Transformations  in
Business & Economics

STRATEGY FORMULATION AND MONITORING OF A SME USING ACTIVITY BASED COSTING, BALANCED SCORECARD, AND QUALITY FUNCTION DEPLOYMENT MODELS
Rishi Dwivedi, Shankar Chakraborty

ABSTRACT.The long term success of an organization, more specifically a small and medium enterprise (SME), strongly depends on the formulation and monitoring of right strategies related to its various activities like production, marketing, product delivery, designing etc. Activity based costing (ABC) and balanced scorecard (BSC) are widely recognized as two important contemporary management tools which act as a facilitator in the establishment and evaluation of the effective organizational strategies. In this paper, ABC and BSC models are individually applied in a simple cost effective manner to a pharmaceutical manufacturing SME of India to demonstrate their aptness as strategic management decision-making tools. Furthermore, a combined ABC/BSC model is developed to show how it can enhance the accuracy of BSC and assign strategic values to different activity groups of the ABC model. Additionally, this paper proposes the application of a performance measurement tool integrating quality function deployment and BSC approaches to examine the progress of the considered SME over a period of time .

KEYWORDS: activity based costing, balanced scorecard, quality function deployment, small and medium enterprise, strategy.

JEL classification: L11, L21, L25, M40.