7.3d Kaplan and Norton Flashcards
1
Q
What did the Kaplan and Norton ‘Balanced Scorecard’ add?
A
Non-financial measures of performance
2
Q
What is the aim of the Kaplan and Norton Balanced Scorecard?
A
- Align business activities to the vision and strategy of the business
- Improve internal and external communications
- Monitor business performance against strategic goals
3
Q
What are the four perspectives of the Balanced Scorecard?
A
- Financial
- Internal processes
- Organisational capacity
- Customer
4
Q
What does the internal processes perspective focus on?
A
Business efficiency
5
Q
What does the organisational capacity perspective focus on?
A
Knowledge and innovation
6
Q
What does the customer perspective focus on?
A
Customer satisfaction
7
Q
What are the key features of the Balanced Scorecard?
A
- Top-down approach
- Starts with mission and vision of the business
- Identified key performance indicators
- Emphasises importance of non-financial measures
8
Q
Advantages of Balanced Scorecard
A
- Broader view of business performance
- Links performance measurement to long-term
- Constant monitoring
9
Q
Disadvantages of Balanced Scorecard
A
- Danger of too many key performance indicators
- Getting right balance between key performance indicators is difficult
- Needs to be updated regularly to be useful
10
Q
Financial perspective details:
A
- How do we create value for shareholders?
- Objective: e.g. increase profitability
- Measures: e.g. ROCE
- Target: e.g. increase ROCE by 3%
- Initiatives: e.g. increase efficiency of production methods
11
Q
Internal processes perspective details:
A
- How can we improve our processes?
- Objective: e.g. improve efficiency
- Measures: e.g. labour productivity
- Target: increase labour productivity by 15%
- Initiatives: e.g. introduce new technology
12
Q
Organisational capacity perspective details:
A
- How can we continue to grow and improve?
- Objective: e.g. increase employee development
- Measures: e.g. labour retention
- Target: e.g. increase labour retention by 10%
- Initiatives: e.g. staff training
13
Q
Customer perspective details:
A
- What do our customers value about us?
- Objective: e.g. improve customer loyalty
- Measures: e.g. number of new customers
- Target: increase number of new customers by 5%
- Initiatives: e.g. improve quality of product
14
Q
What do managers need to consider for each perspective?
A
- Objectives
- Measures
- Targets
- Initiatives
