Balanced scorecard gap analysis

1. BalancedScorecardGap AnalysisModel
The significantdifference betweenthe fieldof strategybasedontheoriesleadtoconflictigviewson
the shareholderandstakeholderviewof the organisation.Emergingtriple bottomline approach
Importance pf sustainability
Environment Strategy Capability
Organisationperformance
MeasuresforStrategicPerformance
(1) ShareholderValueapproach
(2) StakeholderApproach
(3) the ExtendedStakeholderApproach:sustainability,corporate social responsibility,andthe
triple bottomline.
(1) ShareholderValueapproach
Financial return tpshareholders
Iinvestingincompaniesasacapita budgettingdecision
Financial value drivers-salesgrowthrate,margins,workngcapital,fixedcapital costof ca[ital,
tax rate,shareholdervalue
Total ShareholderReturn(TSR) isthe increase inshare price overa period,plusthe dividends
paidforthe period,dividedbythe initial share price forthe period.
Simple model of economicvalue added
Proftaftertax
Adddepreciation+noncashprovisions
EqualsNetoperatingcashflowaftertax

2. Less Capital charge (cost of capital x equity)
Equals : Economicvalue added
(2) Measuringstakeholderperformance:the balancedscorecardapproach
The balancedscorecardapproach isconsistentwiththe stakeholderapproachof
organisationbutitdoesnotrejectthe importance of shareholdervalue.
Four perspectives:
1)The BCS recognisesthe demandof the customersmaybe inconflictwiththe demandsif
the shareholders.
2)The BSC recognisesthe role of innovation,learningandgrowthindevelopingthe
organisatioforthe future.
3)Measuresare for the longterm forthe future of the organisation.
4)The BSC recognisesthe role of of implementationinstrategythroughthe measurementof
internal processperformance.
The Performance MeasurementCube
Hubbaardfoundthat the type of the organisationhadanimpact onthe the emadures
Non-profit,governmentbusinessenterprise,(Non-commerciallyoientedandcommecially-
oriented).
Changesto the external environmentof the organisation.(changeintechnology,
globalisatiobn)andchange ininternal factors:change inkeystakeholders, organisational
performance,organisationalstrategy).
Performance measuresfordifferentorganisational strategicsituations
Long term
Short term
Effecton measure
Specificeffect
Major aspectsof the Global ReportingInitiativeFramework
MeasuringStrateicPerformance:How todo it

3. Financial measures
StrategicFinancial AnalysisandDuPontAnalysis
1. Growth
2. Shareholders’returns(Returnonshareholder’sfunds/equity
3. Operatingperformance (earningsbeforeInterestandtax/Total Assets)
4. OperatingProfitbefore tax/sales
5. Financial Risk
LinkingStrategyMeasuresViaScorecardMeasures
Strategiclevel Performance Measure
Businessstrategy Organisational BalancedScorecard
Business unit/ BusinessUnit/functionalunitBalancedScorecard
Functional unitstrategy
Individual Role Individual KPIs/balancedscorecard
Standardsof Comparison
Past performance
Internal Targets
Industryaverages
BestIndustryPractice
World’sBestPractices

4. (i)Time periodOf Performance analysis
(ii)Gettingcomparisoninformation
A) Assessingperformance
B) CommunicatingPerformance Information
C) Traps inpresentingandcommunicatingperformance information