Question

Please explain how the Balanced Scorecard can be used to assist a company in executing its strategy.

Answer 1

A balance scorecard helps the business in analysing the strategy to be implemented from four perspectives . it checks if the prospective strategy adds value to the business based on the four perspectives

1. learning and growth perspective : this segment of balance score card deals with how the company can sustain over a period of time with a strategy adopted inspite of the changes in the business environment

This mainly deals with technology aspect , research and development , leadership initiative.In short this perspective focuses on achieving the vision of the company as well as sustaining the company through execution of various strategies and policies.

2. internal perspective : this deals with the business processes carried out and its relation to customer satisfaction . while adopting a strategy it checks wether the said strategy adds value to the company and also meets the customer demand

3. customer perspective : customer expectations keeps changing and the business process must be aligned so as to meet the ever changing customer expectations. while adopting a strategy it has to see if the said strategy meets or exceeds the customer demands , wether it helps in enhancing the customer base of a company.

This phase evaluates a strategy on terms of price, quality, customer support

4. financial perspective: This phase deals with evaluating the financial viability of a strategy to be adopted. it is an analysis from stakeholders point of view .This phase measures a strategy to be implemented on terms of slaes, profitability, cash flow , cost reduction . As a whole it sums up the value added from the above three perspective and checks its impact on the financial picture of the company.

Thus while executing a strategy balance scorecards helps in deciding the effectiveness of strategy by measuring it on the basis four metrics. Therefore balance score card gives a qualitative as well as quantitative analysis of a strategy to be executed.