Question

Chapter Twelve discusses the Balanced Scorecard as a multi-dimensional assessment tool to determine if the company performance is in alignment with its strategies to achieve its goals. Consider one or more features or measurements of the scorecard and discuss its importance in meeting a company's goals.

Answer 1

The balanced score card can be defined as an approach to the provision of information to management to assist strategic policy formulation and achievement.it emphasizes the need to provide the user with a set of information, which addresses all relevant areas of performance in an objective and unbiased fashion. the ultimate result of using the balanced score card approach should be an improved long-term financial performance.

Balanced score card is a set of financial and non-financial measures relating to a company's critical success factors.

Idea of the balanced score card is that managers should develop the measures on which they manage the business from four different perspectives:

1. Customer perspective: i.e How are we looked upon by customers.

Goals	Performance measures
Price	Competitive price
Delivery	Number of on-time delivery
Quality	Number of defects or own quality relative to industry standards
Support	Customer satisfaction survey or Response time

2. Internal Business Perspective: i.e what should we excel.

Goals	Performance measures
Efficiency of manufacturing process	Manufacturing cycle time
Sales penetration	Sales plan
New product introduction	Rate of new product introduction

3. Innovation an learning perspective: i.e is it possible for us to continuously improve and create values.

Goals	Performance measures
Technology leadership	Performance of the product or Use of technology
Cost leadership	Manufacturing overhead per quarter
Market leadership	Market share
Research and development	Number of new products

4. Financial perspective: i.e How do we look to our shareholders.

Goals	Performance measures
Sales	revenue and Profit growth
Cost of sales	Extent in remain fixed
Profitability	Return on capital employed
prosperity	Cash flows

Successful implementation of the balanced score card requires that the top management builds an overall consensus on the components and targets.