Presentation on:THE BALANCE SCORE CARD

What is Balance Score Card?

Balance Score Card is a set of financial and non-financial measures relating to a companys success factors. It provides information to management to assist in strategic policy formulation and achievement. The Balanced Scorecard can be a great help used as a strategic tool, a management methodology or / and a measurement system. The main objective of Balance Score Card is to provide a comprehensive framework for translating a firms strategic objectives, into a coherent set of performance measures.

Components of a Balance Score Card:

CUSTOMER PERSPECTIVE INTERNAL PERSPECTIVE INNOVATION AND LERNING PERSPECTIVE FINANCIAL PERSPECTIVE

Creating a Balance Score Card

STEP :1. 2. 3. 4. 5. 6. 7. Identify the VISION Where an organization is going. Identify the organization's STRATEGIES How an organization is planning to go there. Define critical success factors and perspectives What we have an well in each perspective. Identify Measures Which will ensure that everything is going in the experts way. Evaluation of BSC Ensuring what we are measuring is right. Create action plans and plan reporting of the Balance Score Card. Follow up and manage Which person should have reports and now reports should look like.

Illustration of perspective and performance measures:

A. Customer Perspective
GOALS
Price Delivery
Quality Support

PERFORMANCE MEASURES
Competitive price Number of on time delivery, lead time from receipt of order to delivery to customer. Own quality relative to industry standards, number of defects or defect level Response time, customer satisfaction surveys.

Illustration of perspective and performance measures:

B. Internal Business Perspective
GOALS
Efficiency of manufacturing process Sales perspective

PERFORMANCE MEASURES
Manufacturing cycle time
Annual sales versus Plan sales, Increase in number of customers in a unit of time. Rate of new product introduction per quarter.

New Product introduction

Illustration of perspective and performance measures:

C. Innovation and Learning Perspective
GOALS
Technology Leadership

PERFORMANCE MEASURES
Product performance compared to competitors, number of new products with patented technology. Manufacturing overheads per quarter as a percentage of sales, rate of decrease in cost per quarter. Market share in all major markets.

Cost Leadership Market Leadership

Illustration of perspective and performance measures:

D. Financial Perspective
GOALS
Sales Cost of sales
Profitability Prospective

PERFORMANCE MEASURES
Revenue and profit growth. Extent to which it remained fixed or decreased each year. Return on capital employed. Cash flow.

Department Level Scorecard Example

Advantages of the Balance Score Card:

1. Holistic approach
2. Overall Agenda 3. Objectivity 4. Management by Objectives 5. Feedback and Learning 6. Systems Approach

THANK YOU