A Balanced Scorecard Is A Method Of Analyzing And Assessing Internal And External Factors That Affect The Business Strategy

Robert S. Kaplan and David P. Norton introduced the balanced scorecard, which supplemented traditional financial measures with criteria that measured performance from the perspectives of customers, internal business processes, and learning and growth. The scorecard enabled companies to track financial results while monitoring progress in building the capabilities they would need for growth.

The balanced scorecard is used in business to make sure the business is meeting the metrics that are previously established. According to Edwards (2011), “[by] focusing on both financial and non-financial performance targets and outcomes, the balanced

The balanced scorecard was first identified by Kaplan and Norton in 1990 as a management tool to help management to summarize the key factors to conduct a successful business, and to align the whole business operations according to the overall business strategies. Then, in the following year, they implemented the balanced scorecard in various companies to conduct the study, and it appeared that the balanced scorecard was the key to drive the performance in the companies. It provided the management all the necessary strategic information by emphasizing enablers over results and changing strategic management paradigms.

Quality and the Balanced Scorecard Approach: Customer satisfaction, both internal and external, is an important component of a Balanced Scorecard. A Balanced Scorecard approach (BSA) is often seen as one of the key tools that translate strategy into performance. The balanced scorecard model is a clear direction outlining what the organization should measure to balance the financial output. The scorecard retains financial measurement as a summary of their business performance (Kocakulah and Austill, 2007). Moreover, the scorecard will highlight an integrated set of measurement that will link customers, processes, resources, and performance to long-term financial success. The balanced scorecard is a tool that provides the company the framework that translates vision and strategy into actionable tasks. The scorecard is a set of performance measures allowing management a dashboard view of their business. These performance measurements are used to aid the company in setting goals and manage the business's

A balanced scorecard is a popular management tool that evaluates a company’s performance with both financial and nonfinancial measures (Hendricks). This concept was developed after the realization that a company could not determine its success by one factor (Manzoni 193). Organizations are complex, often consisting of multiple departments which have different goals and measures of success. Choosing one factor to explain the organization’s achievement as a whole is near impossible. “Financial indicators, for example, are typically considered to be ‘lagging indicators of performance,’ because they record

The balanced scorecard is a strategic measurement strategy used in business and government as a measurement tool. The balanced scorecard should reflect businesses plans and strategic goals. The balance scorecard “was originated by Drs. Robert Kaplan (Harvard Business School) and David Norton (n.n October 8th, 2015). Balanced scorecard is used by managers not only to measure performance but to align their goals and execute the visions and missions of any agency. The balanced scorecard include metrics in different perspective views, these include “The learning and growth perspective, the business process perspective, the customer perspective and the financial perspective”.

A theory and management approach of the Balanced Scorecard was first “proposed in the Harvard Business Review by Robert S. Kaplan & David P. Norton (1995)” (Knapp, 2001). In the book called ‘The Balances Scorecard’ Kaplan and Norton (1996) translated organization’s mission and strategy into comprehensive set of performance measures. That

Balanced Scorecard is a strategic performance management framework that helps organizations to align strategies with both financial and non-financial measures to monitor progress, measure performance, prioritize and reveal improvement opportunities (Henderson, Gary & Mittl). BSC is generally implemented at the corporate level, but it is useful for all levels of the organization. It should not only act as an information system for corporate management, but form a basis for encouraging behavioral change in the organization in order to conform to the vision and

Kaplan and Norton (1996c) defined Balanced Scorecard as a framework that helps organizations translates strategy into operational objectives that drive both behaviour and performance. They realized that although traditional financial performance measures worked well for the industrial era, but were proving to be insufficient in measuring the abilities and competencies essential for survival in changing economic environment. Traditional performance indicators tend to measure financial and accounting aspects, impacting long-term productivity and profits, whereas, Balanced Scorecard provides the measures of synthetic indicators which companies should focus on, such as customer reactions, profits, quality and flexible production selection (Martin,

Balanced scorecard is a measurement system that takes into financial as well as non-financial information into account. This system strongly affects the behaviour of managers and employees by aligning their goals to the company’s vision. Kaplan and Norton argues in ‘The Balanced Scorecard- Measures That Drives Performance, 1992’ that no single measure can provide a clear performance target or focus attention on critical areas, and by observing and working with many companies they found that senior executives do not rely on one set of measures.

The balanced scorecard (BSC) is an extensively used performance measurement tool introduced to take the strategy and vision of the business into real action from four perspectives: financial, customers, internally progress and learning and grow. (Kaplan and Norton, 1996) From all these four perspectives, it can be seen that this measurement tool is different from others because it concentrates on both financial and operational information rather than only financial figures which make the tool provide a more comprehensive of the business to shareholders and customers. In these years, BSC has developed from the performance measurement tool to a strategic management system. ( Kaplan and Norton, 1996, p 37) However, this essay aims at introducing the balanced scorecard as a performance measurement from its origins, why business needs it, how it can be utilized, how the business can get benefits from adopting this measurement tool and what potential problems and limits it has.

The value proposition for Worldclass to continue the balanced scorecard is that with strategic timing of reviews and quality indicator data, the improvement of the management review processes could be achieved, which would lead to increased profits and improved financial performance. The management team would be better informed and able to comprehend their team’s results and which actions had caused them. Managers contribute to obtaining the measure and can make suggestions to adjust the scorecard for improvement of the balanced set of measures linked to strategic objectives. The increased performance would be indicative of the success of the strengthening and reinforced relativeness of the four perspectives: financial, customer, process, and learning and growth. Some examples would be increased cash flow for financial, increased customer satisfaction from inquiries, increased distribution efficiency for process, and the company’s ability to longer retain its employees for the learning and growth perspective. The firm would be able to generate lead measures and extend more

The Balanced Scorecard (BSC) is one of ‘Performance Management System’ used widely around the world (Kaplan, 1993). This system is used to track the pivotal elements of a business, and allow managers to make decisions based on these measures to improve the company. Firstly, this essay will further introduce the BSC and then, its development throughout the years. Thirdly, the essay will suggest that the BSC is indeed effective as a ‘Performance Management System’ and that, lastly, it does help with the process of acquiring other companies.

The scorecard addresses a serious deficiency in traditional management systems: their inability to link a company’s long term strategy with its short-term actions. Managers using the balance scorecard do not rely on short-term financial measures as the sole indicators of the company’s performance. The scorecard introduces four new management processes that, separately & in combination, contribute to linking long-term strategic objectives with short term actions.

“The Balanced Scorecard translates a company's vision and strategy into a coherent set of performance measures” which was defined by Robert S. Kaplan, David P. Norton (1996).