1.Theory behind the Balanced Scorecard for Balanced Scorecard.........Project

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INDEX

1. Theory behind the Balanced Scorecard.....................................................................5

1.1. Background of the Concept of Balanced Scorecard...............................................51.2. Balanced Scorecard as Complementary Tool for Management Accounting..........91.3. Defining Critical Success Factors and Measures.................................................111.4.Balanced Scorecard as a Measurement Tool........................................................231.5. Balanced Scorecard as a Strategic Management System ...................................24

2. Constructing a Balanced Scorecard.........................................................................27

2.1. Establishing Strategy by Building up a Balanced Scorecard ...............................302.1.1. Clarifying and Translating the Vision and Strategy...............................................302.1.2. Communicating and Linking Strategic Objectives and Measures........................322.1.3. Planning, Setting Targets and Aligning Strategic Initiatives.................................342.1.4. Enhancing Strategic Feedback and Learning........................................................362.1.5. Conclusions and Recommendations – How Many Measures to Choose?............402.2. Testing the Balanced Scorecard ...........................................................................412.2.1. Analysing Outcomes and Performance Drivers ...................................................412.2.2. Analysing Cause and Effect...................................................................................422.3. Establishing Action Plan.......................................................................................442.3.1. Setting up Catalytic Mechanisms..........................................................................44

3. Implementing a Balanced Scorecard as a Management System...........................46

4 Case Studies on Implementing a Balanced Scorecard..............................................504.3 Practical Aspects of Setting up Balanced Scorecard in a Service Company.............754.4 Using the Balanced Scorecard at Metro Bank...........................................................784.5 Using the Results of a Balanced Scorecard at Sears Company.................................815. Conclusions and Recommendations on Implementing a Balanced Scorecard........83

6. Summary....................................................................................................................85Bibliography..................................................................................................................87Executive summary

The overall objective of the report is to analyse the use of Balanced Scorecard as a performance measurement tool in the areas of general management and strategicmanagement.The Balanced Scorecard may be described as a strategy-driven measurement systemthat retains traditional financial measures, but adds also the perspectives of present and

potential (future) value of a company, namely its customers, suppliers, employees, processes, technology, and innovation.The purpose is to show that the Balanced Scorecard may be considered as one of the best remedies in tackling with the questions concerning:

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helping to align key performance measures with overall organisation strategy at alllevels of an organisation;

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linking strategic vision and long-term objectives to short term tactics;

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directing sophisticated and different critical paths of success in the light of strategicmanagement;

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review of strategic vision in the light of day-to-day operations management.The concept of the Balanced Scorecard is not yet very familiar in Indi. Therefore, we paid much effort in describing the theory side of the Balanced Scorecard and the detailsof starting up a Balanced Scorecard – based management. Those aspects constitute twofirst chapters of the thesis.In the last part, attention is given to day-to-day implementation of Balanced Scorecardusing the examples of four case studies. Finally, some conclusions andrecommendations are drawn based on practical use of the Balanced Scorecard.

Introduction

Darwin had once remarked “survival of the fittest”. It was not a statement in the contextof any business organization. The saying, however, holds very true in today’s businessscenario. Every company has realized that the ones with the best strategies, bestoperations, best people etc. would outperform those who do not have the superior thingsin place. All assets deserve equal attention. The best organisations will be the ones whowould survive the cut-throat competition. The struggle for existence and growth, isindeed very severe for firms in this competitive environment. The fate of organizations2

are changing very fast. Strong competitors are entering into industries due to theliberalization, privatization and globalization which has formed the buzzword in theeconomic field. The life tenure of any organization is determined by the strength of the protective shield it has been able to build around itself which would not only helpcapitalise on the opportunities but also counter the threats.In this competitive environment, the field of management which is becoming increasingly popular and relevant is Strategic Management. This is becausethis subject helps to bring a focus on those actions that should be taken by themanagement which would ensure the existence, survival and the long-term success of any organization. The scope of application of this field, however, varies with the business size. Strategic Management is Managing for the Future or Competing for theFuture as had been remarked by the renowned strategic management experts,Hameland Prahalad. As Peter Drucker had warned, management “ has no choicebut toanticipate the future, to attempt to mould it, and to balance short-range and long-rangegoals. The future will not just happen if one wishes hard enough. It requires decision-now. It imposes risk-now. It requires action-now. It demands allocation of resources-now. It requires work-now.”Having understood these things which are applicable to the business inreality, the applicability of strategic management is getting wider – be it a multinational,domestic or even a national player in the market. In any strategic management process,one of the most important element is the SWOT analysis which means analyzing theenvironment – both internal and external. The internal environment analysis highlightsthe areas of strength and weaknesses which the organization has and the externalenvironment analysis throws light on the opportunities and the threats being offered bythe various areas of the environment. The most important thing that can ensure thesuccess of any organization is the development of appropriate strategies which woulddecide the direction the organization will take as it progresses.

Need for Balanced scorecard

We have seen that the there is a very significant need of balanced scorecard in this eraof cut-throat competition, as what an organization requires is not just framing the rightstrategies, but also managing the same. The impact of the right strategies will3

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Neeru Rawat

Hello Jai, Its a very nice project nd ur sincere efforts could be seen. I m in dire need of balance scorecard project, Pls send me asap at neeru_rawat2007@yahoo.co.in. Thanks and Regards Neeru

reply04 / 20 / 2011

ludpud

my emailid is nupurtewari2587@gmail.com

thanks..good work

hi jai, can u pls mail me your good work as early as possible. its urgent

reply05 / 03 / 2010

Pramod Kumar

hi jai....................... very nice project pls send me on my id pramodpgb@gmail.com for my project