governance decision making. To address this question, taxonomy of roles must be identified and the concept of the stakeholder must be evoked. There are three distinct roles in administrative decision making. There are those who make the decisions; there are those that influence those decision makers by providing information or recommendation; and there are those that ratify decisions. The latter role involves having little involvement in the choice of a preferred course of action but, in the last stage, having the authority to accept it or veto it. For example, in many nonprofit organizations, the chief executive officers (CEOs) are the primary decision makers, but some of their decisions are put to the board for ratification (2001).   If the balanced scorecard cannot be linked to decision making that means the BSC has not yet proven its worth on making business decisions thus companies who are on the verge of making important decisions should avoid using it. Another disadvantage of the balanced scorecard is studies not linking balanced scorecard to improved financial performance.  This could mean that the balanced scorecard can create changes to the financial performance but it doesn’t necessarily mean that the financial performance will improve.  This also means that the balanced scorecard can only initiate the movement in the financial performance and not create methods to increase the financial performance of the firm. Chapter 3 Presentation, interpretation and analysis of data After data collection the next thing to be done is data presentation, interpretation and analysis. It is important that the research output be presented in an organized, coherent and understandable manner so that those who will read the research can propose important decisions about the results of the study. This chapter intends to discuss the information acquired from interview done for the research. The main objective of the study is directed towards determining the effects of the balanced scorecard on modern organizations. Primary research and secondary research was used for this study. Primary research was done using interviews; the interviews were given to the participants, which compose of the employees belonging to the departments of the different organizations who tried using the balanced scorecard.   This part of the study is divided into two parts. The first part intends to give information about the respondents particularly with regards to their gender, position in the company and years of stay in the company. The second part intends to give information about the ideas of the respondents with regards to the effects of the balanced scorecard on modern organizations. The results will be analyzed on how the respondents reply to a specific question on the effect of balanced scorecard on modern organization.  The respondents will be around 30 participants who are working in an industrial firm. This industrial is having trouble with the company’s low performance coupled with the different problems their employees have. Part 1 Presentation of Demographic Data In this part of the study the responses of the respondents will be presented and be given attention and analysis. The participants’ responses are vital and much needed to achieve the objective of the study. The participant’s responses will give the necessary information to find a logical solution for the study’s problem; it can also assist in providing a reachable recommendation and course of action. Such responses will be represented by figures or graph to make it clear and to achieve greater understanding. Lastly these graphs helps in making the study more visual oriented for greater appreciation by the reader. The first question will focus on the age group the respondents belong to. The participant’s age was divided into different groups. The groups include 52 up; 46 to 52; 39 to 45; 32 to 38; 25 to 31; and 18 to 24. The succeeding figure will give the response of the participants. Figure 1 Percentage distribution of respondent’s age The figure shows that majority of the respondents were aged around 32 to 38. They were 31% of the total number of the respondents. This shows that majority of the respondents presumably because of their age were wise enough to decide on the effects of balanced scorecard on modern organizations. A big part of the respondents were aged 25 to 32 years old. They were 26% of the total number of respondents. Some of the respondents are 39 to 45 years old. They were 16% of the total number of respondents. There is a small group of respondents aged 45 to 52. They were 12% of the total number of respondents. Moreover another small group of respondents were aged 52 and above. This group of respondents was 8% of the total number of respondents. The smallest group of respondents was 18 to 24 years old. They were 7% of the total number of respondents. It shows that majority of the respondents are well experienced to give answers to the questions thus giving the information needed for the research. Getting information from an older person gives some assurance that the information received came from the experience of the person. Older persons can relate information according to what they have experienced. Figure 2 Percentage distribution of respondents ‘Gender The figure shows that 52% of the respondents were female while 48% are male. There is a small difference in the participation of male and female participants. It shows that in determining the effect of balanced scorecard on modern organization. Both gender were willing and have the interest to give their opinion. It also means that the perception in the study will not be biased but instead it will be based on both gender’s point of view.  Figure 3 Percentage distribution of respondents’ civil status In this figure majority of the respondents were married. They were 48% of the total number of respondents. 32% of the respondents were divorced. 11& of the respondents were widowers. Lastly 9% the respondents was single. Most of the respondents are married and had gained a lot of maturity and experience. In getting the necessary information it is important to ask persons who are more maturity to prevent being misled.  Figure 4 Percentage distribution of respondents’ Educational attainment In this figure 55% of the respondents finished a college degree. The other respondents or 45% of the group had a post college degree. The educational attainment helps in the scope of knowledge and experience the respondents has. It also helps in adjusting to the level of thinking the respondent has. The respondents being in college makes sure that they have a certain level of thinking that can be of great help in the research. Figure 5 Percentage distribution of respondents’ length of service in the company The figure shows that 55% of the respondents have been serving their respective companies for more than 5 years. 