The Balance Scorecard of Louis Vuitton (LV)
In the early of 1980ies, a number of different performance measurement frameworks have been developed of which the balance scorecard by Kaplan and Norton is the most commonly accepted tool by scholars as well as by practitioners (Thakkar, 2007). The balance scorecard translates the mission and strategy of an organization into many goals. It uses financial and non-financial measurements within Financial, Customers-oriented, Process-oriented, Innovation and Learning in order to achieve the set targets. A critical assumption of balance scorecard is that each performance measure is part of a cause-and-effect relationship, which means these four dimensions interrelated to each other will build a line of cause-and-effect relationship. The forth perspective of “Innovation & Learning” explains about the knowledge and development of members of an organization and affects the quality of the processes within the Louis Vuitton firm. Through effective business processes “Process-oriented” are measured, the high quality is delivered leading to customer satisfaction which is the focus of the “Customer-oriented” perspective. Lastly, at the “Financial” dimension, the financial indicators will be measured by the balance scorecard. These four balance measurement categories are not only linearly related, but also are interdependent from each other (Evans, 2005).
These four perspectives are aligned to the Louis Vuitton’s company’s strategy and every dimension is broken into the specific goals in order to achieve the target values. Figure 1 below illustrates the four perspectives of the balance scorecard framework.
Figure 1: The Balanced Scorecard
Source: Adapted from Kaplan; Norton, 1992.
Deriving universally valid key performance indicator (KPI) for the stores of Louis Vuitton is, indeed, impossible duo to the particularities regarding the product strategies, channel policy and the specificities....
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