Best Balanced Scorecard Homework Help
The balanced scorecard is a tool used in management accounting to align the organization’s business objectives with key performance indicators. The balanced scorecard is a concept introduced by Robert Kaplan and David Norton in The Balanced Scorecard: Translating Strategy into Action (1996). The idea behind it, as defined by these authors, was that “the traditional financial measures are insufficient for managing the complex processes of strategy implementation”. Get the best balanced scorecard homework help today. ORDER NOW.
It combines financial measures with measures of operational efficiency such as customer satisfaction, innovation and improvement activities and internal perspective (Kaplan and Norton,1992). These measures influence the future financial performance. The balanced scorecard links the four perspectives by identifying their measures and setting performance goals based on the measures. The balanced scorecard integrates the elements of a company’s competitive agenda such as excellent quality, teamwork, being customer-centered and regular launching of new products into a single management report.
Components of the balanced scorecard
- The financial perspective
- The customer perspective
- The internal process perspective
- The learning and growth perspective
The financial perspective in the balanced scorecard entails the revenues and costs related to the firm’s products or services. The business perspective includes all of these elements plus the product-market scope, competitive position within each market segment, customer satisfaction with goods/services provided along with loyalty rates for customers who continue to purchase from this particular company over time (Gold & Rizvi, 2012).
finance perspective in Balanced scorecard finance is a crucial part of business. From finance, we can determine the capability of a business to run a certain project or finance a new investment. But putting finance in the usual way may not be effective because it includes activities that are not related to finance itself such as marketing, customer satisfaction and other activities that are outside finance but still considered as finance by many people.
The Balanced Scorecard can be used as a performance measurement system that managers and organization could use, and it also provides information for strategy development and strategic decision-making purposes. It will help managers see how finance contributes to the organization’s overall performance.
Some types of finance perspective in Balanced Scorecard:
– finance contribution perspective, where managers will see finance’s contribution to the organization.
– finance effectiveness perspective, where managers will see how finance is used effectively by the organization such as cost and value of money management.
– finance innovation perspective, which helps managers find ways to innovate finance aspect such as developing finance strategy plan.
– finance transformation perspective, which aims to transform finance aspects to be more effective in the business sector.
– finance efficiency perspective, where managers will see how finance can operate more efficiently by streamlining processes or production schedules.
The customer perspective in the balanced scorecard entails each of these elements plus customer demographics, buying patterns along with pricing sensitivity for all product/services provided. The internal business processes perspective includes investments made to improve efficiency and effectiveness within the company’s own operations (Gold & Rizvi, 2012).
The customer perspective in Balanced scorecard refers to a customer satisfaction measurement, customer loyalty measurements and customer profitability measurements.
This customer perspective is part of the customer-based view in a balanced scorecard. It represents what happens to customers as a result of working with your company.
In general, it could be said that the customer perspective includes the entire customer’s customer experience. This customer perspective in a balanced scorecard will not only consist of customer satisfaction measurements, customer loyalty measurements and customer profitability measurements, but also customer generated data to make up the entire customer experience.
A customer generated database is generated through surveys or the feedback generated by the customers when they are using your company’s products/services. This customer generated data is important to get customer feedback in order to be able to measure customer satisfaction, customer loyalty and customer profitability. This customer generated data can consist of customer complaints too, so you are kept posted about your customers’ experiences with company products/services.
Learning and growth perspective
The learning and growth perspective for this type accountability tool includes the investments made in training employees along with research and development costs. The last perspective is innovation, which entails new products/services brought to market through customer feedback within a specific product line (Gold & Rizvi, 2012).
Learning and growth perspective focuses on people and their learning capabilities and development, which can enable an organization to create conditions for sustainable value creation over time. This Learning and growth perspective is interesting for managers , as it provides a framework to map the process of learning within an organization.
Learning and growth perspective focuses on “measuring, monitoring and stimulating Learning behaviour” . Learning needs analysis needs to be done, in order to support processes of Analysis, Designing Learning strategies and Developing/Design Learning capabilities.
The Learning and growth perspective in Balanced scorecard can help organizations deal with their challenges. It helps develop people’s capabilities to acquire new knowledge or skills, enables employees to adapt to changes in the environment and to change the organization itself, and enables the organization to capture opportunities and to take advantage of them through Learning.
Learning behaviour is an important criterion for assessing Learning processes. Learning objectives should be linked to organizational strategy, by establishing a fit between learning activities and strategic goals. Learning needs analysis (LNA) helps identify Learning strategies, learning priorities and Learning intervention. Learning strategies are ways to create Learning opportunities, learning priorities indicate the methods of Learning interventions, whereas Learning interventions are actions that can be implemented in order to stimulate Learning behaviour.
The idea of a Learning and growth perspective is that it would encourage managers to focus on what they can do to contribute to long-term
The internal perspective in the balanced scorecard entails the operational issues of the organization along with additional factors such as human resources, research and development/innovation along with quality control (Gold & Rizvi, 2012).
The internal business perspective in a balanced scorecard should also include internal objectives that align with the organization’s strategy and long-term goals. The internal business perspective is where measurements related to internal decisions, internal operations and internal performance should be included. The internal business perspective is focused around internal operations and internal performance which can include measurements such as return on capital, cash flow generation, sales by product line or customer service levels.
The internal business perspective in a balanced scorecard will not include measurements related to the organization’s strategy but rather measurements that reflect internal decisions and internal operations. A Balanced scorecard is a strategic management system that provides internal end-users with the ability to measure and manage internal decisions.
Use of a balanced scorecard can also provide internal end-users with the tools necessary to more effectively communicate internal information which allows internal decision makers to make informed decisions. A balanced scorecard approach supports organizations in aligning their business strategy with internal decisions and internal performance. Balanced scorecards would typically include internal measurements within the internal perspective of a balanced scorecard to evaluate internal decision making.
Importance of the Balanced Scorecard
The importance of the balanced scorecard is being able to measure a company’s performance based on all areas, not just one or two. The importance of this system will allow for an overall perspective and give management staff insight into how they should focus their efforts in order to meet objectives set forth by upper-level administration. For example, companies may use the balanced scorecard to track items such as customer satisfaction, employee engagement and operational excellence.
Shortcomings of using the Balanced Scorecard
The first shortcoming with using the balanced score card is that they do not always give companies information about how well their business units are performing. The problem is that many companies don’t spend enough time developing their scorecard or what is included within it. They often times measure too many things without knowing why these metrics are important to their company’s success.
The second shortcoming of using a balanced score card for financial perspective, is that companies need to determine which metrics are most important. This can be challenging because there are often many metrics that companies could choose from, which makes it difficult to decide what they should include in their scorecard.
The third problem is that companies often compare themselves to their peer group. The issue with this, is that it might not be the best comparison for what they are trying to measure. They don’t always have direct competitors and therefore will compare themselves to another company in a different industry which can make things look better or worse than what they actually are.
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