-balance scorecard.ppt

8/18/2019 -Balance Scorecard.ppt

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Apri 2005

Balance Score CardBalance Score Card

A Tool For Appraisal Of A Tool For Appraisal Of Corporate PerformanceCorporate Performance


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April 2005 Raja

Success Factors Of Industrial AgeSuccess Factors Of Industrial Age

Industrial ageIndustrial age

Economies of scaleEconomies of scale

Economies of scopeEconomies of scope

TechnologyTechnology

Cont..Cont..


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April 2005 Raja

Information age.Information age. Customer loyalty through customer relationships.Customer loyalty through customer relationships.

Innovative products and services.Innovative products and services.

igh !uality C"#T$%I#E& products and services at lo'igh !uality C"#T$%I#E& products and services at lo'

cost and 'ith short lead time.cost and 'ith short lead time.

Employee s(ills) motivation and capa*ilities.Employee s(ills) motivation and capa*ilities.

Adaptation of information technology. Adaptation of information technology.

In information age, ORGANISATIONS mustcreate future value through investments in

customers,suppliers,employees,

technology, process and innovation.

Success Factors Of InformationSuccess Factors Of Information

AgeAge


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April 2005 Raja

Balanced ScorecardBalanced Scorecard

alancedalanced scorecardscorecard translatestranslatesOrganisation!s vision, mission and strategy intoOrganisation!s vision, mission and strategy intoa comprehensive set of performance measures,a comprehensive set of performance measures,

"hich forms a frame"or# of strategic"hich forms a frame"or# of strategicmeasurements of management system.measurements of management system.

alanced score card records achievement ofalanced score card records achievement of

financial o$%ectives, $ut also includesfinancial o$%ectives, $ut also includes&'R(OR)AC' drivers of these o$%ectives.&'R(OR)AC' drivers of these o$%ectives.


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April 2005 Raja


alanced scorecard is ORGANIS'* around four distinctalanced scorecard is ORGANIS'* around four distinct

perspectives +perspectives +

Financial.Financial.

Customer.Customer.

Internal.Internal. Innovation & learning.Innovation & learning.

The measure is called $alanced- as it reflects the $alanceThe measure is called $alanced- as it reflects the $alance

provided $et"een short term long term o$%ectives,provided $et"een short term long term o$%ectives,

financial and non/financial measures and $et"een e0ternalfinancial and non/financial measures and $et"een e0ternal

and internal performance perspectives.and internal performance perspectives.

Importance of $alanced scorecard lies in the fact that it hasImportance of $alanced scorecard lies in the fact that it has

evolved from an improved measurement system to a coreevolved from an improved measurement system to a core

management system.management system.


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April 2005 Raja

Balanced Score CardBalanced Score Card

alanced scorecard ena$les an ORGANISATION toalanced scorecard ena$les an ORGANISATION totrac# financial results "hile simultaneouslytrac# financial results "hile simultaneouslymonitoring progress in $uilding capa$ilities andmonitoring progress in $uilding capa$ilities and

ac1uiring intangi$le assets needed for future gro"th.ac1uiring intangi$le assets needed for future gro"th.

alanced scorecard provides managers "ithalanced scorecard provides managers "ithinstruments they need to navigate to futureinstruments they need to navigate to futurecompetitive success "hile operating in comple0competitive success "hile operating in comple0

'NI2IRON)'NT'NI2IRON)'NT


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Balanced Score CardBalanced Score Card

alanced scorecard is the result of collusion $et"eenalanced scorecard is the result of collusion $et"eenthe urge to $uild long range competitive capa$ilitiesthe urge to $uild long range competitive capa$ilitiesand historical financial accounting model.and historical financial accounting model.

3istorical accounting model tells the story of the past3istorical accounting model tells the story of the pastevents. It "as relevant for industrial age in "hichevents. It "as relevant for industrial age in "hichinvestment in long term capa$ilities and customerinvestment in long term capa$ilities and customer

relationship "as not critical for success.relationship "as not critical for success.



Balanced scorecard helpsBalanced scorecard helps

executives measure how theirexecutives measure how their

unitsunits

Create value for current and future customers.Create value for current and future customers.

)ust enhance internal capa$ilities.)ust enhance internal capa$ilities.

'nhance investments in people, process and systems'nhance investments in people, process and systems

to improve future &'R(OR)AC'.to improve future &'R(OR)AC'.

uild future value drivers "hile retaining financialuild future value drivers "hile retaining financialperspective.perspective.




(inancial perspective.(inancial perspective.

alanced scorecard retains financial perspectivealanced scorecard retains financial perspective$y using financial measures to evaluate economic$y using financial measures to evaluate economic

conse1uences of actions already ta#en.conse1uences of actions already ta#en.

It ta#es into account the economic value addedIt ta#es into account the economic value addedand evaluates efficacy of $usiness strategy.and evaluates efficacy of $usiness strategy.



