One of the management accounting practices and techniques that is suitable for the use of Rainfield Pets House

is balanced scorecard. Balanced scorecard is an approach to performance measurement which emphasizes the need to provide management with a set of information which covers all relevant areas of performance in an objective and unbiased fashion. The information provided may be both financial and non-financial and cover areas such as financial, customer satisfaction, internal efficiency and innovation. The balanced scorecard is used extensively in business and industry, government and non-profit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications and monitor organization performance against strategic goals. This approach added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more balanced view of organizational performance. The balanced scorecard is not only a measurement system but also a management system that enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. When fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate age story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology and innovation. The balanced scorecard focuses on four different perspectives. One of four perspectives is customer satisfaction. It normally concerns about what is the value of existing and new customers to the company. This approach gives rise to target that matter to customers which include things such as the cost, quality, speed of delivery, inspection, handling, the services provided, the fulfillment of customer satisfaction, complaint feedback and so on. These are leading indicators as if the customers are not

satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. Another perspective for this approach is internal efficiency. It concerns about the processes which the staffs must excel at to achieve companys financial and customers objectives and what the company can do to be successful. The aim of this perspective is to improve internal processes and decision making of the company. From this perspective, the manager will know how well the company is doing and whether its products and services conform to customer requirements. It also concerns about the employees morale, motivation and how the management system works, whether is the system operates efficiently and effectively or not. The third perspective is innovation and learning. The main concern is how the company can continue to improve and create future value. It considers the businesss capacity to maintain its competitive competition through the acquisition of new skills and the development of new products. This perspective includes employee training and corporate self-cultural attitudes related to both individual and corporate selfimprovement. In the current climate of rapid technological change, it is becoming necessary for knowledge staffs to be in a continuous learning mode. The fourth perspective of this approach is financial with related to profitability. It concerns about how to create value for companys shareholder. It covers traditional measures such as growth profitability and shareholder value but set through talking to the shareholder or shareholders direct. Timely and accurate funding data will always a priority, and managers will do whatever necessary to provide it. But the point is that the current emphasis on financial leads to the unbalanced situation with regard to other perspectives. There is perhaps a need to include additional financial-related data, such as risk assessment and cost-benefit data in this perspective. The approach is balanced as mangers are required to think in terms of all four perspectives, to prevent improvements being made in one area at expense of another.

There are some important features of this approach. First, it looks at both internal and external matters concerning the organization. Secondly, it is related to the key elements of a companys strategy. Thirdly, financial and non-financial measures are linked together. Before Rainfield Pets House can start implementing a balanced scorecard, it needs a clear understanding of its vision and strategy. It is the managements responsibility to define a vision, formulate a strategy and set goals regardless of a balanced scorecard being implemented. Common tools used to help structure the strategy work are: Strategy Mapping, PEST (Political, Economical, Societal, Technological) analysis, SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis, Porter value chain analysis, Porter Five forces of competition analysis and BCG Matrix analysis. The actual implementation of a balanced scorecard can be divided into five phases: Model synthesis, Technical implementation, Organizational integration, Technical integration and Operation. Many of the phases can be performed parallel. This will shorten the total project schedule significantly. The organization should seeks consensus about their vision and strategy and derive the needed measures during the model synthesis phase. The model synthesis phase consists of two major parts, those are strategy synthesis and measure synthesis. The objective of the strategy synthesis phase is to form and commit the management to a consensus view about the organizations vision and strategies. A good way of finding consensus is to conduct interview with the management team. For example, Rainfield Pets House can conduct interview with its five staff to find a consensus view and the results from the interview can then be concluded into common view that everybody include its customers can commit. The strategy of the organization is quantified into measures or Key Performance Indicators (KPIs) during the measure synthesis phase. The Critical Success factors or alternatively Strategy maps can be used to derive the measures from the strategy. The key properties of each of the measures in balanced scorecard are needed to be defined. However, there are some issues or problems faced during this phase of implementation such as it is not unheard of that there exist several

