Balanced Scorecard Analysis on Otago Museum Financial Case Study


Assessment Brief:

  • Topic: Case Study Analysis: Otago Museum
  • Document Type: Term paper
  • Subject: Business
  • Deadline:*: As Per Required
  • Number of Words: 2000
  • Citation/Referencing Style: APA


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Case Study Analysis of the Otago Museum case using financial analysis and Balanced Scorecard framework for the recommendation.



The Otago Museum in New Zealand began operating on September 15, 1868. At that time, it was located in the post office building in Dunedin’s Exchange area, a building in which it shared space with the University of Otago.


As the Otago Museum’s collections grew, so too did its need for larger premises. On August 11, 1877, the museum moved into its present site at 419 Great King Street. The cost to construct these purpose-built premises, which at the time featured two main galleries, was £12,500.


In 1877, responsibility for managing the museum became vested with the University of Otago. This arrangement lasted nearly 80 years; and, during this time, the university oversaw two major additions to the museum and helped it to become what in 1929 was described as “the finest teaching museum in the Commonwealth.”


Generally speaking, the principal funders continued in recent times to be the Dunedin City Council, Clutha District Council, Central Otago District Council, and Waitaki District Council.


Further expansions of the museum occurred in 1963, 1996, and 2002. The latter two expansions were particularly noteworthy for they very powerfully showcased the museum’s attempt to go beyond its traditional role of displaying static work to creating an environment that was capable of engaging and interacting with visitor.

Not coincidentally, the 1996 and 2002 expansions occurred under the leadership of Shimrath Paul, Paul, who became the director in 1995, brought a very fresh approach to the running of the museum. Unlike his predecessors, who were typically biologists or anthropologists, Paul was, among other things, an MBA graduate. As such, he brought a sense of business acumen, including a customer focus, that was less evident in the museum’s prior directors.

He also diversified the museum’s income stream, which at the time of his arrival was about 95 per cent derived from the New Zealand government and the four local authorities noted above. Ever since 2009, only about half of the museum’s funding came from these four sources, with the balance being comprised of gift shop sales, the museum café, the hiring of the museum’s facility areas for conferences, weddings, seminars, etc., various special exhibition fees, and the selling of tours to the cruise boat lines as one of the latter’s passenger activities.


The per museum had about two million items on display or in safekeeping. This number represented about 15 cent of all museum-held items throughout New Zealand. The museum’s collection could best be defined as broad-based. It held a wide array of displays showcasing birds, insects, marine animals, and fossils; owned a variety of significant Maori and Pacific Island artifacts; and boasted a collection of ship builders’ models considered to be among the finest in the Southern Hemisphere.


The museum had about 60 full-time equivalent employees. During a typical 12-month period, the museum attracted between 300,000 to 400,000 visitors. With a regional population of about 130,000 people. Otago Museum was the highest visited museum per capita in Australasia. As Dunedin was not an international gateway, it did not have a large tourist visitation, and maintaining high and Increasing visitor numbers relied primarily on encouraging repeat local visitors. Dunedin’s relative isolation meant that the museum had to offer an experience that consistently attracted the repeat visitor. In practical terms, this experienced translated into the imperative of changing exhibits and offering an excellent whole-visitor experience.




The Otago Museum was a non-profit organization with the mission of providing “service and development” to its community 2. The museum prided itself on its ability “to acquire, record, research, conserve, communicate, and exhibit material evidence of people, knowledge and the environment for the education, entertainment and inspiration of local communities and visitors.”3


The museum’s vision statement, as stated in its annual report, was “To be an inspirational museum of which the people of Otago and New Zealand are proud.”


The vision statement was supported by a mission statement that, again as stated in the museum’s annual report, was “To inspire and enrich our communities, and enhance understanding of the world through our collection, our people and the stories we share.”


In striving to accomplish its vision and mission statements, the museum had three primary areas of focus: culture, nature and science. These foci were further enumerated by the following six strategic objectives:


  1. To develop our culture and capabilities
  2. To continually evolve and grow
  3. To increase engagement and quality of experience for our communities through access to and outreach from the museum
  4. To actively care for, protect and develop our collections and physical environment
  5. To increase our resources and use them wisely
  6. To build and contribute to productive partnerships and strategic alliances


The strategic objectives, and in particular the museum’s ability to achieve the objectives, were underpinned three key results areas:

  1. Being seen as a community leader in the offering of knowledge, learning opportunities and experiences that are relevant, contemporary, topical, widely accessible and consistently high in quality.
  2. Having staff and the Otago Museum Trust Board work together to demonstrate effective, positive management of collections, resources, and skills.
  3. Ensuring a culture that is positive and continually developing, where everyone takes responsibility for individual and collective behaviour, demonstrating agreed values and redressing unacceptable ones, as determined collectively and also individually through self and peer assessment.




