7.3.3 Assessing Business Performance

Question 1

Kaplan and Norton Balanced Scoreboard Model

(Basically only cares about Profit)

Business Mission & Strategy - Internal Process Performance, Financial Performance, Customer Performance, Organisational Capacity/Learning & Growth.

Answer 1

The aim of the scoreboard is to align business activities to the vision and strategy of the business, improve internal and external communication and monitor business performance against strategic goals.

Question 2

Key Features

Answer 2

Top Down Approach

Starts with the mission and vision of a business

Identifies key performance indicators from four different perspectives

Emphasises importance of non-financial measures.

Question 3

Advantages and Disadvantages

Answer 3

Advantages - Highly Flexible, Involves Everyone, Broader View of Business.

Disadvantages - Danger of to many KPI’s, Need balance between 4 objectives, Needs consist ant updating and regulation to be useful.

Question 4

Elkington’s Triple Bottom Line Theory

        Profit - People - Planet

(Basically cares about all the things)

Answer 4

A way of assessing a business performance based on 3 different areas.

Profit - Familiar to managers, identified from income statement, Audited = Reliable Figure.

Planet - Measures impact of a business on the environment.

People - Measures extent to which business is socially responsible, but hard to calculate reliably.