26% of the respondents have been serving their companies for 4 years. 19% of the respondents have been serving their company for 3 years. Respondents who had worked with the company for more than 5 years have observed things that happened in their company and the industry.  They know the effects of certain changes to the industry. They also have an idea on what technologies can be good for the industry.   Part 2 Ideas of the respondents The participants’ responses are vital and much needed to achieve the objectives of the study. To achieve the objectives is to get the necessary and reliable information regarding the effects of balanced scorecard on modern organizations. The participant’s responses will give the necessary information to find a logical solution for the study’s problem; it can also assist in providing a reachable recommendation and course of action. Such responses will be represented by figures or graph to make it clear and to achieve greater understanding. Lastly these graphs helps in making the study more visual oriented for greater appreciation by the reader.  Results of the interview When asked about what brings rapid growth to the company the respondents gave many responses. Some of them said that proper communication can bring rapid growth for the company. Some of the respondents replied that the changes in management styles can help usher in growth for the company. While others stated that an autocratic rule can create rapid growth for the company.  For majority of the respondents the factor that stands out the most is the balanced scorecard. Rapid growth means all aspects of a successful organization have been covered and strategies are used to maintain the balance of the various aspects of the firm.  The participants gave various standards on how a company gains rapid growth. Each has a different view on what is meant by rapid growth for a firm.   The interviewer asked the respondents on what can be the relationship between the balanced scorecard and sustained performance. The participants stated that the balanced scorecard helps the company in making sure that it has sustained performance wherein all aspects of the company perform within the standards. In the interview the respondents disagreed with the idea that the balanced scorecard doesn’t promote sustained performance. This shows that the balanced scorecard can bring sustained performance in modern business.  It shows that the balanced scorecard helps in monitoring business activities into performing well on a sustained basis. The respondents have been asked on whether their company’s revenue is doing well. Most of them said yes. They mentioned that the reasons for the good revenue is the high quality of advertisements, proper implementation of strategies, firm brand name, good use of financial resources and hiring of the best employees. The respondents said that for them to have a good revenue the use of the balanced scorecard is necessary.    The respondents believed that the balanced scorecard helps the business to have better revenue volume. This shows that the balanced scorecard helps a business perform better and it leads to better finances. The participants stated that they believe that the directors and managers of modern businesses are facing one common problem and that is their finances.   The respondents stated that they believe that financial resources are an important aspect of a company. They know that the managers and the directors are doing everything they can to make sure that the company’s assets and liabilities are balanced. They stated that the finances are a valuable pillar for the firm.  They stated that balanced scorecard serve as a big solution to such problem.  Balanced scorecard helped in solving the things that caused modern businesses to have lesser costs. Corporations have a desired customer groups. This customer groups help in making sure that the company stays for longer periods of time.  The customer groups are targeted by companies because they are the ones that really need the company’s products.  Customer groups can be the young students, old people working or just a normal person that has a specific duty for his/her everyday living. Majority of the respondents believed that the balanced score card can help an organization generate more sales to the desired customer groups. This shows that the balanced scorecard can help a company determine its target market and convince this market to purchase the company’s product or service. For the participants operational excellence is a need for the company to be successful. The participants stated that they believe that operational excellence is acquired through the company’s hard work and dedication to making the best use of strategies. The respondents believed that the balanced scorecard helped the company gain operational excellence. The respondents think that the balanced scorecard removed some operational weaknesses of the firms and it helped introducing new operational strategies for the firm. For the respondent’s customer intimacy doesn’t mean that the company and the clients will have extreme closeness. It just means that they will have good communication and open relationship with the clients. The respondents believed that the balanced scorecard helped in increasing the customer intimacy. The respondents have seen a better relationship between the company and the clients; this was made possible through the balanced scorecard.    The respondents believed that the balanced scorecard helped the company have product leadership. For the respondents product leaderships means that their product cannot be imitated and it has a distinctive quality that the rivals cannot copy. The respondents think that the balanced scorecard introduced innovative strategies to the company. The innovative strategies helped in providing product leadership to the firm. The respondents believed that the balanced scorecard helped the company to maintain its operations management techniques. The balanced scorecard reduces the concerns of the operations management. The respondents mentioned that the balanced scorecard helped in creating a tougher customer management strategy. This strategy boosted the company’s performance and it helps the company attract more clients.   