The museum had achieved large increases in its visitor numbers in recent years. The nearly 20 per cent increase in visitor numbers from 2007 to 2008 was partly attributed to its Discovery World Tropical Forest, which featured more than 1,000 imported tropical butterflies. Of course, other reasons behind its significant rise in patronage included its motivated workforce and its focus on customer satisfaction. As an example of this commitment, the museum had won several tourism and best workplace awards, including in 2006 when it won an Unlimited/JRA Best Places to Work in New Zealand Award under the category “ One of the 10 best small workplaces.”


Management believed that a major driving force behind the museum’s current success was its organizational culture. This culture was put together by the staff, board and large stakeholders at a strategic planning workshop. Management believed that a healthy culture must be dynamic — owned and implemented by the staff and supported, not driven, solely from the top.


This culture in its strategic plan was:

Through actively, positively and fully sharing our skills and positive attitudes with the team, our individual contributions can become key parts of the Museum’s total strengths. Together our collective intelligence and abilities will create a work environment which invigorates, inspires and challenges us — and helps us to achieve our vision and mission for the people of Otago and beyond. Our culture is developed through the agreed behaviours being demonstrated and through the expectation that some behaviours will not be acceptable within our team.


An enumeration of the expected and unacceptable behaviours for working as a team at the museum, which was collated by the whole staff, is presented in Exhibits 1 and 2.




The Otago Early Settlers Museum, the Dunedin Art Gallery, and Olveston each embraced a goal that was similar to that of the Otago Museum. Namely, each organization sought to use its collections to enrich its visitors’ understanding of the world.


The Otago Settlers Museum was established in 1898 and was commonly heralded as one of New Zealand’s finest social history museums. The museum’s permanent and temporary exhibitions showcased Otago’s rich cultural tapestry and diversity.


The Dunedin Public Art Gallery was established in 1884 and remained in recent times one of New Zealand’s most significant art museums. It housed a fine collection of European art, including paintings by Monet, Gainsborough, Turner, Rosa, Claude Lorraine, Burne-Jones and Tissot. The collection also featured New Zealand art from 1860 to the present, and had significant holdings of Japanese prints and the decorative arts.


Olveston was the former home of David Theomin and his family. It was designed by London architect Sir Ernest George as an “eloquent expression of one man’s dreams.” Built in 1906, the 36-room house served as a portal to turn-of-the-19th-century early New Zealand life, albeit a rather privileged life.


The Otago Museum needed to compete in this rather crowded competitive space. To assist with its strategic and operational planning, the museum operated what it called a Resources, Operations and Priorities (ROP) system. Each year the ROP system produced a detailed annual plan as well as a three-year plan and a 15-year development plan. Together these plans formed what the museum referred to as its “Statement of Intent.” More specifically, the annual and three-year plans set out the museum’s prioritized objectives and the required resources, especially the human and financial resources, needed to achieve these objectives for each of the two specific time periods. Some of the typical intentions showcased in the annual and three-year plans included the range and types of museum exhibits being contemplated, especially any new exhibitions; museum upgrades and renovations; and forecasts of the museum’s financial performance.


The three-year plan was less detailed and had a greater strategic focus than the annual plan. In addition, the three-year plan helped provide the context for and parameters around the setting of the annual plan, for it was always the case that the annual plan needed to link with the succeeding three years embodied by the rolling three-year plan.


The adoption of a new annual plan and three-year plan began with senior managers heading off-site for a four-or five-day strategic ROP workshop. This strategic management workshop usually occurred in May. In preparation for the workshop, feedback was solicited from five key stakeholders: the Otago community, the four principal funders (Dunedin City Council, Clutha District Council, Central Otago District Council, and Waitaki District Council), visitors to the museum, staff, and the museum’s board.


The strategic workshops were also used as a forum for debating ways to capitalize on the museum’s core competencies. Exhibit 3 presents what the museum’s management saw as its strengths, weaknesses, opportunities and threats (SWOT).




According to the chief executive (CE), the museum operated on a very tight budget. Unlike its New Zealand peers, the museum received significantly less funding from the New Zealand government. Te Papa, for example, received about $30 million of national funding during 2009, while the Otago Museum received no national funding and less than $4 million from its four contributing local authorities. Consequently, the museum’s senior managers often spoke about a gap between what they perceived as the museum’s expected duty and the funding being provided.


