Describing the Balance Scorecard Approach

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Describe the balance scorecard approach to performance measurement.

The Balanced Scorecard is a framework firms can use to verify that they have established strategic and financial controls to assess their performance. This technique is most appropriate for use when dealing with business-level strategies. Many firms jeopardized their future performance by overemphasizing on financial controls rather than strategic controls. Thus, the balanced scorecard should be use to balance these two areas to achieved higher levels of performance.

The balanced scorecard framework consists of four perspective; financial perspective, customer perspective, internal business processes, and learning and growth perspective. This framework would clarify the relationship between internal and external measures, objective and subjective measures, and between performance results and the drivers of future results. Financial perspective concern with growth, profitability, and risk from the shareholders. This perspective is driven by financial factor that will be evaluated in term of monetary value. Financial conditions of an organization would be observed through the financial statement (income statement, balance sheet) that has been prepared. Customer perspective is concern with the degree of customer satisfaction regarding the product. It also indicate the market share of the product in target segment. This perspective included in non-financial measurement which could be measured by distributing the questionnaire to the customer. It might be done either through real mail or electronic mail. The questionnaire should be reliable and understandable to ensure the customer give the true feedback and enable the correct measures would be interpreted precisely. Next is internal business process which area that aim on the business processes that satisfy the customer and shareholder. Determination of efficient and effective business process is important to maximize both customer...
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