Philips's Balanced Scorecard Performance Measurement System

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 framework was first introduced in the 1992 Harvard Business review article, ‘The Balanced Scorecard—Measures that Drive Performance.’ (Kaplan 2006) The purpose of the Balanced Scorecard is to harmonise the corporation’s strategy, operational objectives and performance measures so that they can be controlled to achieve goals. (Stevanovic et al. 2012, p.261) The BSC can be conceptualized as, “…a management system, which is structured according to the logic of the cyber-netic management circle (“plan-do-check-act”) (Bieker 2002, p.2) The model usually measures four core domains organised into quadrants; the customer perspective, internal business perspective, innovation and learning perspective, and the financial perspective. Each closely relating to a recognised aspect of firm performance. (Kaplan & Norton 2005) As seen in the figure below, the scorecard is organised such that the interrelationship between these variables as well as comparison between goals and measures are easily seen.

“The balanced scorecard should translate a business unit’s mission and strategy into tangible objectives and measures. The measures represent a balance between external measures for shareholders and customers and internal measures of critical business processes, innovation and learning and growth. The measures are balance between outcome measures, the results of past efforts, and the measures that drive future performance. And the scorecard is balanced between objective, easily quantified outcome measures and subjective, somewhat judgmental, performance…”

Philips is a Dutch technology company that focuses on health technology and lighting. Their focus is on improving people’s lives through meaningful innovation. They have moved from a holding company structured around multiple divisions to two stand-alone operating companies of health technology and lighting solutions. Their ambitions are to capture growth, create value, and expand into new business ventures through technologies and intellectual property development.

A balanced scorecard is a tool to provide management a way to bridge the gap between the organization’s strategy and vision and the operational processes used to do business. It enables the company to look at more than just the financial targets, but to include nonfinancial measures such as customer service, internal business processes and more. These intangible measures provide better focus on the organization’s long-term strategies. This paper is an attempt to analyze Frieda Fizz decision to utilize a balanced scorecard as they expand into new geographic areas. The strengths and weaknesses of each perspective are discussed along with the pros and cons of using

Philips is a dutch company that is headquartered in Amsterdam. Its areas of focus include lightning, healthcare and electronic. It was founded by Gerard Phillips and his father Frederik. It is the largest electronics manufacturing company in the world and it currently employs about 105,000 people across more than 60 countries.

Introduction- To be competitive, organizations must be both strategic and tactical to the nth degree, must be proactive rather than reactive, and must find a way to measure this easily and accurately. One way to accomplish this is through a Balanced Scorecard approach; a tool often viewed as one of the best tools that helps organizations translate strategy into performance. In general the BSA (Balanced Scorecard Approach) allows for a clear strategic and tactical directions for the organization, retains financial measurements in a summation along with their links to performance, and highlights an important and robust measurement system that links and integrates customers, stakeholders, processes, resources, and performance into single measurement strategy.

A balanced scorecard is the comprehensive collection of ongoing activities and processes that organizations use to systematically coordinate and align resources and actions with mission, vision and strategy throughout an organization making it a strategic planning and management system. (Balanced Scorecard Institute, 1998-2010). The scorecard exposes financial, customer, employee learning and growth, and internal business process objectives crucial to attaining goals of the vision and mission statements. When establishing such objectives, an evaluation of the company’s vision statement, mission statement, and furthermore, core values is

Balanced Scorecard is a general methodology that is being used to improve performance within strategic

What you measure is what you get” – In the journal ‘The Balanced Scorecard – Measures that drive performance’ by renowned professors, Kaplan and Norton (1992), a new management system was introduced to a peripheral perspective economic industry. Past the industry era, traditional financial performance measures such as return-on-investment and earnings-per-share were deemed no longer competent in the ever-changing market. The view of focussing on either financial or non-financial perspectives alone were regarded as one-dimensional and ignorant of other crucial factors in both the company and the market.

A balance scorecard is essential for developing a healthy business growing place. It is a vital key for defining the goals and targets of a company as well as the vision, mission and the SWOTT Analysis. A balanced scorecard is, “A set of measures that are directly linked to a company’s strategy: financial performance, customer knowledge, internal business processes, and learning and growth” (Pearce & Robinson, 2013, p. 194). This company will relate the in-building turbines values, mission, vision and SWOTT Analysis with the four perspectives of the scorecard (financial performance, customer knowledge, internal business process, and learning and

A Balanced Scorecard can be defined as a “performance management tool which began as a concept for measuring whether the smaller-scale operational activities of a company are aligned with its larger-scale objectives in terms of vision and strategy” (Wikipedia 2009, ¶ 1). Scents & Things will need to develop a balanced scorecard that will assist in meeting and help define the company’s values, mission, vision, and SWOT analysis. The balance scorecard is made up of four perspectives; financial, customer, learning and growing, and internal process. This paper will define each of the four perspectives objectives, performance measures, targets, and initiatives. The paper will also show how the perspectives relate

Since an organization is composed of multiple levels, a scorecard must support different levels and perspectives from strategic business units and divisions, to departments, teams and individuals. To accommodate this architecture, the scorecard is structured as multiple, aggregated cubes. Each layer a nesting of the ones below. In general, the highest level cube defines the measures and dimensions that apply to the corporate level, and these drill through to divisional and departmental cubes that have a more detailed level of information (Nickols, 1999). This “artery” of the cubes lets the strategy communicate down the organization, while performance is aggregated up through the organization like blood through vein.

Philips is a diversified technology company active in the markets of healthcare, lighting and consumer well-being. The headquarters are in Amsterdam (Netherlands). Royal Philips Electronics of the Netherlands is a diversified health and well-being company, focused on improving people’s lives through timely innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “Sense and simplicity.” (PHILIPS, 2014)

Philips is a Dutch diversified technology company headquartered in Amsterdam with primary divisions focused in the areas of Healthcare, Consumer Lifestyle and Lighting. It was founded in Eindhoven in 1891 by Gerard Philips and his father Frederik. It is one of the largest electronics companies in the world and employs around 122,000 people across more than 60 countries. (Philips, 2011) Its profit (for the year 2012) amounted €226 million.