The strategy helped the company know how to deal with clients not easy to please.  For the respondents organizational learning is an important undertaking on how the company adjusts to changes in its environment. They believe that organizational learning contributes to how a company grows. The respondents believed that the balanced scorecard helped the company attain some organizational learning. The balanced scorecard helped the company learn more about its internal and external environment and what strategies are appropriate within each environment. The respondents believed that the balanced scorecard supported strategic planning in the firm. This shows that the balanced scorecard can adjust in various aspects of an organization.    Time for the respondents is an important factor in it achieving success. For the respondents time will always spell the difference for the company’s desire to be successful. Time abused leads to more problems and more concerns for the company. The respondents believed that one of the problems with the balanced score card is it being time consuming. It does not help in making sure that the company saves time from adjusting and implementing such change. The respondents believe that with the use of the balanced scorecard some more time may be used.  For the respondents change is an important thing because it can help the organization alter its strategies and provide a much better service to the clients. Change can help the organization adjust to the trends in the industry and it brings about improvements in the operations of firms. The respondents believe that the balance scorecard does not assist in the organizations problem with regards to the challenges of change. Another problem with the balanced scorecard is it will not make the company be ready for the challenges of change. When a company wants to maintain its status it will make use of all measures to bring up its performance. This depends on the factors that give challenges to a firm and make it difficult for the firm to bring about an acceptable performance.   With regards to the major factors that made a modern company go for a balanced scorecard the respondents stated that the company believed that the competition is the company’s main reason for making use of the balanced scorecard. For the respondents the competition is what makes the industry running but a company should not let the competition overrun them because it will lead to more problems. The respondents also stated that some of the managers in their company believed that their company used balanced scorecard because it is a business trend and they had to follow the trend to survive in the market.  Following trends will always be a part of business. For the respondents they believe that the company needs to follow the trends because it can help them make sure that the competition will not gain a massive lead over them. The trends dictate the path of the industry thus the organization needs to use the trend to maintain its path in accordance with the industry’s path. Chapter 4 Summary, Conclusions and Recommendations   This chapter is dedicated to the summarization of the results presented in the previous chapter, as well as the conclusions that can be derived from the gathered and collated data. Recommendations for actions as well as further studies are also included in this chapter. The main objective of the study is directed towards evaluating the effects of the balanced scorecard on modern organizations. In the succeeding parts of this chapter the cause of the problems will be discussed and a corresponding recommendation can come out from it.   Summary Majority of the respondents believed that the balanced scorecard brings about rapid growth in the company. The interview stated that majority of the respondents disagreed with the idea that the balanced scorecard don’t promote sustained performance. The balanced scorecard helps the business to have better revenue volume. Majority of the respondents believed that the balanced score card can help an organization generate more sales to the desired customer groups. The respondents believed that the balanced scorecard helped the company gain operational excellence. The respondents believed that the balanced scorecard helped in increasing the customer intimacy. The respondents believed that the balanced scorecard helped the company have product leadership. The respondents believed that the balanced scorecard helped the company to maintain its operations management techniques. The respondents mentioned that the balanced scorecard helped in creating a tougher customer management strategy. This strategy boosted the company’s performance and it helps the company attract more clients. The respondents believed that the balanced scorecard helped the company attain some organizational learning. The respondents believed that the balanced scorecard supported strategic planning in the firm. The respondents believed that one of the problems with the balanced score card is it being time consuming. The respondents believe that the balance scorecard does not assist in the organizations problem with regards to the challenges of change.   Conclusion The balanced scorecard was an effective strategy for businesses who wants to have a better performance. It is a very useful tool for an organization to gain success and have competitive advantage. It helps the company re access itself and see if it is still on the proper path on achieving its goal. The balanced scorecard was helpful for the company to know more about itself and what needs to be changed for it to solve the different problems it has. The balanced scorecard helped the company learn more about aspects that were once unnoticeable. In doing so the company was able to strategically pinpoint its weakness and use it to create better procedures and better priorities.  Companies who intend to use the balanced scorecard should accept that time loss would be a major risk if this system will be implemented. The balanced scorecard may take some time before it becomes fully functional thus some time might be used by the company.  Companies who intend to use the balanced scorecard should be prepared to face the challenges of creating changes in their organization.  Such changes can be in the way business is transacted and operated. Another change that the balanced scorecard can make in organizations is the overhaul of strategies that may have been used for over a considerable amount of years. The balanced scorecard can create changes to the company’s strategy even if that strategy has been long used by the organization.   