Schiling Chapter Six : Balance ScoreCard
The “balanced score- card,” that they argue can motivate breakthrough improvements in product, process, customer, and market development
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Balanced ScoreCard
1. Theory In Action
The Balanced ScoreCard
Robert Kaplan and David Norton point out that a firm’s methods of
measuring performance will strongly influence whether and how the firm
pur- sues its strategic objectives. the “balanced score- card,” that they
argue can motivate breakthrough improvements in product, process,
customer, and market development. The Balanced ScoreCard emphasizes
four perspectives the firm should take in formulating goals that target
critical success factors and in defining measures:
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2. Theory In Action
The Balanced ScoreCard
1. Financial perspective. Goals might include such things as “meet shareholder’s expectations”
or “double our corporate value in seven years.” Measures might include return on capital,
net cash flow, and earnings growth.
2. Customer perspective. Goals might be to “improve customer loyalty,” “offer best-in-class
customer service,” or “increase customer satis- faction.” Measures might include market
share, percentage of repeat purchases, customer satis- faction surveys, and so on.
3. Internal perspective. Goals might include such things as “reduce internal safety incidents,”
“build best-in-class franchise teams,” or “improve inventory Management.
4. Innovation and learning perspective. Goals might include such things as “accelerate and
improve new product development” or “improve employee skills.”
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3. Theory In Action
Kaplan and Norton acknowledge that the bal- anced scorecard model often
has to be adapted to fit different markets and businesses, but many firms
(including IBM, Philips Electronics, Apple, and Advanced Micro
Electronics) in many different indus- tries (including electronics,
petrochemicals, and health care) are finding the balanced scorecard
useful.b In fact, a 2002 survey by Bain & Company found that
approximately 50 percent of Fortune 1,000 compa- nies in the United
States and 40 percent in Europe use some version of the balanced
scorecard.
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5. Summary Of Chapter
The balanced scorecard is a measurement system that encourages the firm
to con- sider its goals from multiple perspectives (financial, customer,
business process, and innovation and learning), and establish measures
that correspond to each of those perspectives.
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