4015078 balance score cardneed

8/14/2019 4015078 Balance Score Cardneed

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Paramjitsharma

Why does business need aBalanced

Scorecard


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Paramjitsharma

If you cant measure it,

you can cant manage it


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Paramjitsharma

BSCTranslate Strategy& Missioninto performance

measures as a strategic management system


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Paramjitsharma

Once again let us see what BSC does


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Paramjitsharma

Financial Measurement

attempts

Return on Investment

Operating & Cash BudgetsRatios

DuPont Analysis

Trend Analysis

Common size Statements

Financial Auditing

All these

tells about

past than

future


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Financial

perspectives

Profitability,Operating Income

Return on capital

Economic value added

Sales Growth

Cash flow


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Financial performance measures indicates

Whether an organization's strategy,

implementation and execution are contributing

to bottom lineimprovement ?


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Customer

perspectives

Market Segment,Customer Satisfaction

Customer Retention

New customers

Customer profitability

Market share

Account share


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The Customer perspective enables business unit

managers to articulate the customer and market

based strategy that will deliver superior future

financial returns

Customer

perspective


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Internal

business

perspectives

Critical processes to excel

Innovation Process

Operation Process


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The internal Business process perspective of the

Balance scorecard incorporates measures for short

and long term innovation & operations processes

to give better valueto the customers and sholders

Internal

Process

perspective


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Learning and

Growth

Perspective

People

Systems

Procedures


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Paramjitsharma

Learning &

Growth

perspective

The Financial, Customer and Internal Process

Objectives on the BSC typically will reveal large

Gapsbetween the existing capabilities of people

Systemsand procedures and what will be

required to achieve break through performance


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Paramjitsharma

Learning &

Growth

perspective

To close these Gaps,businesses will have to

invest in reskillingemployees, enhancing

information technologyand systems and aligning

organizational procedures and routines


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Paramjitsharma

alignment is not an easy task

but it needs to be there for
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Paramjitsharma

Customer

perspectives

Market Segment,

Customer Satisfaction

Customer Retention

New customers

Customer profitability

Market share

Account share


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Paramjitsharma

Linking Scorecard Measures to a Strategy

Cause and Effect Relationship

Outcome Measures & Performance Drivers


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Paramjitsharma

The measurement system should make the relationshipamong objectives and measures in the various

perspectives explicit so that they can bemanaged and

validated. The chain of cause and effect should pervade

all four perspectives of Balanced Scorecard.

ROCE as Measure

Driver of measure

Repeat sales

Customer Loyalty


On time delivery

Cause and Effect Relationship

Financial

Perspective

Customer

Perspective


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Paramjitsharma

Cause and effect

Relationship

ROCE

Customer

Loyalty

On time

Delivery

Process Cycle

Time

Process

Quality

Employee SkillLearning

&

Growth

Internal

Process

Customer

Financial


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Paramjitsharma

Performance Drivers

Activities which helps in achieving theobjectives through outcome measures

ROCE

Sales GrowthCustomers Loyalty

Quick Delivery

Trained Manpower

Measure Performance Drivers


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Paramjitsharma

Balance Scorecard

Lagging

Indicators

(Outcome Measures)

Leading

Indicators(Performance Drivers)


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Paramjitsharma

Question

Should Financial Measures be Scrapped ?


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Paramjitsharma

Could beYes;


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Paramjitsharma

In todays technologically

and customer driven global

competition

Financial measuresprovide

Poor guidelines for

Success


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Paramjitsharma

Managers should focus

On improving


Quality

Cycle times

Employees skills

Motivation


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Paramjitsharma

Impact of other 3 perspective

On financial perspective

Sales

Return

Physical Assets

Growth


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Paramjitsharma

Four Perspectives: are they sufficient


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Paramjitsharma

More perspectives

watch interest of

EmployeesSuppliers

community


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Paramjitsharma

Strategic Positioning or competencies driven


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Paramjitsharma

Strategic Positioning or competencies driven

Strategy for choosing the market & customer

Segments it wish to serve, identifying criticalinternal processes and to excel in that to give

value to the customers


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Paramjitsharma

Competencies/capabilities driven

Alternatively many organizations exploit their

Competencies, resources and capabilities to

Give better services or product

Hero Honda- engines

Canon - cameras


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Paramjitsharma

to sum Up.

Balance Scorecard is primarily a mechanismfor

Strategy implementationand nor strategy formulation

It can accommodate either approach for formulatingBusiness Strategy- starting from customer perspective

or Starting from excellent internal process capabilities


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Paramjitsharma

to sum Up.

What ever approach is followed toFormulate the

strategy,

the BSCwill provide an Invaluable Mechanismfor translating the strategy into specific Objectives,

measures and targets and monitoring the

Implementation of that strategy during Subsequentperiods


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Paramjitsharma

and.

Management should disclose the financial and

Non financial measurement it uses in managingthe business unit that quantify the effects of key

activities and events.

It is possible through Balance score card


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4015078 balance score cardneed

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