The museum attempted to bridge the funding shortage with the introduction of user-pay systems on specific touring exhibitions; profits from its shop and café; and charitable fundraising campaigns. Any remaining funding shortfall required the museum to reschedule or scale back the introduction of its plans, i.e., introduction of new exhibits, hiring of new employees, and museum upgrades and renovations.


The museum’s café, gift shop, and tourism and facilities operation were the three main ongoing “business units” expected to make significant contributions to the museum’s funding base. The museum’s café was operated by an outside contractor, who leased the museum space. The gift shop was directly run by the museum. Gift shop employees were responsible for recommending, sourcing and selling shop items. Discovery World Tropical Forest, an interactive science centre, levied a visitor’s admission fee, $9.50 for adults and $4.50 for children, in order to be completely self-funding.


There were a number of other more transitory or minor business units. The former comprised internationally sourced special museum exhibition, which had a loan fee not able to be covered internally by the museum, where an admission fee was charged to assist with the costs. These admission fees were calculated to encompass all the exhibit’s costs, plus a desired profit. Being the first New Zealand museum to source these exhibitions and organizing for the freighting and distribution of the exhibitions to other New Zealand and Australian museums was also used to offset the original exhibitions to other small profit. The profit was intended to be used to support the museum’s ongoing activities, including its community programs and any planned gallery redevelopments and structural upgrades. Other business units included the hiring of the museum’s facility areas to the public and corporate for special functions, such as office parties, weddings, etc.

Exhibits 4 to 7 present the financial statements for the year ended June 30, 2009.


Exhibit 1



Passion                                         Enthusiasm                                     Fun

Creativity                                       Imagination                                     Friendliness

Happy                                           Positivity                                         Social

Accountability                                Organized                                       Cooperation

Commitment                                  Drive                                               “Can do” attitude

Adaptability                                   Flexibility                                        Respect

Curiosity                                        Proactivity                                       Openness and honesty

Determination                                Loyalty                                            Dedication

Reliability                                       Common sense                               Professionalism

Hardworking                                  Helpful                                            Supportive

Initiative                                         Inspirational                                    Self belief

Know limits                                    Balance                                           Sense of purpose

Detail focused                               Self-motivation                                Innovative

Continuous learning                        Up for a challenge                           Strong work ethic

Ethical behaviour                           Problem solving                              Trust and trustworthiness Sharing each other’s successes                                     Forthcoming with information           Recognition of our diverse skills Responsibility                                                     Sharing                                           Depth

Working to the best of our ability    Recognition of our individuality        Risk aware but not risk adverse Solution-oriented                                                     Think on our feet                             Pride in our work


Asking for help if you need it          Development of self-empowering


Pulling in the same direction           Appreciation and saying thank


Understanding our place in the organization

Listening and understanding


Acknowledging others                    Telling it like it is                              Giving recognition Constructive feedback/criticism                          Giving help when others need it        Identifying opportunities


Accept when you are wrong, get over it, move on, learn from it

Acceptance of individual’s capacity

Meeting both personal and group challenges and objectives


Brainstorming together                   Pulling together                               Fantastic communication Value others                                                     Focused on common goals             Adherence to systems


Enjoying ourselves and our


Strength through good group dynamics

Challenge each other positively         Committed to meeting


Moving outside our comfort zones   Wanting to be part of the team


Focus on the big picture                 Giving our personal best                  Healthy lifestyles Working together                                                     Team focus                                     Community focus



Exhibit 2


Unconstructive negativity                                     Insularity

Complacency                                                      Lack of initiative

Narrow-mindedness                                             Gossiping

Dishonesty                                                         Sulking

Hostility                                                              Not working in the same direction

Bureaucratic restrictions                                      Exclusion

Bad attitudes                                                      Disinterest

Lack of communication                                       Not owning the goals

Lack of caring                                                     Back stabbing

Having a narrow focus                                         Arrogance

Working in silos                                                  Self importance

Put downs                                                          Disrespect

Inflexibility                                                          Lack of vision

Wasting resources                                              Lack of imagination

Wasting opportunity                                            Unwillingness to help

Blame                                                                 Rudeness

Elitism                                                                Ignorance

Whinging/Whining/Grizzling                                  Lack of common sense

Unproductive criticism                                         Inhospitableness

Discourteousness                                               Judgmental

Inaccessibility                                                     Laziness


Exhibit 3



An Otago-wide organization located in Dunedin Otago Museum Trust Board Act 1996

Well-developed and proven infrastructure and business practices Committed, highly skilled team

