Question

Describe the two tools commonly used to evaluate an organizations external and internal situation.

Answer 1

Answer

Introduction of Evaluating of Organisation:-

Organizational evaluation or assessment measures, compares, and analyzes the coherence between results and specific objectives, and between specific objectives and general objectives of institutional projects, programs, or plans. Evaluation is an important aspect of improving the administration in any organization.

Two tools commonly used to evaluate an organizations external and internal situation.

• Benchmarking. ...
• Balanced Scorecard. ...
• Porter's Five Forces. ...
• The GE-McKinsey Nine-Box Matrix. ...
• The BCG Growth-Share Matrix. ...
• Core Competencies.

Benchmarking

Benchmarking means identifying the best practices (achieved results) of industry leaders and then comparing your own business performance with them. A benchmark can help in virtually all areas of your business and be a useful tool in a business's program of continuous improvement.

Types of Benchmarking

A copier company has benchmarked against a camping goods store. An ammunition supplier has benchmarked against a cosmetics company, comparing shell casings and lipstick holders. An airline company looked at a racing crew to see how to perform quick equipment maintenance and repairs. Within the federal government, agencies have benchmarked their customer service lines for promptness, accuracy, and courtesy against other federal agencies as well as the private sector. The type of study undertaken is not as important as recognizing that benchmarking, both inside and outside an organization, can be enormously beneficial for different reasons and in different ways. Due to the vast differences in resource investments and possible outcomes associated with different types, management must make the decision and identify which type the benchmarking team is to use.

No one type is the best way. One type might be more appropriate for an organization than another depending on its environment, products, services, resources, culture, and current stage of TQ implementation. There are four primary types of benchmarking: internal, competitive, functional, and generic.

1. Internal benchmarking is a comparison of a business process to a similar process inside the organization.
2. Competitive benchmarking is a direct competitor-to-competitor comparison of a product, service, process, or method.
3. Functional benchmarking is a comparison to similar or identical practices within the same or similar functions outside the immediate industry.
4. Generic benchmarking broadly conceptualizes unrelated business processes or functions that can be practiced in the same or similar ways regardless of the industry.

A more detailed explanation of these four types of benchmarking follows, along with: a brief description of each type; possible outcomes; examples from DON, DOD, federal government, and private industry; and some of the pros and cons for each type.

Internal benchmarking

Internal benchmarking is a comparison of a business process to a similar process inside the organization to acquire the best internal. business practices. At the federal level, two Department of Transportation sites might prepare their budget submissions for Congressional approval. In the private sector, a retail food store chain selects its most profitable store as a benchmark for the others.

Benefits

• most cost efficient
• relatively easy
• low cost
• fast
• good practice/training with benchmarking process
• information sharing
• easy to transfer lessons learned
• common language
• gain a deeper understanding of your own process
• makes a great starting point for future benchmarking studies

Challenges

• fosters mediocrity
• limits options for growth
• low performance improvement
• can create atmosphere of competitiveness
• not much of a stretch
• internal bias
• may not yield best-in-class comparisons

Competitive benchmarking

Competitive benchmarking is a direct competitor-to-competitor comparison of a product, service, process, or method. This form of benchmarking provides an opportunity to know yourself and your competition better; combine forces against another common competitor. An example of competitive benchmarking within the Department of Defense, might include contrasting Army and Air Force supply systems for Joint initiatives. Within the private sector, two or more American car companies might benchmark for mutual benefit against common international competitor; or, rival chemical companies benchmark for environmental compliance.

Benefits

• comparing like processes
• know your competition better
• possible partnership
• useful for planning and setting goals
• similar regulatory issues

Challenges

• difficult legal issues
• relatively low performance improvement
• threatening
• limited by trade secrets
• may provide misleading information
• may not get best-in-class comparisons
• competitors could capitalize on your weaknesses

Functional benchmarking

Functional benchmarking is a comparison to similar or identical practices (e.g., the picking process for assembling customer orders, maintaining inventory controls of spare computer parts, logistics to move operational forces, etc.) within the same or similar functions outside the immediate industry. Functional benchmarking might identify practices that are superior in your functional areas in whatever industry they may exist. Functional benchmarking would be accomplished at the federal level by comparing the IRS collections process against those of American Express. Comparing copper mining techniques to coal mining techniques is an example in the private sector.

Benefits

• provides industry trend information
• quantitative comparisons
• better improvement rate; about 35

Challenges

• diverse corporate cultures
• great need for specificity
• not invented here. syndrome
• common functions can be difficult to find
• takes more time than internal or percent
• must be able to visualize how to adapt the best practices

Generic benchmarking

Generic benchmarking broadly conceptualizes unrelated business processes or functions that can be practiced in the same or similar ways regardless of the industry (e.g., transferring funds, bar coding, order fulfillment, admissions, replenishing inventory, warehousing, etc.). Generic means without a brand. It is a pure form of benchmarking,. (Camp, 1989). The focus is on being innovative and gaining insight into excellent work processes rather than on the business practices of a particular organization or industry. The outcome is usually a broad conceptualization, yet careful understanding, of a generic work process that works extremely well. Generic benchmarking is occurring when a Veterans Administration hospital's check-in process is contrasted against a car rental agency's check-in process. Adapting grocery store bar coding to control and sort airport luggage might be another example.