Recommendations The modern businesses should take advantage of the benefits of the balanced scorecard and make optimum use of its capabilities. This technology in general can help the company achieve its goals and provide better services to the clients. The balanced scorecard continues to improve, it is desired by businesses to improve and its capacities continue to widen. Modern business should take advantage of these phenomena so that they can reach for their maximum potential as an organization.  Future research should be done on other systems or strategies that can be useful to most modern businesses; these systems should create drastic changes to the procedures and operations of the businesses. It should meet the financial capabilities of businesses and should not use a huge amount of time of modern businesses. It should also provide alternative actions once the effect of the changes is fully felt by the organization.  Future research should also be done to determine strategies that can be used to counter the negative effects of using the balanced scorecard.    Interview questions <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Does BSC bring rapid growth to the company? Why do you think so?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Do you think BSC can bring sustained performance? </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Do you think BSC will decrease the revenue volume of the firm?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Do you have a desired customer group? Do you think BSC can bring such target to the company?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> What do you perceive of operational excellence? Do you think BSC can provide such concept to the firm?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Is there intimacy between your firm and the clients? How do you think BSC can help bring about such idea in the relationship of the firm and client?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Is product leadership a good thing for organizations? Do you think BSC can help you achieve this kind of leadership?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Describe your operations management strategies? How do you think BSC can change your operations management strategies?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Is organizational learning important? What do you think is its relation to BSC? </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Do you think the balanced scorecard supported strategic planning in the firm? </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">  What do you think are the problems of using BSC? </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">  What includes the major factors that made a modern company go for a balanced scorecard?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> What are the reasons of the managers in your company in choosing to use the balance scorecard?</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> What further comment can you say on the effect of the balanced scorecard? </li>

The Effects the Balanced Scorecard Has on the Modern Day Organisations

Chapter 1 Introduction Developmental organizations embrace performance management processes that enable employees to become their grea...

Application of Systems Thinking

Introduction             The paper is basically a project which is the application of what have learned about systems thinking. It is organized as follows: the choice of mess; the planning phase which involves the 4 phases of analysis cycle; the analysis which is the main part of the study; the summary; and the conclusion or what have learned from the study. The Choice of Mess             The Millennium Bug Case File of GCD Security is a good choice of mess, with the problems brought about by the Millennium Bug as the complex situation faced by GCD Security.   A case study of a company that addressed and solved issues on the Millennium Bug is a good way of presenting the application and importance of systems thinking.  Issues on the millennium bug affect the internal and external environment of a business and may have immediate solutions that may worsen the situation. The complexity of these issues made a case study on the millennium bug an interesting topic where systems thinking is evident. It is a mess where all the ideas on systems thinking can be integrated to be able to formulate possible solutions on the problems or simplify the complexity of the situation. An organization is a complex system itself, and was even made more complex because of its external environment, which is composed of the competitors, the customers and the uncontrollable factors such as politics, economy, society, technology and disasters. That is an immediate solution to the problem may cause even bigger problems. This implies that most companies have complex systems thus they are usually in complex situations.   The Plan Concepts The general plan in analyzing the issues in millennium bug is to use leadership as the main concept since the writer will pretend to be the manager of the company in the case study. The ability of the company’s leader to manage the interactions of employees and the company’s interaction with the external environment despite the disaster caused by the bug will be discussed. In relation with the leadership concept, risk management will also be discussed. Defining risk management, it is the intention of improving project performance through early risk identification, mitigation, and project life cycle management, focused on the ideas that risk must be anticipated and planned for; risk and its consequences must be easily displayed; and active management of shared risks by stakeholders will result in better on-time within budget performance (ITIM, 2006). The goal of risk management is to is to obtain understanding by all parties involved and create agreement around the real nature of the risks and how they will be managed (ITIM, 2006). When the nature of the risks is identified, the conflicts involved in the issues are also revealed.             