Business Studies
Each reply must be a paragraph long of at least 135 words or more not including references which should supported by citing at least 2 peer-reviewed journal articles between 2017-2021 for each reply. The 2 discussions that need reply will be posted below. Your replies must be in current APA format and must include a reference list. Make sure that you are adding new and relevant information with each reply. Reference sample make sure to include DOI-Drollinger, T., Comer, L. B., & Warrington, P. T. (2006). Development and validation of the active empathetic listening scale. Psychology & Marketing, 23(2), 161-180. https://doi.org/10.1002/mar.20105
Reply 1:
A balance scorecard is defined as “a performance measurement and management system aiming at balancing financial and non-financial as well as short and long-term measures.” (Hansen, 2016). Balanced scorecards allow for businesses to perform a self-assessment in order to provide introspective on a broad scope of different metrics within the organization. Metrics such as finances, strategy and customer service can provide perspective to top level management on how well operations are being performed and how they can be done better to enhance competitiveness.
The metrics are not limited to financial performance because they can be applied to sustainability as well. Corporate social responsibility, which is a concept that holds firms accountable to their debt to society, can be integrated into a balance scorecard incorporating diversity, sustainable development, and environment sustainability as essential points to gauge the health of a company. (Nicholls, et al., 2013). Nicholls, et al. (2013) argues that CSR asks corporations to “…embrace, support and enact, within their sphere of influence, a set of core values in the areas of human rights, labour standards, the environment and anti-corruption.”
Business valuation is a method to estimate the value of hard assets and benefits from the efficacy of the organizations management. (Miciula, et al. 2020). Miciula, et al. (2020) argues that the process of determining the value of a business is complex, because there are dynamic factors that influence the value of the firm from one moment to the next. Valskova, et al. (2019) mentions that the capital structure of a business is one of the main factors utilized in the business valuation methods because it incorporates the level of debt, equity and cash flow in determination of how much an investor is willing to pay for the firm.
A balanced scorecard can also be used to help determine the value of a business, because an investor seeking to purchase the business must be able to understand all of the factors affecting operations. The balanced scorecard offers a definitive summary of the business from specific facets and aids in the overall process of deducing the value of the business from multiple perspectives. Keller (2012) mentions that “For many of us, being productive and doing becomes an attempt at redemption. That is, through our work, we try to build our worth, security, and meaning.” This can be interpreted from a business valuation standpoint as a business’s value must be built upon a foundation of security, worth and meaning. The Holy Bible mentions that “A slack hand causes poverty, but the hand of the diligent makes rich.” (King James Bible, 1769/2007 Proverbs 10:4). This verse in the bible can relate to a diligent balanced scorecard that realistically assesses what is making the business operate and what can make the business operate better.
Reply 2:
The financial performance of investment centers within an organization is a key indicator of an organization’s financial health and likelihood of financial success. According to Blocher (2022), there are five steps in the evaluation of the investment center’s financial performance. First, organizations should identify strategic issues influencing the problem. Second, alternative actions should be reviewed. Third, information regarding the alternatives should be collected and analyzed. Next, the desired alternative should be selected and implemented. Finally, a continuous evaluation of the effectiveness of the implemented alternative should be provided. During step two of the evaluation, organizations must weigh the options of various short-term financial performance indicators. Two common indicators selected by organizations include return on investment (ROI) and economic value added (EVA); thus, the purpose of this discussion is to explore the ROI and EVA approaches followed by a Biblical application.
Return on Investment
Return on investment (ROI) is the most used measurement for short-term financial performance of an investment center (Blocher, 2022). There are various approaches to calculating ROI; in the simplest terms, ROI is calculated as the benefit divided by the cost of the investment. While ROI can be utilized in a plethora of industries and organizational areas, one recent study utilized ROI when analyzing the importance of work-family conflict (Dowd et al., 2017). Similar to work-life balance, work-family conflict takes more of a negative angle at the concept by focusing on the challenges created through managing both work and personal obligations. High work-family conflict levels can negatively impact employees and employers. Specifically, employees can exhibit poor well-being and health symptoms, leading the employer to experience increased costs due to health care, sick leave, decreased work performance, and increased turnover (Dowd et al., 2017). Thus, in this study by Dowd (2017), the implementation of an intervention program called Support Transform Achieve Results Today (START) was monitored as it rolled out to 30 extended care facilities in the United States. Moreover, the study measured the ROI before and after the START program specific to three areas: presenteeism, health care utilization, and voluntary termination. Specifically, ROI was calculated by estimating the difference between the intervention effect on organizational costs and the cost of the intervention and dividing the difference by the cost of the intervention. As part of the START intervention, employees and managers attended three face-to-face participatory sessions over a four month period. Prior to the implementation of START, the average employee’s ROI was $706. After the launch of the program, the new estimated ROI per employee was $767 with an average of $668 in reduced health care costs. These results indicate that the START program provided great value to the extended care facilities.