Benefits

• high payoff; about 35 percent
• noncompetitive/nonthreatening
• broad,new perspective
• innovative
• high potential for discovery
• examines multiple industries
• can compare to world

Challenges

• difficult concept
• can be difficult to identify best-in- class
• takes a long time to plan
• known world-class companies are inundated with requests
• quantum changes can bring high risk, escalate fear
• class organizations in your process

Introduction of Balanced Scorecard

A balanced scorecard is a performance metric used to identify, improve, and control a business's various functions and resulting outcomes. It was first introduced in 1992 by David Norton and Robert Kaplan, who took previous metric performance measures and adapted them to include nonfinancial information

The balanced scorecard (BSC) is a strategic planning and management system that organizations use to: Communicate what they are trying to accomplish. Align the day-to-day work that everyone is doing with strategy. Prioritize projects, products, and services.

KEY POINTS

• A balanced scorecard is a performance metric used to identify, improve, and control a business's various functions and resulting outcomes.
• It was first introduced in 1992 by David Norton and Robert Kaplan, who took previous metric performance measures and adapted them to include nonfinancial information.
• The balanced scorecard involves measuring four main aspects of a business: learning and growth, business processes, customers, and finance.

Understanding Balanced Scorecards

Accounting academic Dr. Robert Kaplan and business executive and theorist Dr. David Norton first introduced the balanced scorecard. The Harvard Business Review first published it in the 1992 article "The Balanced Scorecard—Measures That Drive Performance." Both Kaplan and Norton took previous metric performance measures and adapted them to include nonfinancial information.

Companies can easily identify factors hindering business performance and outline strategic changes tracked by future scorecards.

The balanced scorecard model reinforces good behavior in an organization by isolating four separate areas that need to be analyzed. These four areas, also called legs, involve learning and growth, business processes, customers, and finance.

The balanced scorecard is used to attain objectives, measurements, initiatives, and goals that result from these four primary functions of a business. Companies can easily identify factors hindering business performance and outline strategic changes tracked by future scorecards.

The balanced scorecard can provide information about the company as a whole when viewing company objectives. An organization may use the balanced scorecard model to implement strategy mapping to see where value is added within an organization. A company also uses a balanced scorecard to develop strategic initiatives and strategic objectives.

Characteristics of the Balanced Scorecard Model

Information is collected and analyzed from four aspects of a business:

1. Learning and growth are analyzed through the investigation of training and knowledge resources. This first leg handles how well information is captured and how effectively employees use the information to convert it to a competitive advantage over the industry.
2. Business processes are evaluated by investigating how well products are manufactured. Operational management is analyzed to track any gaps, delays, bottlenecks, shortages, or waste.
3. Customer perspectives are collected to gauge customer satisfaction with quality, price, and availability of products or services. Customers provide feedback about their satisfaction with current products.
4. Financial data, such as sales, expenditures, and income are used to understand financial performance. These financial metrics may include dollar amounts, financial ratios, budget variances, or income targets.

These four legs encompass the vision and strategy of an organization and require active management to analyze the data collected. The balanced scorecard is thus often referred to as a management tool rather than a measurement tool.

A balanced scorecard proposes that organizations should be viewed from the following four perspectives, each with their own metrics, data collection, and analysis:

1. Financial
2. Customer
3. Internal Business Processes
4. Learning and Growth

How Balanced Score Cards Work

A BSC is used by organizations as a means to better communicate the goals it's striving to achieve. This management system helps workers align daily tasks and long-term efforts, to better support the organization’s overall strategy. BSCs can be used to assess how a team or a siloed initiative is incrementally advancing its respective mandates to meet the company’s goals, thus letting senior management personnel re-calibrate workflow priorities, as needed.

The BSC system may be viewed as a type of roadmap that lays out the different components of a company’s business plan, including the following elements:

• The company’s overall mission
• The company’s long-term vision
• The company’s core values
• The company’s performance benchmarks

BSC systems empower companies to think beyond the proximate goal of driving up immediate revenue—which is rather obvious, baked in expectation. Instead, BSCs help guide a company's efforts to evolve into new areas, scale operations, and achieve loftier ambitions.

An organization’s progress can be measured against the benchmarks a BSC has outlined, using business management software and apps that gather data and performance metrics, then send that information to the parties best positioned to take meaningful action. Unlike traditional financial reporting documents, which rely on past fiscal trends to project future performance, BSC systems form proactive frameworks for growth, in the quarters and years to come.

A Brief History of Balanced Score Cards (BSC)

The first balanced scorecard was created in 1987, by independent consultant Art Schneiderman, while he was working for semiconductor manufacturer Analog Devices. Three years later, Schneiderman fortuitously participated in an unrelated research study, led by Robert S. Kaplan, during which time Schneiderman chance referenced his work performance measurement research.

Subsequently, Kaplan, along with consultant David P. Norton, anonymous included details of Schneiderman’s scorecard in a 1992 white paper, then again in another article one year later. Finally, in 1996, Kaplan and Norton published a book entitled "The Balanced Scorecard," which mainstreamed this concept, leading many to believe that these two authors originated the idea.

Since the balanced scorecard was first popularized, a host of alternative models have emerged. However, these have largely been restricted to academic circles, and have limited real-world applications. In any case, although the corporate scorecard terminology was coined by Schneiderman, the topic of performance management was part of conversations that occurred in early 19th-century American businesses, according to historians.

Conclusion

Above two tools commonly used to evaluate an organizations external and internal situation.