Under leadership, the concept of decision-making and stakeholder participation are unavoidable to be discussed. After the risks are assessed, the control and mitigation of risks need careful decision-making by the leader with agreement on the involved parties. The concepts involved with the analysis will be best described using a Concept Map where the relationships between all the concepts involved are clearly presented:                     Figure 1: Concept Map of the Millennium Bug Mess   Use of the Phases of the Analysis The first step to be done to accomplish the plan is to perform the sensing phase. Sensing phase involves the identification of problems and collection of information needed to establish a clear understanding of the issues. In the Case File: Millennium Bug, most of the necessary materials needed are already provided such as the case study of the GCD Security, GCD documents, backgrounder on millennium bug, and article and newspaper clippings about the millennium bug. Other necessary information that will be needed along the analysis process will come from the internet which has various sources about the main topic and other related topics.   In the understanding phase, all the information collected in the sensing phase will be assessed and classified according to their relevance on the main issue. This is the phase where the purpose behind the analysis of the millennium bug will be discussed whether it is discussed to determine the importance of risk management to systems thinking or the importance or for any other purposes. The main and related issues will be discussed in details. The Spray Diagram will be useful in identifying the arguments in the millennium bug issues while the Influence Diagram will be used in determining the relationships among the parties involved in the case study.   The deciding phase will be basically the part where conclusions are made. The decisions needed to address the issues are taken at this point. On the acting phase, the lessons learned will be summarized, and is where recommended actions are provided. The primary focus of the study will be on the aspect of how companies anticipated and dealt with disaster such as the millennium bug.             In general, and in other studies, the four phases of analysis is the same as the five basic activities in analysis that can serve as a framework for a discussion of the methodology of system analysis (Beimborn, 2003). These activities are: Formulation, Search, Explain, Evaluate, and Interpret (Beimborn, 2003) that has been contained in the four phases of cycle of inquiry mentioned in T205. The relationship of these activities with the four phases of analysis can be best explained using a diagram:                                         Figure 2: Four Phases of Analysis   Analysis The Sensing Phase Background             When the age of computer came, many large and even small businesses took the opportunity and the advantages brought about by the utilization of personal computers in their businesses. GCD Security, a small company in Berkshire, started in 1974 and is providing services security systems such CCTV, intruder alarms, remote sensing and others to the residential and commercial sectors. GCD, having most of its system automated, utilized PCs and considered them as one of its most important physical resources. The company’s human resources include skilled engineers that provide installations and services including follow-ups and maintenance. The company’s major clients include the Royal Borough of Windsor and Maidenhead aside from other businesses within the area and other commercial clients.               GCD, although a small company, has established a well-structured organization. The company’s human resources include skilled engineers that provide installations and services including follow-ups and maintenance. GCD has a good working relationship with its suppliers as well as with its clients.        Statement of the Problem             The Millennium bug issue emerged in 1996 and GCD became aware of it in 1997. The company became concern of the issue since it used PC based solutions for its internal tasks such as accounting, word processing and client contact management. This meant that there was a great possibility of inoperativeness with its internal systems aside from the fact that its products are automated electronic systems that have a great possibility of being inoperative too. Because of these, the millennium bug posed threat to the business operations of GCD and the company needed to face related issues such as how the company should deal with Millennium bug, how they will approach and explain the issues to the customers and how the company, together with the suppliers, will approach the issue.                                                                                                                           Figure 3: The Relationship of the Primary Problem and the Relevant Factors Relevant Factors             In the diagram above, there are several relevant factors mentioned such as miscommunications of staff, poor services and operations of the internal IT system and others. These are the results or risks of the millennium bug; it is necessary that GCD consider all these factors in order to look the situation as a whole and not at millennium bug alone. For example, if the company focused too much on solving millennium bug to be able to maintain its information system and continue servicing the clients, it may overlook the suppliers. That is, GCD may have the solution for millennium bug but its suppliers may have none, then the suppliers can not be able to provide GCD with the products they needed. GCD in effect will have to look for other suppliers causing delay for the company’s business operation. This requires systems thinking and a good system analysis. Data Search             To analyze the probability of these issues, the manager of GCD should search and collect relevant data about the millennium bug. These data may come from news and articles. All relevant materials that can be found are analyzed carefully to determine what more other issues can millennium bug cause. Other materials that will be helpful are case studies of other companies that had coped up with disasters and crisis not necessarily millennium bug but any other crisis. Materials about technological forecasting and changes in the society may also be classified as relevant data.             