Question

How can the Balanced Scorecard (BSC) help MNEs in establishing a set of adequate performance measurement criteria for the entire company, its subsidiaries, and subsidiary managers? explain

Answer 1

BSC is a performance measurement tool which helps to identify the performance of various business units, center, activities, etc on the basis of some key parameters. In simple words it is a performance metric for the business. It helps to identify the future prospects of the business based on the current performance.

Under this method, the strategy of the organisation is divided into four perspective:

1. Financial
2. Customer
3. Business Process
4. Learning & Growth

Under each of these perspective, specific objectives are set for profit and growth. Subsequently, the defined targets are set for the measurement of these objective. So the objectives are evaluated to be achieved by what margins at the standard target level. After this, there is an action plan for taking corrective actions for meeting the targets if not achieved.

This theory covers various aspects of the business and have a set of defined procedures of measuring its performance and taking corrective action as and when required. Thus it helps MNEs in establishing a set of adequate performance measurement criteria for various internal and external factors, operational activities, etc and in turns for the entire company.