Balanced Scorecard

Translating Strategy Into Action

The Team

1. Ari Restu W. (12106056)

2. Endah Reni P. (12106057)
3. Dida Sadariksa (12106059)
Point f View

Introduction of Balanced Scorecard

The Perspective of Balanced Scorecard
Building Balanced Scorecard
The Implementation of Balanced Scorecard
Case Study
Introduction of Balanced
Scorecard
video
Balanced Scorecard
can Answer that!!
 History of Management System

Industrial age Information age

Measures the company’s performance only in Assesses financial and non financial
financial prespective (traditional accounting) capital

Short term Investment Long Term Investment

Manpower Based Project Technology Based Project

No market segmentation Market Segmentation

Unknowledgeable Labor Knowledgeable Labor

Low quality product and no High quality product and costumer

costumer satisfaction orientation satisfaction
Introduction of Balanced Scorecard

Balanced scorecard is a model in managing the company’s

performance with four perspective: financial, costumer and
stakeholder, internal processes, and learning and growth.

Introduced in 1992, by Robert Kaplan and David Norton, the

Balanced Scorecard is the most commonly used framework
for ensuring that agencies execute their strategies. Today,
about 70% of the Fortune 1,000 companies utilize the
Balanced Scorecard to help manage performance

Balanced scorecard is not just a tool to assess the

company’s performance. More than it, balanced
scorecard is a whole management system of a company
The Perspectives of BSC
Purposes of Utilizing a Balanced
Scorecard
Clarify and to results in consensus about strategy
Communicate the strategy to the whole element
of company
Harmonize some department and individual goals
with the company’s strategy
Relate some strategic goals with long term target
and annual budget
Identify and to harmonize some strategic
initiatives
Evaluate strategy periodically and systematicly
To get feedback needed to learn and improve
strategy
Now we know about...

• Developing of management system

• What balanced scorecard is
• The purposes in utilizing balanced scorecard
Perspectives of Balanced
Scorecard
The Perspectives of Balanced
Scorecard
Financial Perspective
Measurement
Formulating financial goals that want to
achieve in the future. Further this financial
goals become the basis for the three other
perspectives in setting their goals and size.
Customer Perspective
Measurement
Contains:
– Market segmentation
– Retention of customer
– Aquitition of customer
– Customers satisfaction
– Profitability of customer
To reach maximum impact, every measuring
must be relevant to segment of customer that
gives highest growth and profitability.
Customer Satisfaction Drivers

There are 3 (three) factors:

– Time
• The faster service is getting better, of course with
maintaining the quality of products / services.
– Quality
• Meet customer needs in accordance with their
expectations.
– Price
• Customers loved low price product with good quality.
 Internal Business Process Measurement
(1)

• Identify critical processes that must be

properly controlled by company to be able to
meet the objectives of shareholders and
customer segments.

Identifying Customer
Innovation Operation After sales
customer Process service satisfaction
Process
need
Internal Business Process Measurement
(2)
• Innovation Process
– Analyzing customer needs
– Recognizing the market, then create products / services
– Supporting system:
• The existence of R & D department to be very vital in a company
• Other research facilities, such as laboratory
• Design, etc.
• Operation Process
– Build products / services according to customers' needs, and then launch it into
the market
– This process identifying the characteristics:
• Financial and cost
• Quality
• Time
• Performance
• After-sales Service
– Emphasis on customer service
– Improvement activities
– Replacement of damaged products
– Payments process
Learning and Growth perspective

Develop objectives and measures that

encourage learning and growth.
The purpose of the learning and growth
perspective is to provide the infrastructure that
support three other perspectives
Three main categories:
– Employee capabilities
– Information systems capabilities
– Motivation, empowerment and alignment
Employee Capabilities

• A revolutionary thinking about how workers

contribute to the company
– Mere physical work into the process of thinking
how to improve performance and creativity to
achieve business objectives.
• Three measurement parameters of workers:
– Employee satisfaction
– Employee retention
– Worker productivity
Information Systems Capabilities

• Expanding access to information about

customers, internal processes, and financial
consequences of corporate decisions
• Front-line workers were given information
about the segment of customers so they can
determine how much effort to be performed
Motivation, Empowerment, and Allignment
• Providing a role for workers to express their
thoughts for the provision of advice, criticism,
etc.
• Workers feel empowered  improve work
motivation
• So, this will increase productivity too
Now we know about...

• Four perspective in balance scorecard

• How we measure the perspective
• Relation from one perspective to the other
Building Balanced Scorecard
 Organization Structure

corporate
Level I

Division 1 Division 2

Level II

UBS UBS
UBS 3
1 2

Level III
Building Balanced Scorecard as a
Strategic Framework for Action
•Communicating and
• Clarifying the Educating
Vision • Setting Goals
• Gaining •Linking rewards to
Consensus performances
measurement

Clarifying and
Translating the Communicatin
Vision and g and Linking
Strategy

Strategic
Planning and
• Articulating the Feedback and
traget Setting •Setting target
vision Learning
•Aligning strategic
• Supplying
initiatives
strategic •Allocating
feedback
• resources
Facilitating •Establishing
strategy review
milestones
and learning
Relating some measurements in BSC
with strategy

Three principals in relating balanced

scorecard with company’s strategy :
1. Cause and effect relationship;
2. Work driver factor
3. Connection with financial.
Cause and effect relationship
Lagging and leading indicator
Connection with financial

• A balanced scorecard must still has a concern in financial results

like ROCE and economics added value
• The most important thing; causal relationship between all
measurements in a balanced scorecard must be related with
every financial goal of the company
• Many managers fail to relate program in improving internal
business process with the result that affect the costumer directly
and good financial performance at the future
Now we know about...

