AMBA 630 1141
Week 10 Assignment
Balanced Scorecard
The Balanced Scorecard
Most organizations used the financial statements as a tool to evaluate management as well as performance. Rather than relating to present and future all aspects of financial statements concerns with performance of the past. Limiting performance measures to the past means that steps to correct errors often delayed, and in some instances loses have been incurred.
Organizations eliminated these problems by adopting the balanced scorecard approach. The balanced scorecard addressed the problems lag in financial statement evaluation and the absence of connection between organizational employees’ daily activities and the strategy of the organization. The balances scorecard provide a link between the daily activities of employees and the organization’s strategic objectives.
The balanced scorecard accomplishes key tasks for the organization that are agreed upon. The balanced scorecard focuses on what is important. It stresses on business drivers. The balanced scorecard stresses on cause and effect relations. It uses lead as well as lag indicators, implements business strategy, and uses proper metrics for targets and performance measurements. The strategic objectives are grouped into four main organizational perspectives: The financial perspective, customer perspective, internal process perspective and organizational learning and growth perspective.
The financial perspective measures productivity, cost control and revenue growth, risk management, cash flow, reported earnings. While the financial perspective is a valuable tool for measuring organizations performance, the problem with the financial perspective is that it focus on the past rather than the future therefore, it is a lagging indicator. The customer perspective measures customer satisfaction rates, market share, value to customers, quality, cost and performance. Learning and growth...