Models

Question 1

The four perspectives of BSC

Answer 1

financial perspective
customer perspective
internal business process perspective
innovation and learning perspective.

Question 2

Advantage of scorecard

Answer 2

• Measures performance in a variety of ways, rather than relying on one figure
• Managers are unlikely to be able to distort the performance measure - bad performance is difficult to hide if multiple performance measures are used
• It takes a long-term perspective of business performance
• success in the four key areas should lead to the long-term success of the organisation

it is flexible - what is measured can be changed over time to reflect changing priorities

‘what gets measured gets done’ - if managers know they are being appraised on various aspects of performance they will pay attention to these areas, rather than simply paying ‘lip service’ to them.

Question 3

Limitations of balanced scorecard

Answer 3

it can involve a large number of calculations which may make performance measurement time-consuming and costly to operate

the selection of performance indicators under each of the four perspectives is subjective

this in turn will make comparisons with the performance of other organisations difficult to achieve satisfactorily

it is also very difficult to set standards for each of the key performance indicators