Page 1 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 02
March 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 171
Application of Balance Scorecard to address the marketing
problem in Telecommunication sector
Amir Aghelie1*, Suleiman Sajilan2
, Shahriar Soorooshian1
, Noor Azlina Azizan1
1Faculty of Industrial Management, University Malaysia Pahang, Malaysia
2Management Department, University of Kuala Lumpur
*Email: ama172008@yahoo.com
Abstract:
This paper aimed to identify the problems that are associated with starting and running small business
especially in telecom companies and giving solution by applying balance scorecard model. In caring
out the study, a qualitative research method was used. The most important method data was sourced by
primary data by conducting and using interviews with people that working in the selected company and
by secondary data using literatures collected from books, journals and past research work and
electronic web.
On the basis of the analysis of data collected during the interview, the study revealed that Telecom
Company faces many problems when compared with other businesses or companies. The problem facing
in telecom companies faced are ranked as follows: Lack of Finance, lack of managerial skills, problems
in human resources, inappropriate marketing, outdated facilities and providing adequate goods and
services to customers.
Key-Words: Small Business, Telecom sector, Business Management, Performance
1 Introduction
In this phase of paper will give an overview of selected
company “Optical Communication Engineering
Sdn.Bhd” and introduction of balance scorecard
framework.
1.1 Company Overview
Optical Communication Engineering Sdn. Bhd.
(OCE) was established in 1992 by Rimbunan Hijau
Group to produce optical fibers, optical cables and
associated passive devices, active devices and
accessories in Malaysia. In 1994, OCESB expanded its
expertise to produce Optical fiber cables and acquired
connectivity technology from NTT (Japan) under
transfer of technology to produce a full range of optical
integration products. Since then OCESB has specialize
in Metro Optical Cables and
Integration.
1.2 Introduction of Balance Scorecard The balance
scorecard is used as a strategic planning and a
management technique. This is widely used in many
organizations, regardless of their scale, to align the
organization's performance to its vision and objectives.
The scorecard is also used as a tool, which improves
the communication and feedback process between the
employees and management and to monitor
performance of the organizational objectives.
As the name depicts, the balanced scorecard concept
was developed not only to evaluate the financial
performance of a business organization, but also to
address customer concerns, business process
optimization, and improvement of learning tools and
method. Following is the simplest illustration of the
concept of balanced scorecard. The four boxes
represent the main areas of consideration under
balanced scorecard. All four main areas of
consideration are bound by the business
organization's vision and strategy.
Page 2 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 02
March 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 172
Figure 1: Balance Scorecard Framework
The balanced scorecard is divided into four main areas
and a successful organization is one that finds the right
balance between these areas. Each area (perspective)
represents a different aspect of the business
organization in order to operate at best possible
capacity.
• Financial Perspective: This consists of costs or
measurement involved, in terms of rate of return
on capital (ROI) employed and operating income
of the organization.
• Customer Perspective: Measures the level of
customer satisfaction, customer retention and
market share held by the organization.
• Business Process Perspective: This consists of
measures such as cost and quality related to the
business processes.
• Learning and Growth Perspective: Consists of
measures such as employee satisfaction, employee
retention and knowledge management.
The four perspectives are interrelated. Therefore, they
do not function independently. In real-world situations,
organizations need one or more perspectives combined
together to achieve its business objectives.
1.3 Features of Balanced Scorecard From the above
diagram, you will see that there are four perspectives
on a balanced scorecard. Each of these four
perspectives should be considered with respect to the
following factors.
When it comes to defining and assessing the four
perspectives, following factors are used:
•Objectives: This reflects the organization's
objectives such as profitability or market
share.
•Measures: Based on the objectives, measures
will be put in place to gauge the progress of
achieving objectives.
• Targets: This could be department based or overall
as a company. There will be specific targets that
have been set to achieve the measures.
• Initiatives: These could be classified as actions
that are taken to meet the objectives.
2 Problem Formulation and
Problems were found and identified through
conducting interview with top managers such as
Sales manager and Human resource manager as well
as my experience of using the company product and
services for last 5 years which helped me to be so
familiar with company’s strength and weaknesses
and issues. The problems and issues will be
explained accordingly to related business area of the
company in bracket. The identified problems of
Optical Communication Engineering (OCE) are in
following below:
2.1 Lack of Human Capital Human capital is one
of the main issues and problems that is going on this
company. Human capital can be defined in
organization context to the collective value of the
organization's intellectual capital (competencies,
knowledge, and skills). This capital is the
organization's constantly renewable source of
creativity and innovativeness (and imparts it the
ability to change) but is not reflected in its financial
statements.
