Balanced Scorecard
Abstract
This paper explores the similarities and differences between two popular business strategies that have helped to shape modern strategic management. The two strategies discussed are Kaplan and Norton’s “Balanced Scorecard”, and Porter’s “Five Forces”. Kaplan and Norton present a model that help businesses investigate and understand their internal resources, and how to align high-level goals to objectives. Porter’s model attempts to help businesses identify and understand the external forces that affect strategic management and long-term sustainability.
Keywords: Strategic Management, Balanced Scorecard, Measurement, Strategic Planning
Inside Out: A comparative view of Kaplan and Norton’s “Balanced Scorecard” and Porter’s “Five Forces” Although many studies have been conducted and properly communicated on the topic of Strategic Management, perhaps none have generated as significant an impact as the articles published by these three business leaders. As we delve into their unique business frameworks, we will explore their relationship through lenses of advantages and criticisms. Kaplan, Norton, and Porter’s strategies need to be identified as frameworks, and understood as just that. If we focus our lens too narrowly, it is easy to miss the object of each strategy. As with any business philosophy, we should approach them as an ongoing exercise in improvement.
Kaplan and Norton’s Balanced Scorecard Understanding the Balanced Scorecard (BSC), involves understanding perspectives. In their original article, Kaplan and Norton innovated the way modern businesses could strategically plan, by considering alternative perspectives of capital. These perspectives are offered in addition to traditional financial measures and include 1) learning and growth 2) customer considerations and 3) internal business process. (Kaplan and Norton, 1996)
Financial considerations include return of capital expended, economic
This paper explores the similarities and differences between two popular business strategies that have helped to shape modern strategic management. The two strategies discussed are Kaplan and Norton’s “Balanced Scorecard”, and Porter’s “Five Forces”. Kaplan and Norton present a model that help businesses investigate and understand their internal resources, and how to align high-level goals to objectives. Porter’s model attempts to help businesses identify and understand the external forces that affect strategic management and long-term sustainability.
Keywords: Strategic Management, Balanced Scorecard, Measurement, Strategic Planning
Inside Out: A comparative view of Kaplan and Norton’s “Balanced Scorecard” and Porter’s “Five Forces” Although many studies have been conducted and properly communicated on the topic of Strategic Management, perhaps none have generated as significant an impact as the articles published by these three business leaders. As we delve into their unique business frameworks, we will explore their relationship through lenses of advantages and criticisms. Kaplan, Norton, and Porter’s strategies need to be identified as frameworks, and understood as just that. If we focus our lens too narrowly, it is easy to miss the object of each strategy. As with any business philosophy, we should approach them as an ongoing exercise in improvement.
Kaplan and Norton’s Balanced Scorecard Understanding the Balanced Scorecard (BSC), involves understanding perspectives. In their original article, Kaplan and Norton innovated the way modern businesses could strategically plan, by considering alternative perspectives of capital. These perspectives are offered in addition to traditional financial measures and include 1) learning and growth 2) customer considerations and 3) internal business process. (Kaplan and Norton, 1996)
Financial considerations include return of capital expended, economic
Cited: Dranove, D. (2013, January 07). The end of strategy? our faculty discusses. Retrieved from http://insight.kellogg.northwestern.edu/blogs/entry/the_end_of_strategy_our_faculty_discusses/ Hanne Nørreklit (2003) The Balanced Scorecard: what is the score? A rhetorical analysis of the Balanced Scorecard, Accounting, Organizations and Society, Volume 28, Issue 6, August 2003, Pages 591–619 Henry, A. (2008). Understanding strategic management. (p. 81). New York: Oxford University Press. Retrieved from http://books.google.com/books?id=Sli7_rbsEgcC&pg=PA81&lpg=PA81&dq=criticisms of porter 's five forces&source=bl&ots Othman, R. (2008). Enhancing the effectiveness of the balanced scorecard with scenario planning. International Journal of Productivity and Performance Management, 57(3), 259-266. doi:http://dx.doi.org/10.1108/17410400810857266 Porter, M. E. (2008). THE FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY. Harvard Business Review, 86(1), 78-93. Sven C. Voelpel, Marius Leibold, Robert A. Eckhoff, (2006) "The tyranny of the Balanced Scorecard in the innovation economy", Journal of Intellectual Capital, Vol. 7 Iss: 1, pp.43 – 60