In search for data, the company may conduct interviews about risk management on established large and complex companies from which GCD may get some idea on managing risks. The company can also coordinate with the other companies within the alarm industries; together the industry can provide advice, risks management strategies, alternatives, and customer information services. Coordination with government agencies is also useful, for they conduct in-depth research about different disasters and crisis; government agencies employ experts and can provide the companies advices, strategies and precautionary measures as well as update the company with the development on the technologies that may address such the issues on millennium bug. The Understanding Phase             The understanding phase is the central phase of analysis. This is where theories are developed to support the explanations. The Millennium Bug             The Millennium Bug which is also referred to as the Year 2000 or Y2K bug is a computer problem, more specifically a problem with the dates in the computer. The problem can be traced back to the earlier computing days, about 1950s, when computer programmers, as result of saving amount and space in the memory of the software they created, they only represented the year in a date with only two digits; 1999 is represented as 99, 1978 as 78, 1982 as 82 and so on.  During those times, the idea was convenient and effective, not until when the new millennium was approaching and the software made by IBM, Microsoft and others became popular resulting to long lives of software. Computer users then realized the possible effects of the dating method, that at the turn of the millennium, year 2000 will be presented as 00 but can be perceived by the computer as 1900. This problem implicated risks, effecting many applications on PCs and on mainframes especially those that had embedded date functions. The following are the applications that can be affected by the Y2K Problem (Kesavan & Kimis, 1997): <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software calendar utility functions in commercial spreadsheets such as Lotus, Excel, and others used commonly in financial applications; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Calendar applications embedded in personal information managers (PIM and handheld devices; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software on commercial planes, military aircraft, weapon systems and satellites; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Computer Operating Systems (OS) utilizing calendar and clock routines;</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Production control systems containing embedded systems such as heating and temperature controllers of industrial and chemical plants; </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software of telephone switching systems and other telecommunication services;</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Software of time-based systems such as security and alarm systems used in residential and commercial buildings and other establishments.</li> </ul>   For some businesses, the immediate solution was to replace their computers. But for some, this was a risky move for there were organizations that have used computers for its internal operations such as in the supply chain and as strategy for maintaining service to customers.             The business operations of the transportation industry were also affected by the bug. In 1998, Railtrack, a train service company, cancelled 44 computer projects which include an integrated asset-management system, which was due to create a database of Railtrack’s stock across the rail network (Parsley, 1998). The airline industry is also affected by the bug. The British Airways (BA) invested on upgrading its computer which involves replacement of equipment in aircraft where there are embedded chips that cannot be reprogrammed (Gribben, 1998). BA also coordinated with other airlines, international organizations and governments to ensure the safety and security of its passengers and employees by the year 2000 (Gribben, 1998). These moves had cost the company to spend about £100 million, £32 million of that went to engine maintenance.             The energy sector was also affected by Y2K for if the bug persisted, it may cause electricity failure. In the UK, the Electricity Association, the UK industry representative body confirmed that electricity companies were spending more than 200 million pounds on fixing the millennium bug (Price, 1999). It has also formed a task force to promote to promote readiness.             Furthermore, the government played an important role for the awareness and prevention of the millennium bug since it has a great effect on the economy of a country. In the UK, the economy is heavily dependent on the Small and Medium Enterprises (SMEs) which generated over 1/3 of the country’s GDP. With over 1.3 million SMEs in UK, each employed about less than 250 staff.             In 1996, the UK government set up the Taskforce 2000 to address the Y2K issue. In 1997, it was a new program called Action 2000 was launched which promoted intensive awareness on Y2K with the support of business organizations and professional institutions to provide advice to businesses in dealing with the problem, especially the SMEs which was found out by a survey that it was the sector that was unprepared the most of the Millennium Bug.             Action 2000 constructed a comprehensive model of the industrial and other processes. The model was used to identify critical interdependencies; that is failure of one utility could cause serious problems for others. These utilities which serve as essential services to businesses and also what comprised the national infrastructure of UK include electricity, gas, water and finance. By the end of the program, it was announced that the UK infrastructure was Millennium-ready. Action 2000 also promoted public information campaign to reassure the public that the problem was under control to preventing panic.              A diagram will further describe the interconnections of industries affected by the bug to show how largely could be the damage of such bug in the business sector especially when there are critical interdependencies among the different industries. The diagram below shows the interdependency of the major industry on the essential utilities such as electricity, water, gas and finance.             It is very noticeable that in diagram, a lost or damage to an essential utility has a significant effect on the other. For example, when the water utility was interrupted by the Y2K, the service and the manufacturing industries will be directly affected and interrupted as well as the transportation and the individual household. Figure 4: Interdependencies of Different Industries on Each other and on the Essential Utilities Risk Management             Due to the above risks brought about by the Millennium bug, it is important for companies especially the SMEs to learn how to manage such risks. Unlike large companies, which have the ability to spend additional expenses and has the experiences on dealing with risks and disasters, SMEs needed further education on managing risk.             