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Balance Score Card

The Balance Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It uses financial and non-financial metrics in four perspectives: customer, internal business processes, innovation and learning, and financial. Creating a Balance Scorecard involves identifying the vision and strategies, defining critical success factors and perspectives, identifying measures, evaluating the scorecard, creating action plans, and following up on reporting. Examples are provided of goals and performance measures for each perspective.

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Prashant Mhatre
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369 views11 pages

Balance Score Card

The Balance Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It uses financial and non-financial metrics in four perspectives: customer, internal business processes, innovation and learning, and financial. Creating a Balance Scorecard involves identifying the vision and strategies, defining critical success factors and perspectives, identifying measures, evaluating the scorecard, creating action plans, and following up on reporting. Examples are provided of goals and performance measures for each perspective.

Uploaded by

Prashant Mhatre
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Presentation on:THE BALANCE SCORE CARD

What is Balance Score Card?


Balance Score Card is a set of financial and non-financial measures relating to a companys success factors. It provides information to management to assist in strategic policy formulation and achievement. The Balanced Scorecard can be a great help used as a strategic tool, a management methodology or / and a measurement system. The main objective of Balance Score Card is to provide a comprehensive framework for translating a firms strategic objectives, into a coherent set of performance measures.

Components of a Balance Score Card:


CUSTOMER PERSPECTIVE INTERNAL PERSPECTIVE INNOVATION AND LERNING PERSPECTIVE FINANCIAL PERSPECTIVE

Creating a Balance Score Card


STEP :1. 2. 3. 4. 5. 6. 7. Identify the VISION Where an organization is going. Identify the organization's STRATEGIES How an organization is planning to go there. Define critical success factors and perspectives What we have an well in each perspective. Identify Measures Which will ensure that everything is going in the experts way. Evaluation of BSC Ensuring what we are measuring is right. Create action plans and plan reporting of the Balance Score Card. Follow up and manage Which person should have reports and now reports should look like.

Illustration of perspective and performance measures:


A. Customer Perspective
GOALS
Price Delivery
Quality Support

PERFORMANCE MEASURES
Competitive price Number of on time delivery, lead time from receipt of order to delivery to customer. Own quality relative to industry standards, number of defects or defect level Response time, customer satisfaction surveys.

Illustration of perspective and performance measures:


B. Internal Business Perspective
GOALS
Efficiency of manufacturing process Sales perspective

PERFORMANCE MEASURES
Manufacturing cycle time
Annual sales versus Plan sales, Increase in number of customers in a unit of time. Rate of new product introduction per quarter.

New Product introduction

Illustration of perspective and performance measures:


C. Innovation and Learning Perspective
GOALS
Technology Leadership

PERFORMANCE MEASURES
Product performance compared to competitors, number of new products with patented technology. Manufacturing overheads per quarter as a percentage of sales, rate of decrease in cost per quarter. Market share in all major markets.

Cost Leadership Market Leadership

Illustration of perspective and performance measures:


D. Financial Perspective
GOALS
Sales Cost of sales
Profitability Prospective

PERFORMANCE MEASURES
Revenue and profit growth. Extent to which it remained fixed or decreased each year. Return on capital employed. Cash flow.

Department Level Scorecard Example

Advantages of the Balance Score Card:


1. Holistic approach
2. Overall Agenda 3. Objectivity 4. Management by Objectives 5. Feedback and Learning 6. Systems Approach

THANK YOU

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