BALANCE SC!"ECA" F"A#E$!"% !"ANSLAE S"AE'( IN! !)E"AI!NAL

E"#SFINANCIAL

TO SUCCEED FINANCIALLY

HOW SHOULD WE APPEAR TO

OUR SHAREHOLDERS

CUSTOMERS

TO ACHIEVE OUR VISION,

HOW SHOULD WE APPEAR

TO OUR CUSTOMERS

INTERNAL BUSINESS

PROCESS

TO SATISFY OUR CUSTOMERS

AND SHAREHOLDERS

PROCESSES WE MUST EXCEL AT

*ISI!N &S"AE'

(

LEARNING AND

GROWTH

TO ACHIEVE OUR VISION,

HOW SHOULD WE SUSTAIN

OUR ABILITY TO IMPROVE AND CHANGE



+alanced scorecard goes *eyond the standard+alanced scorecard goes *eyond the standardmeasures) such as customer satisfaction)measures) such as customer satisfaction)

customer retention) customer ac!uisition) mar(etcustomer retention) customer ac!uisition) mar(et

share etc. It specifically loo(s at the valueshare etc. It specifically loo(s at the valueproposition that the $R,A-I#ATI$- 'ill deliverproposition that the $R,A-I#ATI$- 'ill deliverto the customer in target mar(et segment.to the customer in target mar(et segment.

It articulates customer and mar(et *ased

strategy) that 'ill deliver superior) value to thecustomer) *uild customer loyalty and *ringsuperior I-ACIA/ returns.

Customer perspectiveCustomer perspective



Learning and 'rowthLearning and 'rowth

)erspective)erspective

alanced scorecard identifies the infrastructure analanced scorecard identifies the infrastructure anORGANISATION must $uild to create long term gro"thORGANISATION must $uild to create long term gro"thand improvement.and improvement.

The other three perspectives "ill reveal the gapsThe other three perspectives "ill reveal the gaps$et"een e0isting capa$ilities of people, systems and$et"een e0isting capa$ilities of people, systems andprocedures and "hat is needed to achieveprocedures and "hat is needed to achieve$rea#through performance.$rea#through performance.

This perspective of $alanced scorecard identifiesThis perspective of $alanced scorecard identifiesintervention areas for long term gro"th andintervention areas for long term gro"th andimprovement.improvement.



Internal )rocessInternal )rocess

)erspective)erspectivealanced scorecard IN*'NTI(I'S critical internalalanced scorecard IN*'NTI(I'S critical internal

processes in "hich the ORGANISATION must e0cel.processes in "hich the ORGANISATION must e0cel.

Traditional approach in this field monitors e0istingTraditional approach in this field monitors e0istingprocesses and $rings improvements in them.processes and $rings improvements in them.alanced scorecard usually identifies critically ne"alanced scorecard usually identifies critically ne"processes at "hich the ORGANISATION must e0cel.processes at "hich the ORGANISATION must e0cel.

)ore specifically, $alanced scorecard tries to)ore specifically, $alanced scorecard tries toincorporate innovation processes into internalincorporate innovation processes into internalprocesses, as innovation is a po"erful driver forprocesses, as innovation is a po"erful driver forfuture financial &'R(OR)AC'.future financial &'R(OR)AC'.


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FINANCIAL PERSPECTIVE

CUSTOMER

PERSPECTIVE

INTERNAL PROCESS

PERSPECTIVE

LEARNING AND

GROWTH

PERSPECTIVE

BALANCESC!"ECA"

GOALS MEASURES

GOALS MEASURES

GOALS MEASURES

GOALS MEASURES




GoalsGoals

SurviveSurvive

SucceedSucceed

&rosper &rosper

)easures)easures

Cash flo"Cash flo" Sales gro"thSales gro"th

Gro"th in operationalGro"th in operational

incomeincome

ROIROI

'2A'2A

FINANCIAL PERSPECTIVE



GOALS

RESPONSIVE SUPPLY

PREFERRED

SUPPLIER STATUS

NEW PRODUCT

LAUNCH

CUSTOMER

RELATIONSHIP

MEASURES

ON TIME DELIVERY

SHARE OF KEY

CUSTOMERS’ PURCHASES

PERCENTAGE SALE FROM

NEW PRODUCES

CUSTOMER PARTNERSHIP

VENTURES

CUSTOMER PERSPECTIVE



GOALS

TECHNOLOGY

UPGRADATION

NEW PRODUCT

DEVELOPMENT

MANUFACTURING

EXCELLENCE

MEASURES

TECHNOLOGICAL

INVESTMENTS

R&D EXPENDITURE

COMMERCIALIZATION OF

R&D

CYCLE-TIME REDUCTION

IMPROVEMENT IN

THROUGHPUT

INTERNAL BUSINESS PERSPECTIVE


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GOALS

TECHNOLOGICALLEADERSHIP

MANUFACTURING

IMPROVEMENT

TIME TO MARKET

MEASURES

INTERNAL TECHNOLOGYDEVELOPMENT

WASTE REDUCTION

CONSTRAINT REMOVAL

PROCESS IMPROVEMENT

INNOVATION AND LEARNING PERSPECTIVE

-balance scorecard.ppt

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