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Balanced Score Board Measures

Essay by   •  November 13, 2016  •  Essay  •  512 Words (3 Pages)  •  598 Views

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In today’s business world, it has never been more important to implement strategies. Therefore, many organizations use tools to measure their tangible assets and how they can be effective and be competitive.  The effective measurements and efficient work of the company’s indicates its success in monitoring strategy, monitoring the competitive advantage. This measurement helps the employees to be aware of the goals and improve their performance.

As for me I would choose the Balanced Scorecard (BSC) as it measures the process based on the idea to create measures under all important areas as follows:

  1. Financial perspective:  it encourages business to customize their long term financial objective and to link it to market growth to consolidate.
  2.  Customer Perspective: Every company’s mission is to satisfy its customers and achieve a “brand image”. The leading indicators or customers are: Time, Quality, performance, Service and cost. These customer-based measures are very important, as they give a company good decision and actions planning process of what are the customer expectations.
  3. Internal business perspective: This process is very critical for an organisation as it allows the managers to know how well the business is running, are they meeting the customer requirements. This process must be intimately processed by those who know better about the development of the company.
  4. Innovation & Learning perspective: The Company’s value is tied to its ability to motivate and improve the efficiencies. This includes employees training and capabilities which would improve their attitudes and motivate them. In today’s technological world, it is very necessary for workers to improve their knowledge on regular bases. According to Kaplan and Norton “Learning is more than training”.

According to the study of Cranfield University, more than 50% of the large companies use “Balanced Scorecard” to understand their strategy and measure the improvement s and performances. Several organisations use it because of its advantages as follows:

  • It provides framework for a company to know what should be done.
  • It provides the performance measurements of both internal and external outcomes.
  • It helps a company to know its vision and strategy.
  • It communicates the objective and measures of an organisation.
  • It aligns all the employees to understand the strategy.
  • Its helps in evaluating the future value of the organization.
  • Provides feedback to senior manages on how the company operates.

Limitations of BSC:

  • This tool involves a lot of subjectivity.
  • It is more complex compared to other tools.
  • A lot of refinement skill is required for it to be completed.

This tool has become a weapon for companies which not only helps in measuring their performance but identifies the pressure points, conflicts, planning etc. This tool assures the consistency of vision and action towards the development of a successful organization. Its proper implementation measures the internal capabilities, innovations and will help in developing a competitive advantage without outperforming its rivals.

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