KAPLAN AND NORTON’S BALANCED SCORECARD Flashcards

1
Q

When did this first come out, and what did businesses start paying more attention to

A

This came about in the 1990s when business started to pay more attention to issues with: Corporate, social, responsibility - Not just considering profits, but also a business considering the wider impact that it has on society.

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2
Q

What is the Kaplan & Noton’s balanced scorecard system used for

A

Kaplan & Noton’s balanced scorecard is a system used to analyse the financial and non-financial performance of a business from a range of stakeholder perspectives.

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3
Q

What does it allow businesses to do (from a perspective aspect)

A

This allows the organisation to look at the business not only for a shareholders benefit but also for all stakeholders (even though shareholders are still stakeholders)

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4
Q

What does a balanced scoreboard look like

A

https://docs.google.com/document/d/1ixpv_dWxdys26HIkMpbkrEHfA6unAQFucaFmVl1hV9E/edit

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5
Q

What are some examples of finanical in the scoreboard

A

Financial - Being things like total capital employed, profitability etc.

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6
Q

What are some examples of internal business practises in the scoreboard

A

Internal business practices - How effective the business is at meeting customer orders on time, labour productivity, chasing up debts (receivables) etc

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7
Q

What are some examples of learning and growth in the scoreboard

A

Learning and growth - Is the business learning and reinvesting for the future

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8
Q

What are some examples of customer in the scoreboard

A

Customer - The impact on the customer

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9
Q

What would you want to do for each catagory

A

Assess the strengths and weaknesses

Set SMART objectives that will contribute to achieving the organisations purpose

Set strategy to achieve objectives

Review progress made against targets & begin process again

The organisation needs to be taking a holistic view on this, for example: If the business decided to pay out profits to shareholders, then they won’t have as much money to invest into learning and growth.

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10
Q

What are the financial meausres

A

Stakeholders that are considered: Shareholders

Measures: Gross profit margin, Operating profit margin, return on capital employed, Gearing etc

Example objectives: Reduce cost of sales by 15% by June 2024

Example strategy: Pay suppliers upon delivery and negotiate a reduction in raw materials

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11
Q

What are the internal business practices

A

Stakeholders considered: managers, employees

Measures: Labour productivity, inventory turnover, payables days, lead time etc.

Example objectives: increase labour productivity by 10% by December 2024

Example strategy; All warehouse employees to receive 20 hours of off the job training

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12
Q

What is the customer the customer

A

Customer:

Stakeholders considered: customers

Measures: Customer satisfaction levels, brand awareness, market share, quality measures

Example objectives: Increase customer satisfaction levels to 99% by June 2025

Example strategy; Introduce total quality management (TQM) to reduce number of faulty products leaving factory

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13
Q

What is the learning and growth

A

Stakeholders: management, shareholders, local/ national community, employees, customers

Masures: Labour retention, % turnover invested in market research/ research and development

Example objectives: Produce prototype design of new products

Example strategy: Invest £10 million into research and development

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14
Q

What are the advantages of the balanced score card

A

Encourage a systematic approach to reviewing performance and creating new strategy

Based on quantatitive and qualatitive data

Encourages a range of perspectives to be considered

Encourages a long term approach to decision making

Balance comes from considering the impact of one strategy across a range of performance measures

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15
Q

WHta are some disadvantages of a balance score card

A

Time consuming and expensive to complete

Complexity of balancing needs of one stake holder against another

Number of different targets may be consing or conflict with each other

May require several strategies to be implemented at the same time

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