Community sense of ownership and pride

Ability to “make a difference” in our community

Committed management team focussed on developing the organization and the people who are part of it

Location between city centre and university Well-considered development plan


Reliance on local authorities with small ratepayer bases for core funding Resources don’t match ambition

Reliance on revenue generation and fundraising Depreciation largely unfunded

Flat organizational structure limits perception of development opportunities Visitor parking is limited



Revenue generation ideas Harbour development

Settlers Museum redevelopment Offsite exhibition ideas

Outreach bus

National and international market for exhibits and exhibitions



Local community spending behaviour

Limited number of quality exhibitions on touring circuit Skilled/experienced labour shortage in museum sector


Exhibit 4



For the Financial Year Ended June 30, 2009


Income 2009






Grants – Government & other 248,265 244,321 270,603
New Zealand Lottery Grants Board
Local authorities 3,642,294 3,657,711 3,432,580
Public 1,952,377 1,454,525 2,365,700
Legacies & bequests 5,235 500,000 70,291
Investment income – Dividends 125,206 79,995 165,222
– Interest 607,117 433,293 637,160
Realized net gains/loss on sale of financial instruments


 -147,676    251,134
 Total income 6,432,818  6,369,845  7,192,690
Employee benefits expense -2,577,716 -2,577,556 -2,600,211
Depreciation and amortization expense -1,114,959 -1,293,405 -1,163,797
Other expenses -2,667,506 -2,636,871 -2,409,319
 Total operating expenditure  -6,360,181  -6,507,832  -6,173,327
 Surplus for the year  $72,637  ($137,989)  $1,019,363



Exhibit 5


As at June 30, 2009



Current assets







Cash and cash equivalents 6,467,451 220,355 4,367,360
Trade and other receivables 181,081 403,213 224,410
Inventories 153,821 129,757 155,174
Other financial assets 530,673 1,974,556
Other current assets 72,295 66,315
Total current assets 7,405,321 753,325 6,787,815
 Non-current assets

Other financial assets

 3,782,282  7,455,615   4,419,321
Property, plant and equipment 15,765,629 16,733,801 16,723,427
 Total non-current assets  19,547,911  24,189,416  21,142,748
 Total assets  26,953,232  24,942,741  27,930,563
 Current liabilities

Trade and other payables

  468,369   379,563  659,797
Employee entitlements 819,144 730,298
 Total current liabilities  1,287,513  379,563  1,390,725
 Total liabilities  1,287,513  379,563  1,390,725
 Net assets  25,665,719  24,563,178  26,539,838
 Equity Reserves   10,674,458   8,461,525   10,543,847
Capital 14,991,261 16,101,654 15,995,991
$25,665,719 $24,563,179 $26,539,838


Exhibit 6


For the Financial Year Ended June 30, 2009

  Available-for-sale financial assets valuation gain/(loss) taken to equity 2009






 Net income recognized directly in equity  -946,756  -799,695
Surplus for the year 72,637 1,019,363
 Total recognized income & expense for the year  -874,119  219,668
Statement of changes in equity

for the financial year ended June 30, 2009

Equity at beginning of year 26,539,838 26,320,170
Total recognized income & expense for the year -874,119 219,668
 Equity at end of year  $25,665,719  $26,539,838



Exhibit 7


For the Financial Year Ended June 30, 2009


 Cash flows from operating activities 2009






Government, local authorities & the public 5,890,126 6,035,942 6,101,572
Dividends 125,206 79,995 165,222
Interest received 603,864 433,293 565,954
Payments to employees -2,573,082 -2,577,556 -2,500,324
Payments to suppliers -2,736,138 -2,823,240 -2,146,411
Net cash inflow/(outflow) from operating activities 1,309,976 1,148,434 2,186,013
 Cash flows from investing activities
Proceeds from maturity & sale of other financial assets 1,160,712 2,483,441
Proceeds from sale of property, plant & equipment
Purchase of property, plant & equipment -196,378 -1,104,600 -655,273
Purchase of other financial assets -174,219 -356,987
Net cash inflow/(outflow) from investing activities 790,115 -1,104,600 1,471,181
 Cash flows from financing activities

Repayment of portion of Climate Control Levy





Net cash inflow/(outflow) from financing activities 58,869
 Net increase in cash & cash equivalents  2,100,091  43,834  3,716,063
Cash & cash equivalents at the beginning of the financial year 4,367,360 176,520 651,297
Cash & cash equivalents at the end of the financial year $6,467,451 $220,354 $4,367,360