Balanced Scorecard & Advanced

Analysis and Appraisal of

Performance, Financial & Related
Information
 Balanced scorecard
• Is a management system.
• Is a way of looking at your organization that
focuses on your big- picture strategic goals.
• Helps you choose the right things to measure so
that you can reach those goals.
• A performance metric used in strategic
management to identify and improve various
internal functions of a business and their
resulting external outcomes.
• Used to measure and provide feedback to
organizations.
 Balanced Scorecard
• By Robert Kaplan and David Norton
• Links performance measures:
- Allows managers to look at the business at
four important perspectives
- It provide answers to four basic questions
Perspective of the Balanced Scorecard
1. Financial Perspective – How do we look to
shareholders?
2. Customer Perspective – How do customers
see us?
3. Internal Business Process Perspective – What
must we excel at?
4. Learning and Growth Perspective – Can we
continue to improve and create value?
 Example of a company’s Balanced
scorecard
• Financial Perspective:
Goals Measures
- Survive - Cash Flow
- Succeed - Quarterly sales growth &
operating income by division
- Prosper - Increased market share and
ROI
 Customer Perspective
• Goals Measures
- New products - % of sales from new
product
- Responsive supply - On time delivery
(defined by customer)
- Preferred Supplier - Share of key accounts
purchases.
- Customer partnership - Number of
cooperative engineering efforts.
 Internal Business Process Perspective
• Goals Measures
- Technology capability- Manufacturing
geometry Vs. competition
- Manufacturing excellence - cycle time unit
cost yield.
- Design Productivity - Silicon efficiency
- Engineering efficiency
- New product Introduction – Actual introduction
schedule vs. plan
 Learning and Growth Perspective
• Goals Measures
- Technology Leadership - Time to develop
next generation.
- Manufacturing Learning - Process time to
maturity.
- Product Focus - % of products that equal
80% sales.
- Time to market - New product
introduction vs. competition.
Aligning the Balanced Scorecard to
Strategy
 Strategic objectives
• Reduce injuries
• Improve call times
• Increase profit
• Financial: Reduce costs, Increase profits, Increase
revenue in targeted markets
• Customer perspective: Improve customized customer
experience, Increase awareness as Industry leader.
• Internal Business process: Improve internal efficiency,
Increase acquisitions, Increase consulting knowledge
sharing, Improve product/service offerings
• Learning & growth: Increase employee expertise,
Optimize technology, Optimize human capital, Improve
thought leadership.
 How to use
• To bring an organizations strategy to life.
• To communicate the strategy across the
organization
• To track strategic performance
Features of a Good Balanced Scorecard
Pitfalls when implementing a Balanced
Scorecard
Evaluation of the Success of a stratgey
Strategic Analysis of Operating Income
Productivity Measurement