Yunnans Lucky Airs Balanced Scorecard Case Study

Yunnans Lucky Airs Balanced Scorecard - Case Study Example Furthermore technology is also changing the manner in which businesses operate. For example, technological developments have led to the development of e-commerce which enables companies to sell products through online channels using internet communication. Organisations must also respond to the needs of multiple stakeholders such as environmental protection agencies that require companies to reduce the amount of CO2 emissions. While shareholder value maximisation remains the main objective of every company, companies must first satisfy the needs of other stakeholders to be able to properly maximise shareholder value.To determine whether it is performing well, that is meeting the needs of its different stakeholders, a company must use a set of performance measures to gauge its performance against pre-determined targets and against the performance of its competitors.Until recently, the main focus of many companies had been on the use of financial performance measures. These measures fo cused only on the financial performance of the company. While financial performance measures remain an integral part of performance measurement, they are not the only measures of organisational success. Recent developments suggest that non-financial performance measures also have an important role to play in determining organisational success or failure. One of the most commonly used performance measurement tools that incorporate both financial and non-financial performance measures is the balanced scorecard. There are a number of reasons why an organisation should adopt a balanced scorecard. These are detailed in the letter to the Chief Executive Officer of Lucky Air Below. From: The Chief Financial Offer To: The Chief Executive Officer of Lucky Air Re: Adoption of the Balanced Scorecard by Yunnan Lucky Air Dear Sir, I am writing to express concerns to the current performance measures employed by Lucky Air. I believe that these measures are not in line with today's globalised, technologically driven, and customer focused business environment. Lucky Air continues to measure performance from the shareholder performance whereas there a are a host of interested groups of stakeholders that require information on how their needs are being met by Lucky Air. Given these issues, I will like Lucky Air to implement the balanced scorecard. The balanced scorecard is a performance report that is based on a broad set of financial and non-financial performance measures. The balanced scorecard is made up of four main perspectives (Kaplan and Northon, 1996, 2000; Malina and Selto, 2001; Blocher et al., 2005). These include Financial, Customer, internal business processes, and the learning and growth perspectives (Malina and Selto, 2001). I believe that adopting the balanced scorecard will enable Lucky Air to impro ve the manner in which it performs its services to multiple stakeholders as this will enable Lucky Air to set realisable targets and work towards achieving those targets. For example, the internal business perspectives will enable Lucky Air to improve on quality of service, productivity and safety (Libby et al., 2002). From the foregoing, I believe that adopting the Balanced scorecard will tremendously improve the way Lucky Air is measuring performance and thus determine how Lucky Air is performing compared to the industry as a whole. Best Regards, Chief Financial Officer. 2. Gap Analysis of Lucky Air Within four years of its incorporation, Yunnan Lucky Air's revenues had grown to a US$104.3 million which corroborates that it has