Risk management is also a step by step process. The first step to risk management is Risk Planning when the company decides on how risk will be treated (ITIM, 2006). In SMEs, it is the responsibility of the manager to identify and articulate the risk and its possible impacts to the company. Risk Identification follows Risk Planning. At this point, the risk is explicitly identified, involving the identification of potential sources of risks, potential risk events and when research and interviews can be conducted. Risk analysis is the next step. It is the process of anticipating and identifying probable impacts on a project, reviewing assumptions, and taking action to prevent a negative impact or to take advantage of other opportunity (ITIM, 2006). The probability of the risk is also determined at this stage as well as the potential consequence of its occurrence (ITIM, 2006). Risk Mitigation then follows; this involves techniques used to control or transfer risk. Some of the most common techniques are budget management to mitigate cost risk, parallel development and prototyping to mitigate technical risk. Risk Mitigation is followed by Risk Control. At this point, the risk can be considered managed or restrained already. Figure 5: Risk Management Process The Deciding/ Acting Phase             With all the necessary information sated above, GCD can now evaluate on the probable approach on the Millennium bug. It is noticeable that the millennium bug is not a problem within a company only rather it is a global problem which needed to be approached with systems thinking, that is GCD will manage the risk with systems approach.             To do this, GCD should weigh the vulnerability of all the stakeholders involved. First to be done is to assess the vulnerability of the company to its information system since many of its operations are interdependent on its information system (see figure 3). Then understand the vulnerability of the suppliers to the millennium bug because it is from the suppliers that GCD’s products came from and without the products, there will be no point of continuing the business as well as the vulnerability of the clients.             It is important for GCD to coordinate with government agencies such as the Action 2000. Because of interdependency of UK’s economy to SMEs like GCD, the government will be much willing to help GCD overcome the risk. As noted above, the British Airways coordinated with other airlines. GCD can do the same; it should also coordinate with other alarm companies to be able to acquire ideas on how to mitigate the millennium bug risks.             The diagram below shows the stakeholders of GCD and the sectors that have significance in the mitigation of the Y2K bug.   Figure 6: Sectors Involved in GCD’s Mitigation of the Millennium Bug             After evaluation, GCD decided to take the following course of actions: RISK PLANNING: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Form a committee responsible for the Millennium Bug headed by the manager</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Be sure that the company’s organization is well-structured and is ready for changes that might be brought about by the actions necessary to manage the risk</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Review and documentation of all the hardware and software use by GCD</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Investigation of systems used by the company that can probably be affected by the Y2K bug such as the equipments and the telephone system</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Identification and documentation of the products that are possible to be affected by the Y2K bug ( this can bed done with the coordination form the suppliers)</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Review government regulations</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Formulate strategies on how to mitigate the risks</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Set a timetable for proper scheduling and set a target date when the risks are expected to be mitigated</li> </ul>   RISK IDENTIFICATION: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Conduct research study about the millennium bug</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Consult IT professionals to assist the company all through out the risk management process</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Coordinate with the industry and government agencies such as Action 2000</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Coordinate with the suppliers and know their actions about the bug</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the reactions and perceptions of the clients by coordinating with each of them and reassuring that the company is taking actions </li> </ul> RISK ANALYSIS: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Evaluate the overall risks cause by the millennium bug and evaluate each risk on how vulnerable the company to these risks</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Evaluate which products and the corresponding the supplier are vulnerable to which risks</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the possible occurrence of each risk and their corresponding consequences. Rating each risk depending on its impact is necessary for effective evaluation and scheduling</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Schedule each risk and assess the possible solutions and prevention for it</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the costs that are accompanied by the prevention of each risk</li> </ul> RISK MITIGATION: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Determine the resources needed (Financial, human resources, physical resources) and the resources that are affordable to GCD. This might be very expensive for the company so there should be alternatives.</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">  Determine which method is suitable for the mitigation of the millennium bug. