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The Balance Scorecard

A Strategic Management ---- a new
approach developed in the early 1990’s by
Robert Kaplan and David Norton.

This approach provides a clear prescription
as to what companies should measure in
order to “balance” the financial perspective.
Introduction:------
The Balanced Scorecard is a management
system that enables organizations to clarify
their vision and strategy and translate them
into action.
It provides feedback around both the
internal business process and external
outcomes in order to continuously improve
strategic performance and results.
Methodology:----------
The Balanced Scorecard methodology builds
on some key concepts of previous
management ideas such as TQM (Total
Quality Management) including customer
defined quality, continuous improvement,
employee empowerment and primarily
measurement-based management and
feedback.
Four Perspectives
The Balanced Scorecard suggests that we
view the organization from four
perspectives and to develop metrics, collect
data and analyze it relative to each of these
perspectives.
The Learning and Growth Perspective
The Business Process Perspective
The Customer Perspective
The Financial Perspective.
Learning and Growth Perspective
To Achieve the vision, how will we sustain
the ability to change and improve.
People need to constantly learn and grow to
accept the desired changes happening in the
organization This is an important perspective
as it takes into consideration Learning and
Growth of employees so that they don't resist
change and therefore improve continuously.
Internal Business Process
To satisfy the shareholders and customers
what business process must one be excellent.
All the business process should be efficient
and effective so as to satisfy the customer's
demands and shareholder's needs.
Internal business Process are important
aspect for productivity and overall attainment
of organizational goals and objectives.
Customer Perspective
To achieve the vision, how should one
appear to the customers
Customers are one of the most important
asset of the organization. Their satisfaction is
of utmost important for the business. Hence
to take the customer aspect or perspective
into consideration is necessary.
Financial Perspective
To succeed financially how should one
appear to the shareholders. The objectives,
targets measures and initiatives should be
taken into consideration.
Financial perspective is the most important
perspective. It helps the organization to know
the cost effectiveness and profitability of the
organization
Double—Loop Feedback
In order to shield the customer from
receiving poor quality products,aggressive
efforts were focused on inspection and
testing at the end of the production line.
True causes of defects can never be
identified and there is always inefficiencies
due to rejection of defects. Hence the causes
of variation needs to be identified and fixed
Double—Loop Feedback
To establish such a process, Deming
emphasized that all business processes
should be part of a system with feedback
loops. The feedback data should be examined
by managers to determine the causes of
variation, what are the processes with
significant problems and then they can focus
attention on fixing the subset of processes.
Double—Loop Feedback
The Balanced Scorecard incorporates
feedback around internal business process
outputs, as in TQM, but also adds a feedback
loop around the outcomes of business
strategies. This creates a “double-loop
feedback” processes in the balanced
scorecard.
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