A REPORT ON ASSESSING BUSINESS STRATEGY: LOOKING AT THE BENEFITS AND LIMITATIONS OF THE BALANCE SCORECARD APPROACH
Prepared for: Julie Mitchell
Submitted: 17 September 2009
Introduction: This literature review analyses the advantages and disadvantages of the balance scorecard approach used to measure an organisations strategic performance. This particular approach measures the four main perspectives of customers, financial, internal business processes and learning and growth which are internal and external views of the organisation’s performance. The report will further dive into the types of organisations that have applied this model in their own way and whether or not it is easily applied practically rather than just theoretically. Specifically looking at the perspectives they have applied, whether or not they have balanced financial and non-financial measures and if the balance scorecard metrics align with their corporate strategy.
There has been a variety of resources used including articles, academic journals and text books, in order to cover what the balance scorecard is and the limitations and benefits it provides to organisations.
The Balance Scorecard Approach: The Balance scorecard approach is used to measure a company’s performance giving them a chance to look at the organisation from other perspectives that are internal and external to the company (Kramar, Hollenbeck and Wright, 2008). There are four perspectives that are drawn upon when an organisation applies the balance scorecard (Hanson, Dowling, Hitt, Ireland and Hoskisson, 2002). These include the financial perspective, looking at the organisation from a shareholders perspective which concentrates on growth, profitability and risk (Hanson et. al., 2002). Then there is the customer who is concerned with how the customer values the organisation’s product, looking at features, special qualities and the uniqueness (Hanson et. al., 2002). The internal...