Economic Value Added
Economic value added (EVA) estimates an organization’s economic profit by calculating profit less an imputed charge for the use of the assets (capital) during a period of time (Blocher, 2022). A recent study monitoring the application of the EVA approach suggest performance in public organizations can improve when EVA is used as a performance evaluation metric (Meena & Farazmand, 2020). Because EVA studies are often linked to short-term periods, there is limited research on the long-term implications of an EVA approach; however, one recent study by Guermat (2019) researched the long-term effects of EVA on an organization by analyzing 89 EVA adpopting organizations listed on NASDAQ, NYSE, and American Stock Exchange markets. The findings indicate that compared to non-EVA adopters, EVA adopters show an increase in the working capital cycle, less asset usage, lower shareholder dividend payouts, and a decrease in new investments. Thus, the long-term effects of EVA adoption could have positive and negative impacts.
Biblical Application
Return on investment can be applied to the core of Christianity. “For God so loved the world, that He gave His only Son, that whoever believes in Him should not perish but have eternal life” (New International Version, 1978/2011, John 3:16). Being a devout Christian requires much investment. There are time investments, like the dedication to attend Sunday services, pray, and read the Bible. As well, there are financial investments of donations to the church or charities. However, the benefit of eternal life will always far outweigh the investment.
ANSWER
Reply 1: Balanced Scorecard
A balanced scorecard is a performance metric used to identify, improve, and control a business’s various activities and resulting outcomes. The balanced scorecard acts as a structured report that measures a company’s performance. The balanced scorecard plays an essential role in measuring the four significant aspects of business, including growth and learning, customers, business processes, and finance (Khaled and Bani-Ahmad, 2019). However, the metrics of a balanced scorecard are not limited to financial performance since they can be applied to measure the sustainability of a business. A balanced scorecard can be used in determining the value of the company. Ideally, the investor seeking to purchase a business or make an investment can understand the factors influencing operations (Farooq and Hussain, 2011). Therefore, they can determine the organization’s performance through the balanced scorecard, which tells how well it is doing. For instance, the balanced scorecard measures return on investment and income. Proverbs 10:4 relates to a balanced scorecard that realistically examines what makes the business operate and make it perform better.
Reply 2: Financial Performance
Companies examine the performance of an investment center with regards to the revenues if offered through investment. The investment center’s financial performance is based on the return on assets invested in that particular business unit. The two common indicators used in determining an investment center’s financial performance are economic value-added and return on investment. Return on investment is measured by the profit earned on an investment divided by the investment cost. For instance, Dowd et al., (2017) calculated ROI by estimating the variation between the intervention impact on organizational costs and intervention costs and dividing by the intervention cost. Economic value-added measures a company’s financial performance calculated by deducting the cost of capital from the operating profit. Economic value added examines the organization’s economic profit through calculating profitless a charged capital during the period. Subedi and Farazmand (2020) conducted a study that monitored the application of the EVA approach. The study indicated that the EVA approach could improve when economic value added is used as a performance evaluation metric. Regarding John 3:16, Christians need to invest a lot in their Christianity life to gain eternal life.
References
Dowd, W. N., Bray, J. W., Barbosa, C., Brockwood, K., Kaiser, D. J., Mills, M. J., … & Wipfli, B. (2017). Cost and Return on Investment of a Work-Family Intervention in the Extended Care Industry: Evidence from the Work, Family & Health Network. Journal of occupational and environmental medicine, 59(10), 956. https://doi.org/10.1097/JOM.0000000000001097
Farooq, A., & Hussain, Z. (2011). Balanced scorecard perspective on change and performance: a study of selected Indian companies. Procedia-social and behavioral sciences, 24, 754-768. https://doi.org/10.1016/j.sbspro.2011.09.043
Khaled, S. B., & Bani-Ahmad, A. (2019). The role of the balanced scorecard on performance: a case study of the housing bank for trade and finance. International Journal of Economics and Finance, 11(2), 17-26. https://doi.org/10.5539/ijef.v11n2p17
Subedi, M., & Farazmand, A. (2020). Economic Value Added (EVA) for Performance Evaluation of Public Organizations. Public Organization Review, 20(4), 613-630. https://doi.org/10.1007/s11115-020-00493-2
