An Analysis of Balanced Scorecard

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An Analysis of Balanced Scorecard

By | Jan. 2013
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1. Introduction
One of the biggest challenges in organisational management is measuring performance comprehensively, as well as implementing and executing organisational strategy effectively. The inception of Balanced Scorecard (BSC) dramatically contributes to address these issues, as it provides a useful performance measurement approach, and most importantly, a strategic management and control system. Therefore the BSC was widely adopted in practice and treated as one of the most valuable innovations in 20th century (Bible et al, 2006). The purpose of this report is to explore the aims of BSC set out to achieve, then evaluating the extent to which BSC has achieved its goals. In additional, this report focuses on investigating the reason why BSC has widely adopted through out the world and achieved such a high degree of acclaim.

2. The aims of Balanced Scorecard
2.1 A Performance measurement tool
The balanced scorecard was created by Robert S. Kaplan and David P. Norton in 1992, and their initial aim is to provide a new performance measurement tool to measure the performance of organisations comprehensively (Kaplan and Norton, 1992). Since 1980s, Executives began to realise that traditional performance systems are not capable enough to cope with the new business environment, which intangible assets, such as customer and supplier relationships, and innovation in production, play a significant role in creating value for a company (Norreklit and Mitchell, 2007). The invention of BSC overcomes the shortcomings of traditional performance measurement approach by recommending companies to measure performance in four perspectives – financial, customer, internal business process and learning and growth.

In this way, the BSC is designed to help managers keep balance in three aspects when they measure performance (Gautreau and Kleiner, 2001). Firstly, keeping balance on lagging and leading indicators. Financial measures are lagging indicators which can only imply...

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