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Published by SouvikGhosh

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Published by: SouvikGhosh on Nov 28, 2012
Copyright:Attribution Non-commercial


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How can stakeholder demands be integrated into core management systems of companies andmanaged in an effective and efficient way? How can be ensured that, coming from the paradigm of economic, ethics, legal, environmental and social matters are implemented and managed by companiesin an equal ways?The instrument of the BSC is being discussed as a possible appropriate conceptual framework for CSR.Recent researches at the Institute for Economy and the Environment at the University of St.Gallen haveshown that the BSC is suitable to integrate qualitative, for example environmental and social, aspectsinto the core management system of the companies.Companies can use the combination of the BSC and CSR to help create a competitive advantage byletting decision makers know if they are truly entering into CSR virtuous cycle which is combines toimprove organizational performance exponentially. A company could begin to compete on costleadership as a result of improved technology and effective and efficient processes, which leads toimproved ecological protection, which results in better risk management and a lower cost of cap ital.Alternatively a company could differentiate itself from its competitors' values and performance as aresult of its community building activities, which can improve corporate reputation, result inimproved brand equity, creating customers satisfaction, which increases sales.Since the 1990s, the Balanced Scorecard System has provided a rigorous way to measure performanceby quantifying so-called intangible assets. The Balanced Scorecard draws its strengths from fourperspectives: 1) financial measures; 2) customers; 3) internal processes; and 4) learning and growth.Kaplan and Norton used this four perspective model and link it with the time-based dynamics of strategy
to create strategy maps. A strategy map provides a visual representation of the organization’s
strategy. A strategy map creates a powerful communication tool that enables employees to understanda strategy and translate it into actions to allow the organization to succeed.The key benefit of a strategy, as articulated by Michael Porter, is when the integrated and alignedactivities enable the company to offer a value proposition better than competitors.
While Porter’s work
helps managers formulate strategy, the Balanced Scorecard provides the discipline to ensure that theformulated strategy has specific objectives for shareholders and customers, an explicit value propositionand organizational culture.Porter argues that strategy is determined by a unique combination of activities that deliver a differentvalue proposition than competitors or the same value proposition better. The strategy map frameworkallows companies to identify and link together the critical internal processes and human, informationand organizational capital that deliver the value proposition differently or better.The process of creating a strategy map and Balanced Scorecard translates the formulated strategy intospecific objectives, measures and targets and initiatives in the four inter-related perspectives. Thestrategy map helps organizations translate, communicate, implement and review the strategy they haveformulated following
Porter’s principles.

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