• How to build a balanced scorcard

• Three principals of balanced scorecard
Implementation of Balanced
Scorecard
 BSC in Mining Company
Board of Director - Strategy Map of PT.ANTAM Tbk
The Productivity Strategy The Revenue Growth Strategy
Profitability Revenue Growth
FINANCIAL
• Net Margin • Sustainable Growth
Cost Structure • ROE Solvability Rate (SGR)
• ROA
• ROCE
/ Leverage
• Cash
Cost
Customer
CUSTOMER

Sales
Satisfaction
• Sales Revenue

Regulatory &
Innovation Environmental
Operational Operational Processes
PROCESSES

Process
INTERNAL

• Strategic Risk • GCG Score

Project • Production Productivity / • PROPER Score
Achievement • % of •
SBU Mining closure
Ratio • Determining (on Schedule & on Budget)
Opinion of Independent
• Acquisition Risk that •
Auditor % of Corporate Legal
matter Protectability
• Comply to Procurement SOP
LEARNING
& GROWTH

Employee Skill and Organization Integrated Information

Competencies (HC) Climate Technology (IC)
• % of HR Composition Best
• Organization Climate Index • IT System / program effectiveness
Practices
(Education & Age)
Performaces Management System

PT Antam Tbk.
Implementation of BSC for other
sector
Feature Private Sector Public Sector
General Strategic Competitiveness, Mission Success,
Goals Uniqueness Best Practices

Financial Goals Profit,Growth, Productivity,Efficiency

Market Share ,Value

Stakeholders Stackholder,Buyers, Taxpayer,Recipient,

Managers Legislator

Desired Outcome Customer Satisfaction Customer Satisfaction

(Source : Averson 1999)

The Advantages of Implementing
BSC

Use Financial Perspective and

Non Financial Perspectives

Systematic Long Term Plan

 Case Study
Balanced Scorecard and Strategy Map
at Mobil North America Marketing and
Refining (NAM&R)
Mobil North America Marketing and
Refining (NAM&R)

Mobil North America Marketing and

Refining (NAM&R), is a multibillion-
dollar division of Exxon Mobil,the
world's largest publicly traded
international oil and gas company.
Mobil’s (NAM&R) Strategic
Vision
Is to be the best integrated refiner-
marketer in the United States by
efficiently delivering unprecedented
value to customers
Mobil’s Problem

The performance of the past was not acceptable.

Mobil, in the past, had attempted to sell a full range of
products and services to all consumers, while still
matching the low prices of nearby discount stations.
But this unfocused strategy had failed, leading to poor
financial performance in the early '90s.
This led Mobil to adopt the Balanced Scorecard
Financial Perspective

Revenue growth
The revenue growth strategy called for Mobil to expand sales
outside of gasoline by offering convenience store products and
services
automotive services (car washes, oil changes, and minor
repairs)
automotive products (oil, antifreeze, and wiper fluid)
common replacement parts (tires and wiper blades)
Productivity
Mobil slash operating expenses per gallon sold to the lowest
level in the industry and extract more from existing assets by
reducing the downtime at its oil refineries and increasing their
yields.
KPI of Financial Perspective

REVENUE
PRODUCTIVITY
GROWTH

Mobil’s cost per

gallon compared
with the rest of the
Profit margin industry
Sales volume compared
to the rest of the Actual cash flow
industry compared to the
Ratio of premium products rest of the business
sold to regular products plan
sold
Customer Perspective

The strategy is applied by offering immediate

access to gasoline pumps, each equipped
with a self-payment mechanism; safe, well-lit
stations; clean restrooms; convenience stores
stocked with fresh, high-quality merchandise;
and friendly employees.
KPI of Customer Perspective

Share of targeted
customer segment

Mystery shopper rating

The customer strategy led to increased
profits due to the following cycle
Internal Business Process
Perspective
Mobil's internal process objectives included
building the franchise by developing new
products and services, such as :
sales from convenience stores
enhancing customer value by training dealers to
become better managers
helping them generate profits from nongasoline
products and services.
KPI of Internal Business Process
Perspective
• New product acceptance rate
• New product return on investment
• Share of target market
• Dealer quality rating
• Refinery yield gap
• Unplanned downtime
• Inventory levels
• Stockout rate
• Activity-based costs versus the competition
• Reduced number of environmental incidents and
safety accidents
Learning and Growth
Perspective
Mobil identified key technologies
that it had to develop, including
automated equipment for
monitoring the refining processes
and extensive databases and tools
to analyze consumers' buying
experiences
KPI of Learning and Growth Perpective

Ratio of strategic skills to job coverage

Personal balanced scorecards

On-time deployment of systems

Employee feedback
Mobil’s Achievement
Mobil increased its operating cash flow by more than
$1 billion per year and became the industry's profit
leader
The division (NAM&R) increased its return on capital
employed from 6% to 16%
Sales growth exceeded the industry average by more
than 2% annually
Cash expenses decreased by 20%
Dealer quality increased each year
Safety accidents plunged between 60% and 80%
Lost oil-refinery yields due to systems downtime
dropped by 70%.
Now we know about...

• Example of implementation balanced

sorecard in company
• The implementation of BSC in non profit
sector with some modification
References :

http://books.google.com/books
http://www.nixfon.com/images/corda_files/
nonflash_corda/dashboard_bsc.png
http://www.12manage.com/images/
figure_bsc.jpg
http://www.softit.biz/products/primebsc/
bsc7steps.htm
Thanks You
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