2. What Is a Balanced Scorecard?
• A Balanced Scorecard is method of implementing a
business strategy by translating it into a set of
performance measures derived from strategic goals
that allocate rewards to executives and managers
based on their success at meeting or exceeding the
performance measures.
• It was originated by Dr. Robert Kaplan (Harvard
Business School) and David Norton .
3. Why are Companies Adopting a Balanced
Scorecard ?
• Change
Formulate and communicate a new strategy for a more
competitive environment.
• Growth
Increase revenues, not just cut costs and enhance
productivity.
• Implement
Implements the new growth strategy in their day-to-day
operations.
4. Perspectives of Balanced scorecard :
– Financial Perspective
• How do look to shareholders?
– Customer Perspective
• How do customers see us?
– Internal Business Perspective
• What must we excel at?
– Learning & Growth Perspective
• Can we continue to improve & create value?
5. Translating Vision and Strategy:
Four Perspectives
Vision and
Strategy
Objectives Measures Targets Initiatives
Financial Perspectives
“To succeed
financially, ho
w should we
appear to our
shareholders?”
Objectives Measures Targets Initiatives
Learning And Growth Perspectives
“To achieve
our vision,
how will we
sustain our
ability to
change and
improve?”
Objectives Measures Targets Initiatives
Customer Perspectives
“To achieve
our vision,
how should
we appear
to our
customers?”
Objectives Measures Targets Initiatives
Internal Business Process Perspectives
“To satisfy our
shareholders
and customers,
what business
processes must
we excel at?”
7. Customer Perspective
GOALS MEASURES
New products % sales from new products
Responsive
supply
On-time delivery
Preferred
suppliers
Share of key accounts
Customer
partnerships
No of cooperative engineering efforts
8. Internal Business Perspective
GOALS MEASURES
Manufacturing
excellence
Cycle time
Unit cost
Yield
Design
productivity
Engineering efficiency
New product
innovation
Actual launch date vs. Plan
9. Learning & Growth Perspective
GOALS MEASURES
Manufacturing
learning
Process time to maturity
Product focus % products representing 80% of sales
Time to market New product introduction vs.
competition
10. Advantages of Balanced Scorecard:
• Clarifies strategy and make strategy operational.
• Aligns the organization with strategy.
• Links budget with strategy.
• Identifies and align strategic initiative.
11. Disadvantages of Balanced Scorecard:
• It is a scorecard not a decision making tool.
• It can not helps used as a tool thought it can
be help in assessing performance.
• Lack of well-defined strategy.
• Using only lagging measures.