Balanced Score Card

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Banasthali
University

Strategic
Management

Balanced Scorecard
A Case Study

Presented to :
Ms. Neeti Kasliwal

Presented by:
Atula Singh Sirohi

FIRST BALANCED SCORECARD
Banasthali
University

Strategic
Management

 The first balanced scorecard in the world was created and implemented by Analog Device, Inc. (ADI), USA ; as an offshoot of the company’s strategic planning process.  ADI’s SPP was driven by strategic objectives which related to its stakeholders customers, suppliers, employees, society, etc.  Both the internal and external perspectives led the company to realize that the nonfinancial goals were the drivers of business success.

 Drawing from its strategy and strategic thinking, ADI developed the scorecard metrics with a clear link between the metrics and strategic objectives.  The quality improvement process (QIP) was the TMQ framework used for this purpose.

STRATEGIC PLANNING PROCESS
Banasthali
University

WHY IT MATTERS?
 SPP helps an organization to identify
and create opportunities to meet the
needs of its various stakeholders.

Strategic
Management

STEPS
1. Stakeholders and strategic objectives
2. Stakeholders’ needs
3. Performance gap

 Customers are more knowledgeable
now and have become very demanding.

4. Performance improvement linked to
internal processes

 Employees also have more
knowledge and have become
knowledge workers.

5. Process improvement priorities

 Suppliers of capital are looking for
sustained performance and long-term
success in the capital markets.

6. Performance metrics
7. Communicate performance metrics
8. Critical process initiatives
9. Performance evaluation
10. Feedback

Banasthali
University

WHAT IS A BALANCED SCORECARD?

Strategic
Management

“The balanced scorecard retains traditional financial measures. But, financial measures tell the story of past events, an adequate story for industrial-age companies for which investments in long-term capabilities and customer relationships are not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey those information-age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation" (Kaplan and Norton 1996).

The balanced scorecard facilitates the following functions:
translating strategy and strategy objectives into actionable goals and initiatives communicating strategy and strategic objectives throughout the organization setting achievable targets and initiating processes to achieve those targets reviewing performance and feedback to executives about the status of strategy implementation and business success.

Banasthali
University

MULTIPLE PERFORMANCE PERSPECTIVES

• Shareholder market value
• Return on investment
• Economic value added
• Growth
Financial
• Profit margin

Perspective

Customer
Perspective

Strategic
Management

• Customer satisfaction
• Customer retention
• Market share
• Customer profitability

Internal
Learning/
Process
Growth
• Cycle time
Perspective Perspective • Employee satisfaction
• Quality performance
• Productivity
• After-sales service

• Employee retention
• Employee productivity

Banasthali
University

Each perspective includes four elements:
Objectives
Measures
Targets
Initiative

Strategic
Management

Banasthali
University

How to Build and Implement the BSC?

Strategic
Management

Assessment of the organisational mission and vision, challenges, driving forces, culture, and values .
Strategy is designed to align business activities with organisation’s mission and vision. Objective to be achieved are set for each perspective of the organisation. Strategy Map is developed to ensure the smooth implementation of strategy Performance Measures developed for each of the enterprisewide strategic objectives based on both...
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