Financial

Financial Performance Management

Introduction

In the current business environment, the term quality in the service and product plays a significant role in achieving the suitable profit and sustaining the sales. In this way, the main aim of this report is to analyse the performance of the YUM! brand for the past two years. In the first section, this report critically evaluates the role of the balance scorecard approach in improving YUM! recent performance. In the next section, this report determines the concept of total quality management and it also presents the discussion on TQM of YUM!. This report is also vital to develop the understanding on the benchmarking.

Balanced scorecard

The balanced scorecard (BSC) is an effective framework to determine the effectiveness of the intangible assets within the organisation when the strategies are applied. This framework is used to transform the strategies into performance objectives, goals and measures in four areas including customer, finance, internal process and learning and growth. The use of this framework enables the firms to get benefits in terms of improving financial results, strategic alignment and increase in collaboration (Tan et al., 2017).

The major focus of YUM! is on the innovation to develop trust among the people as its main key competitive advantage is the investment in its innovative culture to fuel better business results. Its emphasis on the business expansion through franchises and investment in people capability, is also valuable in generative attractive returns (Yum Brand, 2019).

However, this strategic focus was not successfully executed as its Pizza Hut brand did not perform well. Some risks associated to food safety and food-borne illness concerns and increasing health concerns among people also raised issues for the business of YUM!. It was required for the company to make changes in its existing strategies and approaches related to the business. Meanwhile, the focus on healthy products with the nutritional content of food products by YUM! was an obvious option for the business growth as there were increasing concerns regarding weight gain and other adverse effects among people. These concerns may raise the legal complications for the company and its business. At the same time, supply chain issue was the major concern for the company that affected its business growth of KFC brand (Noe et al., 2017). The lack of the required supply in nearly 900 restaurants also caused a drop in sales of the company due to the supplier disruption at KFC stores. In addition, Pizza Hut stores could not perform effectively that affected overall revenues of the firm. The focus on health aspects helped the firm to target the customer perspective but the use of BSC might have improved the performance of YUM! brands through focus on the different areas of the business including customer, operations, financial and learning and growth(Yum Brand, 2019). It is because the use of this framework can enable the firm to determine the causes behind the lacking performance and provide the effect of these causes on the performance of the company. It will be effective to determine the impact of improving supply chain and healthy product innovation on the different four perspectives of BSC. For instance, the investment in people by the company to increase their capabilities can be related to the learning and growth perspective of the BSC. With the help of this, the company might have identified the skill gap and provided themwith training to improve the skills and competencies of the workers to enhance the effectiveness of the supply chain and provide healthy and innovative products to the customers (Hladchenko, 2015).

YUM! operates in highly competitive business environmentes as the food industry is competitive due to presence of many rival companies that have an adverse impact on the performance of the company. So, it is required for YUM!to consider the competition and strategies of the competitors but BSC does not consider the competitors and the external environment. The focus on the analysis of the internal and external environment might have been effective to make the framework more productive for YUM!. For instance, the use of external benchmarking can be substantial to determine the external information that could be significant to make effective decisions (Yum Brand, 2019).

At the same time, the use of BSC is effective to assess the strategic position of the company that is crucial in learn what kind of strategies can be adopted by the firms to improve the market position. This tool is also effective to determine cause and effect relationship that is significant to integrate the expectations and strategies applied by making better decision making on the basis of the short-term results. In the case of YUM!, the major focus of the company in short-term was to increase revenues for its all brands (Keyes, 2016). This short-term goal should have integrated with the internal and growth perspective. The BSC for YUM! is illustrated in table below:

Table 1: Balanced Scorecard

Perspective Objective Measure Target
Financial Sales growthIncrease in sales especially healthy foodsIncrease in sales by 8% annually
Customer Increase in number of customers through trust development by providing health food itemsIncrease in number of customers

Customer satisfaction index

Increase in number of customers by 25%

Increase in customer satisfaction index by 5%

Internal process Enhance healthy and nutritional aspectsIncrease nutritional values of productsMeet or exceed the new standards
Learning and growth Skill development in healthy food aspectsEmployee training and development20 hours employee training yearly

 

From the balance scorecard, it can be observed that for accomplishing this short-term objective, it is mandatory for the firm to enhance the skills and knowledge of the employees to meet the unmet demand and requirements of the customers in relation to health aspects. It is required for the firm to enhance the quality of food items in terms of health aspects and nutrition to attract more customers and increase revenues and profits considerably. The achievement of this objective can be measured by determining the improvement in productivity and training hours spent in training for skill development in the employees (Lubis et al., 2012). In customer perspective, it is required to promote the health aspects of the food products among the people and achieve the sales target for the healthy food items. So, it is not easy to implement BSC within the organisation due to its complications in different perspectives and need of time and finance resources. These reasons might be restrictions for YUM! to adopt this framework in the business (Yum Brand, 2019).

For enhancing the performance of YUM! in all its brands, the BSC framework could have been used by the company to develop a favourable working environment that could have led to sales growth. In the learning and growth perspective, YUM!could have focused on the core business principles related to quality and customer satisfaction and improve the brand image to achieve its business objectives. The customer perspective could have focused on the satisfaction and trust level among the customers regarding the company’s products as it could have been significant to focus on the nutritional values of its food products. The use of survey and feedback on social media and website could have been effective to know the views and opinions of the customers and meet their needs and requirements properly.

