Question

1. Giving relevant examples, what are the four perspectives used in the balanced scorecard?

Answer 1

Answer to Question :

Balance Score Card(BSC) is a set of financial & non financial measures relating to a Company's critical success factor. The main objective of BSC is to provide a comprehensive framework for translating a Firm's strategic objectives into a coherent set of performance measures.

BSC has the following perspectives from which a Company's activity can be evaluated-

• Customer Prespective, i.e How customers see us ? In order to trnslate effective  internal processes into organisational success, Customers/Clients must be happy with the service they receive. The Customer Prespective considers the business through the eyes of the customers, measuring and reflecting upon Customer satisfaction.

Example:

Perspective	Goals	Performance Measures
Customer Perspective	Price	Competetive Price
	Delivery	No of on time deliveries
	Quality	Defect Level
	Support	Response Time

• Internal Perspective,i.e In what processes must the Firm excel? The Internal Perspective focusses attention on the the Performmance of the key Internal processes, which drive the business. The nature of the processes is dependent on the nature of the Firm.

Example:

Perspective	Goals	Performance Measures
Internal Business Perspective	Sales Penetration	Actual Sales vs Planned Sales
	New Product Introduction	Rate of new product introduction per period

• Innovation and Learning Perspective, i.e Can we continue to improve and create value? The Learning and Growth Perspective is a measure of potential future performance - it directs attention to the basis of all future success - the Firm's people and infrastructure, Adequate investment in these areas is critical to all long term success.

Example:

Perspective	Goals	Performance Measures
Innovation & Learning Perspective	Research & Development	Number of new products & Patents
	Market Laedership	Market share in all major markets

• Financial Perspective, i,e How we look to our Shareholders? The Financial Perspective measures the results that the firm delivers to its stakeholders.

Example:

Perspective	Goals	Performance Measures
Financial Perspective	Prosperity	Cash Flow
	Profitability	Return on Capital Employed