Balanced Scorecard is a
management tool that provides
stakeholders with a comprehensive
measure of how the organization is
progressing towards the
achievement of its strategic goals.
Managing Performance with Balanced Scorecard
Balances financial and non-financial measures
Balances short and long-term measures
Balances performance drivers with outcome
Leads to strategic focus and organizational
PERSPECTIVES OF BALANCED SCORE CARD
BUSINESS PROCESS PERSPECTIVE
LEARNING GROWTH PERSPECTIVE
In private companies, the financial
perspective is the main objective (ultimate
goal) – without having to sacrifice the
interests of other relevant stakeholders
(community, environment, government,
In the financial perspective, the strategic
goal is the long-term shareholder value.
This goal is driven by two factors, namely :
revenue growth and cost efficiency.
This perspective is very instrumental, because without
customers, how can a company survive?
Customer perspective covers the following elements:
• Customer acquisition
• Customer retention
• Customer profitability
• Market share
• Customer satisfaction
This perspective reflects the processes in key
business that should be optimized in order to
meet the needs of the customers.
There are four main themes in this
•Operations Management Process
•Customer Management Process
•Regulatory and Social Process
This perspective reflects the capability that
a company should have, namely:
• Human Capital
This perspective shows us that good human
resource development system,
organizational system and information
system forms a solid foundation for
improving company performance.
Acquisition of materials that are
likely to be used
Prompt response to user requests
Control of unit costs
Acquisition of more digital
Economic value added is a financial
performance method to calculate
the true economic profit of a
Economic value added can be calculated as net
operating after taxes profit minus a charge for
the opportunity cost of the capital invested.
Economic value added is an estimate amount by
which earnings exceed or fall short of the
required minimum rate of returns for
shareholders or lenders at comparable risk.
Unlike market-based measures, such as
MVA,EVA can be calculated at divisional
(strategic business unit)level.
Unlike stock measures, EVA is a flow and
can be measured for performance
evaluation over time.
Unlike accounting profit, such as EBIT, net
income and EPS, EVA is economic and is
based on the idea that a business must
cover both the operating costs and the
Setting organizational goals.
Communication with shareholders and
Motivation of managers.
Analyzing equity securities.
Market value added is the difference
between the equity market valuation of
a listed/quoted company and the sum
of the adjusted book value of debt and
equity invested in the company.
It is the sum of all capital claims held
against the company; the market value
of the debt and the market value of the
The higher the market value added (MVA),the better.
A high MVA indicates the company has created
substantial wealth for the shareholders.
MVA is equivalent to the present value of all future
Negative MVA means the the value of actions
and investments of management is less than
the value of capital contributed to the company
by the capital markets. This means the value or
the wealth has been destroyed.
The aim is to maximize MVA , not to maximize the
value of the firm, since this can be easily
accomplished investing ever-increasing amount of
MVA does not take into account the opportunity cost
of the invested capital
MVA cannot be calculated at divisional(strategic
business unit) level and cannot be used for private
We define knowledge management as
a business activity with two primary
1).Treating the knowledge component
of business activities as an explicit
concern of business reflected in strategy,
policy, and practice at all levels of the
2).Making a direct connection between an
organization’s intellectual assets — both
explicit [recorded] and tacit [personal know-
how] — and positive business results.
Knowledge management often encompasses
identifying and mapping intellectual assets
within the organization.
Generating new knowledge for competitive
advantage within the organization.
Making vast amounts of corporate
Sharing of best practices, and technology that
enables all of the above — including
groupware and intranets.
Marketplaces are increasingly competitive and the
rate of innovation is rising
Reductions in staffing create a need to replace
informal knowledge with formal methods.
Competitive pressures reduce the size of the work
force that holds valuable business knowledge.
The amount of time available to experience and
acquire knowledge has diminished.
Early retirements and increasing mobility of the
work force lead to loss of knowledge.
Changes in strategic direction may result in the loss
of knowledge in a specific area.
Categorization of knowledge
Management of Information:
Objects that can be identified and handled in
Management of People:
For researchers and practitioners in this
field, knowledge consists of "… processes, a
complex set of dynamic skills, know-how,
etc., that is constantly changing."
T.R JAIN (INTRODUCTION TO
MANAGEMENT BOOK KOONTZ.
POONAM GANDHI BUSINESS STUDIES
FOR IMAGES GOOGLE IMAGE SEARCH.