Universidad de San Carlos de Guatemala

Technical English 4
Inga. Soraya Martnez
Special Assignment

APPLICATION OF BALANCE
SCORECARD

Name: Jorge Estuardo Ixcot Ajpop

ID: 2013-14583

Introduction

To face the increasingly competitive global economy today, companies are

realizing that they must make major changes to the old traditional measures
of financial performance which can no longer adequately assess the newly
structured organizations that exist today. The old individual based taskoriented management concept must be replaced with a team-based
process-oriented management concept, and it is necessary to include a
new and innovative strategy in order to reach their metrics. A lot of
organizations and companies want to change their performance
measurement systems and the Balanced Scorecard is a management
strategy that can help them do this, analyzing the companies and following
the steps set by the strategy.

Objectives

To know what is the balance scorecard, in which areas is going to help

and how to introduce it in an organization.
To be familiarized with the steps that is necessary to follow in order to
set up the balance scorecard in a company.
To know the principal and important advantages that the balance
scorecard creates at the moment of being applied.

Balance scorecard
The balance scorecard, abbreviated as BSC has been introduced by Robert
Kaplan and David Norton in 1992. Basically the Balance scorecard is a
strategic planning and management system used in business and industry, it
also applies in government and nonprofit organizations around the world, in
order to relate the business activities to the vision and strategy of the
organization improve internal and external communications and monitor the
organization performance against strategic goals.
It has integrative components that reinforce one another in indicating what
the current and future prospects of an organization will be. Its purpose is to
concentrate corporate focus on performance measurement innovation.
Advantages of the balance scorecard
It set strategy, structure and vision at the center of management focus.
Keeps management focused on the entire business process and helps
ensure that actual current operating performance is in line with the
strategy and customer values.
It keeps a balance between building long range competitive abilities
and recognizing investors attention to financial reports.
The financial measures are evaluated in the context of the
organizations long range competitive strategies for creating future
value through investment in customers, suppliers, employees,
processes, technology and innovation.
It allows management attention to focus on managing results from the
perspective of customers, internal business processes, learning and
growth.
Balance scorecard has 4 important perspectives, in order to develop
metrics, collect data an analyze it.
1. Learning and growth perspective
This perspective includes employee training and corporate cultural
attitudes related to both individual and corporate self-improvement.
People are the main resource and in the rapid technology change is
important for knowledge workers to be in a continuous learning mode.
Learning and growth constitute the essential foundation for success of

any knowledge-worker organization; it also includes technological

tools called high performance work systems.
2. Business process
It is related to internal business processes. Metrics based on this
perspective allow the managers to know how is their business
running, and if the products or services are conforming the customer
requirements.
3. Customer perspective
It is related to the importance of customer focus and customer
satisfaction in any business. Leading indicators are: if customers are
not satisfied they will eventually find other suppliers that will meet their
needs. It means, poor performance from this perspective is thus a
leading indicator of future decline, even if the current financial picture
looks good. Developing metrics for satisfaction requires analysis in
terms of kinds of customers and the kinds or processes for which are
providing a product or service to those customer groups.
4. Financial perspective
The implementation of a corporate database is hoped that more of the
processing can be centralized and automated. Timely and accurate
funding data will always be a priority. It is necessary to include
additional financial-related data, such risk assessment and costbenefit data.
In order to set the balance scorecard in organizations it is necessary to
follow,

Set a consistent and transparent strategy.

Communicate strategy across the organization.
Coordinate the objectives of the various organizational units.
Connect with financial objectives and budget planning.
Identify and coordinate strategic initiatives.
Systematically measure the performance, proposing remedial actions.

Application of the balance scorecard requires six steps

To analyze the situation and get information.

 To analyze the organization and to determinate the management

functions.
To study the needs in order to priorities as informative level.
Signs of the critical variables in each functional area.
To stablish an effective and efficient correspondence between the
critical variables and the precise control measures.
Configuring the scorecard as needed including the information
obtained.
At first the company must know what situation they are in, assess the
situation and recognize the information that will be able to count at each
scenario. This step is related to the second step in which the company must
define the roles that compose so they can study the needs accirdub to levels
of responsibility in each case and to conclude what the news priorities are to
be cover, it committed to be held in the third stage.
In a fourth step it is necessary to recognize critical variables needed to
control each functional area. These variables are different in each case,
whether by cultural and human values that permeate the philosophy of the
company in question, or either type of area being analyzed. The important in
any case is to determine which are most important in each case so that it
can carry out proper control and proper decision-making process.
Is necessary to find a logical correspondence between the variable in each
case, and the value, measurement. Based on the relations of cause and
effect, a strategic map allows seeing the evolution of the indicators and
taking action that can be modified. Finally is important to configure the
dashboard in each functional area and on every level of responsibility so that
always hosts the minimum necessary and sufficient to draw conclusions and
make sound decisions.

Conclusions

The Balanced Scorecard is a set of financial and non-financial

measures relating to a companys critical success factors. It is an
attempt to capture the essence of the organizations critical value
creating activities
The balance scorecard includes the financial analysis which is
important in the company but it also includes other important areas
such as the customers relationships, trained employees in order to
increase their skills and motivation.
There are four important and essential perspectives necessary to
have in mind: the learning and growth perspective, customer
perspective, business process perspective and the financial
perspective.

Bibliography

http://maaw.info/ArticleSummaries/ArtSumChowHaddadWilliamson97.
htm
http://balancedscorecard.org/Resources/About-the-BalancedScorecard
https://hbr.org/2007/07/using-the-balanced-scorecard-as-a-strategicmanagement-system