• Two types of objectives are specially

common in organizations:
 Financial
 Strategic

• Often there is trade-off between the two

• Financial objectives can best be met by

focusing first & foremost on achieving
on strategic objectives that improve a
firm’s competitiveness & market strength
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• Developed in 1993 by Harvard Business
School professors, Robert Kaplan &
David Norton, the Balanced Scorecard is
a strategy evaluation & control technique

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• Balanced Scorecard derives its name
from the perceived need of firms to
balance financial measures that are
oftentimes used exclusively in strategy
evaluation & control with non-financial
measures such as product quality &
customer service

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• Financial measures and ratios are vitally important
in strategic planning, but of equal importance are
factors such as:
 Customer service,
 Employee morale,

 Product quality,

 Pollution abatement,

 Business ethics,

 Social responsibility,

 Community involvement, etc.

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1. How well is the firm continually improving
and creating value along measures such
as:
 Innovation
 Technological leadership
 Product quality
 Operational process efficiencies, and so on?

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2. How well is the firm sustaining and even
improving upon its core competencies
and competitive advantages?

3. How satisfied are the firm’s customers?

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► The Balanced Scorecard approach to
strategy evaluation aims to balance long-
term with short-term concerns, to balance
financial with nonfinancial concerns, and
to balance internal with external concerns.

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