Strategic Management Accounting: Balance Scorecard Flashcards
What is the balance scorecard
A strategic planning management system used to align business activities to strategies by monitoring performance against goals
By Kaplan and Norton
What are the 4 quadrants
- Financial
- Customers
- Learning and growth
- Internal business processes
measures of performance
What is the financial perspective
How we look to shareholders, typical measures include return on investment, profit margin, revenue growth etc
What is the customer perspective
How customers see us, measures include customer satisfaction, delivery times, market share
What is the internal business processes perspective
What must we excel at? For example innovation (develop new markets), operations (increase efficiency) or post-sales service
What is the learning and growth perspective
Can we continue to improve and create value? Focus on infrastructure and comes from 3 sources: employees, systems, procedures
Benefits of the balance scorecard
- Clarifies the vision as it links strategies to performance
- feedback and learning is encouraged
- improves business planning by setting targets and initiatives
Limitations of the balance scorecard
- assumes cause and effect but unproven to be true
- uses generic measures which may not apply to their strategy and position
-non financial measures are not evaluated in monetary terms
What was a more advanced conceptualisation of the BSC
Kaplan and Norton put forward strategy maps, based on the 4 perspectives of the BSC. Helps managers explore ‘if’ ‘then’ relationships more detailed