different views of vision and strategic principles within an organization and the Critical Success factors approach is lacks of the ability to describe the logical cause and effect relationships between the measures in the different perspectives. During the technical implementation phase, there are steps to be followed. Those steps are installation of software, basic training for the staffs who build in scorecards, building of the scorecards, setting target and alarm levels, setting calculation formulas to consolidate the date and defining graphical properties for graphs. It will be a better way to have an implementation consultant to give advices for the implementation of balanced scorecard for Rainfield Pets House as its staffs are not well trained and the staff turnover rate is high. This can indicates that the staffs are lacked of knowledge about the balanced scorecard. After the technical implementation phase, here come the organizational integration phase. The balanced scorecard should be tightly integrated to the processes of the organization and communicated to all the members of the organization. There are some tasks to be carried out during the organizational phase. First, the management should define the persons who are responsible for measure data and their empowerment. Secondly, the management should explain to the staffs about the objectives of implementation of balanced scorecard. Thirdly, the management and strategy process and also reporting process should be re-engineered. The balanced scorecard system should be used in management processes for example monthly review, quarterly business review and so on. Action plans and comments should be added as part of the management processes. There is an effective way to reduce the effort needed to collect measure data is to integrate the balanced scorecard system to operational IT systems, databases and/or data warehouses. The scope for the fourth phase, Technical integration varies enormously, number of integrated measures and number of outside systems used being the most important drivers. Some steps are followed during the technical integration phase. First, identify the imported measures and the source systems. Secondly, do analysis for the database structure and exporting capabilities of the operative systems.

Thirdly, define the procedure to get measure data from data sources including data identification, modification and scheduling. Lastly, implement the link between QPR scorecard and the operative systems. Technical integration can be performed parallel with organizational integration and often partially overlaps the operation phase. The number and the complexity of the systems and also the cost of implementation could be greater than the benefits obtained will be the problems faced in this phase of implementation of balanced scorecard. A lot of effort and time need to be allocated by the staffs to have a good understanding about the systems in order to solve the problem mentioned. During the final phase that is operation of the balanced scorecard system, the balanced scorecard is integrated to normal management and reporting processes of the organization. Within these processes some tasks were performed regularly such as update measure values, analyze the balanced scorecard results, report the balanced scorecard results to the directors and refine the balanced scorecard model. The balanced scorecard should become a standard tool used by the management team in their strategy work. The general issues or problems that could be arise during the implementation of the balanced scorecard system is the estimation of project scope and also the cost of implementation. It is difficult to estimate the whole cost of implementation in advance due to the staffs or management of Rainfield Pets House might not familiar and new to the balanced scorecard system. In addition, the management also cant estimate the time needed for the implementation of balanced scorecard system. The management might think that it is not beneficial to spend lot of money and time to implement this system as the pets house is running quite well without the balanced scorecard system. If the cost exceeds the benefits, the management will choose rather not to implement this system. Besides, the management would not know how much effort should be put into the implementation of balanced scorecard as they do not know how complexity is the balanced scorecard system. Furthermore, the management need to incur training costs

for the staffs to gain some knowledge and skills about how to operate the balanced scorecard system. This may again be one of the reason that the management refuse to implement this system. Likewise, the staffs might feel demotivated as they need to put extra efforts and do extra works and also might refuse to use a new system. There are some benefits obtained after the implementation of balanced scorecard system. One of the potential benefits is it can increase the focus of management and staffs on the companys strategy and results. The staffs can be clearer about what is the companys strategy and will put more efforts in to achieve the strategy as they know what are their goals. They can also be clearer and more understandable about the results achieved and hence will be more motivated to improve the results in future. Besides, by implementing balanced scorecard system, the organizational performance can be improved by measuring what matters. The management can know which perspective of the organization need to be solved as the balanced scorecard did show the four important perspectives of the company and hence they can know which perspective has deficiencies and need to be pay attention of. Furthermore, it aligns the organization strategy with the work people do on a day-to-day basis. Hence, the management and staffs will not deviate away from the organization strategy. It can also focus on the drivers of future performance and improve communication of the organizations vision and strategy too. In addition, by indirectly, the management and staffs can be trained for future senior executive position and it will be a long term benefits for the company which cannot be foreseen now.