Strategic Management Accounting: Balance Scorecard Flashcards

1
Q

What is the balance scorecard

A

A strategic planning management system used to align business activities to strategies by monitoring performance against goals

By Kaplan and Norton

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2
Q

What are the 4 quadrants

A
  • Financial
  • Customers
  • Learning and growth
  • Internal business processes

measures of performance

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3
Q

What is the financial perspective

A

How we look to shareholders, typical measures include return on investment, profit margin, revenue growth etc

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4
Q

What is the customer perspective

A

How customers see us, measures include customer satisfaction, delivery times, market share

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5
Q

What is the internal business processes perspective

A

What must we excel at? For example innovation (develop new markets), operations (increase efficiency) or post-sales service

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6
Q

What is the learning and growth perspective

A

Can we continue to improve and create value? Focus on infrastructure and comes from 3 sources: employees, systems, procedures

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7
Q

Benefits of the balance scorecard

A
  • Clarifies the vision as it links strategies to performance
  • feedback and learning is encouraged
  • improves business planning by setting targets and initiatives
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8
Q

Limitations of the balance scorecard

A
  • 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
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9
Q

What was a more advanced conceptualisation of the BSC

A

Kaplan and Norton put forward strategy maps, based on the 4 perspectives of the BSC. Helps managers explore ‘if’ ‘then’ relationships more detailed

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