The working with teams of different functional departments could have been used by YUM! to make informed decisions and prevent the losses or decline in sales of brands like Pizza Hut brand. Involvement of different people in decision making would have allowed for getting meaningful insights to make better decisions and attract more customers towards its products to increase revenues and profits in the financial year. Some improvements are made in the financial perspective through the costs related to the learning and growth and customer perspectives that could have been prevented through use of BSC framework.

Total quality management

The total quality management TQM is a vital management approach that is used to improve the overall performance of the company. The total quality management improves and focuses on the culture attitude and organisation of a company. The main aim behind the adoption of TQM is to satisfy the need of each customer in the business.  The total quality management method helps the company to engage the employees in the improvement of the service and product of the company. The practices of a company regarding the total quality management determine the performance of the company as the combination of the quality and management. One of the main aim of the TQM is to increase the profit and decrease the cost or loss of company (Sallis, 2014). YUM!brandhas adopted the concept of the TQM significantly in which it focuses on the following aspects:

Commitment and understanding from employees

YUM!brand is committed to meet with the expectation of the employees and their needs. Each employee of YUM! is aware of the concept of the total quality management policies and supports the company to achieve the aim of TQM. At the same time, the employees of the YUM! also aware about the expectation of the company and customer from them. This feature of employment culture of YUM! reduces the burden of management because employees of the company are self-motivated for quality management (Oakland, 2014).

Quality improvement culture

The quality is one of the key features of the culture of YUM! brand. In order to improve the employee’s engagement in the quality management, it is necessary to motivate the employees on a continuous basis. But, YUM! already develop quality management culture that supports the company. The employees of Yum are strongly committed and valuable for maintaining quality improvement workplace. In regard of this, employees of YUM! participant in suggesting the ways those are helpful in maintaining the quality (Ross, 2017).

Continuous improvement in process

In order to manage overall quality in the business operation, it is essential for the company to adopt continue improvement process. If the company does not adopt then it can go backwards. The continuous improvement is necessary for the company if it wants to achieve the high extent in this. In the context of this, it is found that YUM!brand is committed for regular improvement in policies, procedures and controls activities (Goetsch and Davis, 2014).

Focus on customer requirements

Each person that is associated with YUM!service has focus on the customer requirements. In the current market, customer is so smart and aware that wants zero error in the service and product of the company. The consideration on the customers’ need enables the company to satisfy the customers. It also enables YUM!to develop a strong and positive relationship with the customers. The research and development team study on the customer desire and suggest the report to management. It helps the management to make the better decisions.

Effective control

Without the control, it is not possible to bring the improvement in the service of the firm. Due to this, it is essential for each business to have the effective control and measure at the workplace where improvement is measured on a continuous basis. YUM!has adopted the significant measure and control practices that enable the company to measure and compare the past and current performance. It helps the company to make the necessary changes if the performance does not meet with the expectations (Wang, et al., 2012).

Benchmarking

The meaning of the term benchmarking is related to the measurement of the performance of a product and service in the comparison of another business that is doing best in the industry. The main aim of the benchmarking is to identify the opportunity of the internal and external improvement and reach the top level of the performance.  After the identification of the best ways of the performing well, the next step is implementing the practices in order to get significant improvement in the firm (McCrory et al., 2013).

 

Internal Benchmarking

Under the internal benchmarking, it can be suggested to YUM!that the company can focus on the internal strength and weakness of the capabilities and resources. It can be helpful to make the decision to improve the operation of the company. In the words of McCrory et al., (2013), it can be defined that internal benchmarking is a process of comparing the internal results with standard measurements. It means that internal benchmarking allows YUM! to focus on the improvement of the internal capabilities. The benefit of concerning the internal capabilities is associated with the return on investment, the figure of merit, operational process, and business strategy of the company. In the last quarter, it was found that the performance of YUM!has declined by 6%. The internal benchmarking can help the firm to identify that main reason for declining the performance and develop the strategy to overcome the issue. Under this, the company can also focus on adopting the best ways of innovation and cost reduction that will help YUM!to improve its overall performance.

External Benchmarking

According to Gaieski et al., (2013), external benchmarking enables the company to get the benefit of the value advantage over the competitors. Without consideration of the external benchmarking, it is not possible for the company to achieve sustainable growth in the business. However, the effectiveness of the implemented benchmarking is measured by analysing the performance of the company. YUM! brand is operating the business with the three most popular brands in the fast food industry that provides a competitive advantage.  Its external benchmarking is appreciated in business identification. As increasing the issue of sustainability, YUM!brand is aware of this and it has adopted the significant strategies to deal with this global warming and environment pollution.

Best practice Benchmarking

In the context of YUM! brand, its best practices can be seen in the context of benchmarking from the great example. In this, the company has selected three appropriate and well-known brands such as KFC, Pizza Hut and Taco Bell. These all have a good customer base in the fast food industry which benefits gets to YUM!Brand. The company also adopted the stick and accurate food standard in the operation that shows, the company is aware and serious for the health of the customers. In the context of the internal benchmarking, management is a great example of the performance of the company. It is because the management of the company is responsible for improving the operation of the company on a regular basis (Venema, et al., 2013). Hence, it can be said that benchmarking is significantly followed by YUM!brand that is helpful for the future of the company.

Conclusion

From the above discussion, it is found that balance scorecard is a significant strategic business tool that helps the company to make the effective use of the organisational tangible resources in strategic adoption. It can also be summarised that the concept of the total quality management allows the company to improve the overall business quality in which company is able to improve the customer satisfaction by following some specific principles. At the same time, Benchmarking is also significant aspect that helps the company to improve the internal capabilities.

References

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