Balanced Scorecard Financial

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Guillermo Alfaro Carvajal

Financial Perspective
* Building a B.S should encourage business units to link their financial objectives to corporate strategy * The financial objectives serve as the focus for the objectives and measures in all the other scorecard perspective Linking financial objectives to business unit strategy

Stages of business life cycle
Growth: they have to commit considerable resources to develop and enhance new products and services, construct and expand production facilities, build operating capabilities, invest in systems, infrastructure and distribution networks and nurture and develop customer relationships. * Operate with negative cash flow and low current returns on invested capital * Financial objectives: sales growth: maintaining adequate spending levels for products and process development and establishment of new marketing sales and distribution channels. Sustain: still attract investment and reinvestment but are required to earn excellent returns on invested capitals * Financial objective: profitability, by using measures realted to accounting income Harvest: no longer investment, just to maintain equipment

* Financial objective: maximize flow cash
Risk Management
Every business may include in their financial perspective the risk dimension of their strategy, for example, diversifying revenue sources away from a narrow set of customers … Risk management should complement the return strategy that the business has chosen Strategic themes for the financial perspective

1. Revenue growth and mix: Refers to expanding product and service offerings, reaching new customers and markets. a. New products: Emphasize expansions of existing products lines or offering entirely new products and services. Measure: percentage of revenue fro new products and service introduced within a specified period b. New applications: Grow revenues by taking existing products and finding new applications for...
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