The Balanced Scorecard of MBA accounting
The balanced scoreboard
Traditional
financial performance measures provide information about the past performance
of the company, but are not well suited to predict future performance or to
implement and monitor the strategic plan of the company. By analyzing the
different views that financial managers can better translate strategy into
objectives action and better measure how the strategic plan runs.
The
scorecard is a management system that maps the strategic objectives of the
Organization in the measures of performance in four perspectives: financial,
internal, customers, and learning and growth process. These perspectives
provide a relevant feedback as to how the strategic plan runs so that
adjustments can be made as necessary. The prospective framework can be
described as follows:
Financial
PerformanceObjectivesMeasuresTargetInitiatives CustomersObjectivesMeasuresTargetInitiativesStrategyInternalProcessObjectivesMeasuresTargetInitiatives Learning& GrowthObjectivesMeasuresTargetInitiatives
The
Balanced Scorecard (BSC) was published in 1992 by Robert Kaplan and David
Norton. In addition to measuring the actual performance on the map financial
prospective dashboard evaluates efforts for future improvement using process
client and metric, learning, and growth of the firm. The term 'score card'
means quantified and 'balanced' indicators means that the system is balanced
between:
short-term
objectives and long-term goals
financial
and non-financial measures
trolling
and advanced indicators
internal
and external return Outlook performance
Financial measures are insufficient
While
financial accounting is suitable for the monitoring of the physical assets such
as equipment manufacturing and inventory, it is less able to provide useful
reports in environments with a large intangible asset base. As intangible
assets constitute an increasing proportion of the market value of the company,
there is an increase in the need for measures that better declare such loyal
customer assets, exclusive and personal process highly qualified.
Take
the case of a company which is not profitable, but which has a very large
customer. Such a company could be an attractive takeover target simply because
the acquiring company wants to have access to these clients. It is not uncommon
for a company to support a competitor with the plan to put an end to the range
of competing products and convert the customer base for its own products and
services. The balance sheets of these Busters targets do not reflect the value
of customers who are nonetheless worth something to the acquiring company.
Obviously, additional measures are needed for these intangible assets.
Scorecard
of measures are in limited number
The
scorecard is more than a collection of measures used to identify problems. It
is a system that integrates the company's strategy with a voluntarily limited
number of key indicators. Simply adding new financial measures could result in
hundreds of measures and create information overload.
To
avoid this problem, the balanced scoreboard focuses on four major areas of
performance and a limited number of settings within these areas. The objectives
within the four perspectives are carefully selected and are specific to the company.
To avoid information overload, the total number of measures should be limited
to somewhere between 15 and 20 or three or four measures for each four axes.
These measures are selected as those regarded as essential in the achievement
of competitive performance breakthrough; They define what is meant by
'performance '.
A
chain of Cause-effect relationships
Before
the Balanced Scorecard, some companies already used a set of financial measures
and non-financial indicators of performance-critical. However, a well-designed
balanced scoreboard is different from such a system in that the four
perspectives of TBE form a chain of cause-effect relationships. For example,
learning and growth lead to better business processes that result in greater
customer loyalty and therefore a more high return on invested capital (ROI).
Indeed,
of cause-effect relationships demonstrate the hypothesis behind the strategy of
the organization. The measures reflect a string of performance engines that
determ
0 comments:
Post a Comment