Or in another word human capital is the set of skills
which an employee acquires on the job, through
training and experience, and which increase that
employee's value in the marketplace. This problem
was exposed through interview with Sales manager
“We are limited in number of employees; we are
offering young people specially students an
opportunity to join us and use their knowledge and
skills”. I noticed this problem when i went to
company several times and saw they are employees
who are assigned to several tasks to cover such as the
receptionist was in charge of answering customer
problems, calling distributors to deliver the products
and giving registration form to new customer, also
the problem was shown that there is only one
technician that working in OCE to resolve and
address all technical issues from product and services
by customers. Technician or IT whose job is to install
modem or plug for telephone and internet cable and
solve the technical problems with their modem or
any sort of hardware issues. Having one technician
working for the company will not be able to answer
and solve multiple customers’ issue a day.
Page 3 of 11
Journal for Studies in Management and Planning
Available at http://internationaljournalofresearch.org/index.php/JSMaP
e-ISSN: 2395-0463
Volume 01 Issue 02
March 2015
Available online: http://internationaljournalofresearch.org/ P a g e | 173
These all show as evidence to explain that company
Human resource function does not generate or create
adequate number of employees to train and develop
them for each of this particular task. This lack of
human capital leads to skill shortage in the company
where there is mismatch between available workers or
employees and current and emerging needs of the
company as the existing employees are assigned to
cover more than one task. This issue which is related
to human resources of the company has had direct
impact such as reducing in productivity as it takes a
while for them to answer customer needs and
performing the tasks, and also they are not effective to
their obligation and responsibilities since some of
employees are in charge of tasks that mismatch with
their skills and abilities or workforce is not equipped
with right skills to achieve business goal. Also
recruitment, development and retention practices are
inconsistent and costly.
Human capital’s importance has been recognized as
one of the major challenges in HR to invest in the
employees as employees and people are main asset of
the company.
2.2 Business Level Strategy (Strategic
Management):
An organization's core competencies should be focused
on satisfying customer needs or preferences in order to
achieve above average returns. This is done through
Business-level strategies. Business level strategies
detail actions taken to provide value to customers and
gain a competitive advantage by exploiting core
competencies in specific, individual product or service
markets. The problem in OCE Company in Strategic
Management is simply their business strategy where
they are only focused on Cost Leadership strategy
since they are offering their service cheaper than
competitors in order to attract the customers.
Following Cost Leadership as the only business
strategy is problematic Businesses can find it difficult
to set the price of a product to produce an above- average return while remaining competitive. Cost
leadership is a business-level strategy that requires the
combined efforts of suppliers, designers, research and
development, production and distribution. The major
problems OCE faces of implementing focused Cost
Leadership strategy are:
2.2.1 Quality Perception:
Competition-based pricing is a model that relies on the
pricing habits of the company’s competition. It does
not take into account product cost, but the company’s
profit margin or product demand. In some cases, OCE
may be forced to sell product at a loss to remain
competitive. But their strategy as being the lowest- priced supplier sometimes creates the perception that
the product quality is lower than that of the
competition, therefore losing customer’s trust and
going for competitors. If Perception of quality becomes
so low the business will suffer.
2.2.2 Customer Service:
An everyday low price offering of the company
reduce their profit margin and force to operate on a
low budget. If the company cannot afford to hire the
number of sales associates needed to maintain high
level of customer service, then low price strategy
may not be enough to maintain repeat business.
2.2.3 Inefficiency to Changes in industry and
Market:
OCE tends to keep their costs low by minimizing
advertising, market research, and research and
development, but this approach can prove to be
expensive in the long run. A relative lack of market
research can lead the company to be less skilled than
other firms at detecting important environmental
changes. Meanwhile, downplaying research and
development can slow the company’s ability to
respond to changes once they are detected. Lagging
rivals in terms of detecting and reacting to external
shifts can prove to be a deadly combination that
leaves OCE out of touch with the market and out of
answers.
The business level strategy is very essential in the
business. Companies need to be very cautiously and
critical to choose their business strategy. Because
Business strategy refers to a set of actions a business
organization intends to undertake in order to improve
on its competitiveness, service delivery and customer
relations. It involves identification of competencies
in core areas in order to gain comparative advantage
over other firms.
If a company like OCE do not implement a right
strategy might suffer through entire business aspects
such as cost, effectiveness, competitiveness,
operation or losing brand value, without a proper
strategy companies cannot not get their desired goals.
Among all the problems have been identified in the
company, Human capital issue is more priority to
other issues as this issue refers to employees and
people working in the company. Employees always
have been classified as most important asset of a
company where they are the one that give company
name, reputation, success and profit. It’s impossible
to find an organization today without employee or
