Kaplan & Norton and Elkington’s Triple Bottom Line

Question 1

What is the balanced scorecard?

Answer 1

The balanced scorecard is a planning and management strategy designed to match business activities to the aspirations set out in the organisation’s vision statement.

Question 2

What is Kaplan and Norton’s balanced scorecard approach based on?

Answer 2

Based on the premise that financial data is inadequate on its own as a measure of a business’s performance, and that non-financial data should be included in any worthwhile measure.

It’s balanced

Question 3

What did Kaplan and Norton suggest to managers to consider when developing their unique version of the balanced scorecard?

Answer 3

• The customer’s perspective
• The company’s internal perspective
• Innovation, learning and improvement
• Financial performance

Question 4

Why is the balanced scorecard useful?

Answer 4

• Enables firms to clarify their vision and strategy and translate them into action.
• Guide managers in decision making
• Helps managers identify what should be done and to measure the extent to which these targets are achieved.

Question 5

What is social responsibility?

Answer 5

Social responsibility is managing a business so as to take into account the interests of society in general and especially those groups and individuals with a direct interest in the business.

Question 6

What is Elkington’s triple bottom line?

Answer 6

Has three components:
- Profit
- People
- Planet

Takes on stakeholder perspective and not just a shareholder perspective when analysing performance and proposing actions and decisions.

Question 7

What are the drawbacks of K + N model?

Answer 7

• Too many indicators?
• Balancing the perspectives
• Will senior management break free of the view of finance as the most important metric?