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Balanced scorecard

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  • 1. BALANCED SCORECARD
  • 2. The Balanced Scorecard is a measure of the key elements of a company’s strategy, ranging from continuous improvement and partnerships, to team work and global scale. Organisations design their unique balanced scorecard based upon their unique constraints. A company’s performance depends on how it measures its performance.
  • 3. Managers cannot afford to rely on either financial or operational measures exclusively. No single measure provides a clear performance target focusing on the critical areas of a business. Thus there is a need for balanced representation of both financial and operational measures.
  • 4. Kaplan and Norton have devised a balanced scorecard- a set of measures that give top managers a quick but comprehensive view of the business.The balanced scorecard consists of – a)financial measures that measure the actions already taken. b)The scorecard also contains operational measures such as customer satisfaction, internal processes and the organisation’s innovation and improvement activities.
  • 5. The balanced scorecard can be compared with dials and indicators in an airline cockpit. Pilots need detailed information of many aspects of flight for navigating and flying an airplane.
  • 6. These information is necessary to get an idea of the current and predicted environment.. Relying on an single measure can be fatal. Just like a pilot, a manager should be able to view performance in several areas at the same time.
  • 7. Using a balanced scorecard, managers can look at the business in terms of four dimensions. The balanced scorecard answers four basic questions1. HOW DO CUSTOMERS SEE US? 2.WHAT MUST WE EXCEL AT? 3.CAN WE IMPROVE AND CREATE VALUE? 4.HOW DO WE LOOK TO SHAREHOLDERS?
  • 8. 1. HOW DO CUSTOMERS SEE US?
  • 9. WHAT MUST WE EXCEL AT? GOALS Technology capability MEASURES Manufacturing geometry vs. competition Manufacturing excellence Cycle time/ unit cost/yield Design productivity Efficiencies New product introduction Actual introduction schedule vs. plan
  • 10. CAN WE IMPROVE AND CREATE VALUE GOALS Technology leadership MEASURES Time to develop next generation Manufacturing learning Process time to maturity Product focus Percent of products that equals 80% sales Time to market New product introduction vs. competition
  • 11. HOW DO WE LOOK TO SHAREHOLDERS? GOALS MEASURES Survive Cash flow Succeed Quarterly sales growth and operating income by division Prosper Increased market share and ROI
  • 12. Many firms use balanced scorecard as a strategy tool It brings many elements of a company’s strategy in a single report. The balanced scorecard is appropriate for organisations of today to be on track and move confidently into the future. The scorecard keeps strategy and vision at the center