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Since the millennium bug is technical in nature, parallel development or prototyping method can be used. Mentioned earlier, BA reprogrammed some of its PCs; GCD may do the same depending on the evaluation of IT professionals. The suppliers will be responsible on updating or reprogramming of their products while the clients of the company who have availed products and services from GCD can have their installed products reprogrammed with the cooperation of the respective suppliers. If reprogramming of installed products is not possible (as specified by the supplier and tested by GCD), GCD may replace the product depending on the negotiations with the supplier. There may also be some government regulations that correspond to this case which can be the bases of the actions of GCD. Each product should be specified, tested and evaluated. </li> </ul>   RISK CONTROL: <ul style="margin-top: 0in; margin-bottom: 0in" type="disc"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Continuous and periodical review of the risk is important to be updated on the possible outcome of the actions taken by GCD. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> The committee who “debug” the risk should also be the responsible for monitoring since there may be some associated risks with the actions taken </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Assess the changes that has brought about by the actions taken</li> </ul>   It is important to weigh the vulnerability of each stakeholder involved. That is, for every actions taken by the company, each stakeholder are taken to consideration to determine if the action can damage a stakeholder or damage the structure of the company’s business system (e.g. lose a supplier or a loyal customer). Summary             This study is basically an application of what has learned about systems thinking. The study chose issues on the Millennium Bug with the aid of a case study where systems thinking is applied. There are currently many problems and complex situations encountered especially in organizations where problems do not only affect an individual but systems of individuals and an apparent immediate solution to problems may lead to even bigger problems. The paper then focuses on the importance and applications of systems thinking. With this study, a step by step analysis and the processes that can be used in systems thinking are involved, discussed and put into applications.             The case study of GCD Security on how the company dealt with the millennium bug was chosen for this study for several reasons. First, with the use of a company whose system is a complex one will cover areas on systems thinking. Secondly, a small enterprise like GCD, unlike larger companies, still has no enough experience dealing with risks such as the millennium bug. Therefore, a study on how an SME like GCD managed risks is an interesting study. Also, by using a case study of a company, there are other relevant topics that can also be discussed such as risk management.             The planning part involves diagrams to make the discussion more easily to be comprehended. The planning part serves as the outline on what the analysis part is all about. The analysis section has 4 phases: the sensing phase, the understanding phase, and the deciding and action phase. In the sensing phase, the background of the case study is presented; the problems and issues are presented; and using a diagram, the relevant issues associated with the Millennium bug with respect to the company’s operation are identified.             The understanding phase discusses about the data that were gathered for the study. These data gave an overview of what GCD can do to manage the risks brought about by the millennium bug like the possibility reprogramming and coordination with other companies within the industry that are learned form the British Airways. The understanding phase also gave GCD the overview on what the government can help for the company. This phase also provided a step by step process on how to manage risks in a company systematically.             The deciding phase is the evaluation of the how to start risk management. It was learned that weighing the vulnerabilities of each stakeholder in the GCD business system is necessary to be sure the steps that are taken can not bring damage or much problem to all the parties involved. Conclusions             Generally, the study is helpful in managing complex situations specifically overcoming risk in a complex system. It is learned that in a system where a move to overcome risks or problems can be damaging to a part of the system or to the system as a whole. Therefore careful risk management is necessary. It is learned that risk management is not a task that can be done right ahead that whatever obvious possible solution can help an organization overcome risks. Risk management involves step by step process, each step carefully evaluated and executed, avoiding not to interfere with the other member of the system. Also, risks are also done looking at the system as a whole. Like in the case study, GCD considered the help of people and organizations outside the company since GCD is generally part of the economic system of UK. GCD is part of the system of the alarm industry, that any damage to GCD is may have effect on the entire industry. Therefore the primary objective of the study is to expose the significance of systems thinking as well as the relationship of systems thinking to risk management. It is also noticeable that systems thinking is also applicable in understanding other topics such as sustainable development where the environment is taken as part of the systems of organizations; in change management where the vulnerability of each the department in a company are weighed to determine the effect of the change to each department for the company’s system to be effective; and in economics and politics where country will be affected on the actions of the government. References: Gribben, R. (1998) BA puts £100m into grounding millennium bug, City News Electronic Telegraph, February Issue 991 Online <http://www.telegraph.co.uk/htmlContent.jhtml?html=/archive/1998/02/10/cba10.html>   Information Technology Investment Management Process, Introduction to Risk             Management, accessed online on June 9, 2006             <http://www.rongarlow.com/ITIM/Risk/risk.htm>   Kesavan, J. & Kimis, A. (1997), The Millennium Bug,             Accessed online on June 9, 2006             < http://www.doc.ic.ac.uk/~nd/surprise_97/journal/vol4/ak16/>   Parsley, D. (1998) Bug delays Railtrack, The Sunday Times, 31 May,             Acquired from the T205 Case File 3: Millennium Bug        Price, C. (1999) Questions linger on energy, Financial Times, 3 March             Acquired from the T205 Case File 3: Millennium Bug

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