4 Flashcards
What is the Balanced Scorecard (BSC)?
A set of measures that give top managers a fast but comprehensive view of the business
Kaplan and Norton, 1992
What are the four perspectives of the Balanced Scorecard?
- Financial
- Customer
- Internal business
- Innovation and learning
Nørreklit, 2000
What is the financial perspective in BSC?
How do we look to shareholders? Goals may include survival, success, and prosperity
Measures include cash flow, sales growth, market share, etc.
How do customers perceive us according to the customer perspective in BSC?
- Time
- Quality
- Performance and service
- Cost
Goals may include getting products to market sooner and customer satisfaction.
What must we do internally to meet shareholders and customers’ expectations according to the internal business perspective?
Focus on processes with the greatest impact on customer satisfaction
Goals may include manufacturing excellence and design productivity.
What does the innovation and learning perspective assess in BSC?
A company’s ability to innovate, improve, and learn
Measures include launching new products and improving employee skills.
Fill in the blank: The Balanced Scorecard translates the vision and strategy into objectives and measures in _______.
[four different areas]
What are the advantages of the Balanced Scorecard?
- Prevents sub-optimisation
- Predicts future financial performance
- Connects employee actions with the company’s mission
- Minimises information overload
- Helps prioritize improvement initiatives
Kaplan and Norton, 1992, 1996
What are some limitations of the Balanced Scorecard?
- Does not guarantee a winning strategy
- Difficulties in linking strategy to operations
- Changes in business environment may invalidate strategy
- Causality between perspectives is questionable
Kaplan and Norton, 1992, 1996
What is the difference between the Balanced Scorecard and the Stakeholder Scorecard?
The stakeholder scorecard identifies major constituents and develops measures but does not explain how to achieve targets
It is not adequate to describe the strategy of an organization.
What are public sector performance indicators (PIs) used for?
- Accountability
- Equity
- Control
They help clarify objectives and promote accountability.
What is Value for Money (VFM) in public sector audits?
An investigation into whether proper arrangements have been made for securing economy, efficiency, and effectiveness in resource use
Focuses on reducing costs and ensuring objectives are met.
What is the definition of efficiency in the context of VFM?
The best use of resources to achieve objectives
Example: reducing cost per unit.
What is effectiveness in the context of VFM?
Using resources to ensure organizational objectives are met
Effectiveness is about achieving intended outcomes.
True or False: The Balanced Scorecard includes only financial measures.
False
It includes both financial and non-financial measures.
What is a significant challenge when assessing performance in not-for-profit organizations?
Measuring outcomes is not easy
For example, evaluating the quality of education or police performance.
What is a key requirement for a successful Balanced Scorecard?
The mission and vision statements must be expressed as an integrated set of objectives and measures
Senior management involvement is also crucial.
Fill in the blank: Satisfied and loyal customers may not necessarily be _______.
[inexpensive]
What are typical areas of attention in Value for Money audits?
- Manpower management
- Planning/budgeting/control systems
- Managerial decision making
- Asset management
- Organization structures
These areas focus on resource allocation and accountability.
