Question

There are four areas in the Balanced Scorecard:

1. Financial Perspective
2. Customer Perspective
3. Internal Business Perspective
4. Innovation and Learning Perspective

• Please provide perspective for each.
• Insert two company goals for each perspective.
• Insert two measures or matrices for these two goals

Answer 1

Balanced Scorecard Approach:

This approach takes into account four perspectives that help understand an Organization as a whole, a set of elements which work jointly to achieve the common goals, like shareholders's wealth maximisation, customer satisfaction, employee satisfaction etc. The four perspectives along with goals and metrices for each one of them is numerated below:

1. Financial Perspective

Achieving financial goals of a Company will include revenue and profit maximisation. Profit is the life blood of an Organisation upon which it thrives in the long term. Other goals might be cost reductions and efficiencies. Metrices that can be used to measure the above goals are- increasing operating profit margins, adding revenue sources, implementing new cost saving models to reduce the cost of production per unit.

2. Customer Perspective

Customer is the king pin of any market and it is their loyalty which enables a Company to sustain in the long run. This perspective focusses on what a Company should do to retain existing customers and acquire new ones to achieve its financial goals. The goals in this regard can be increasing market share, increasing brand awareness, increasing customer loyalty via customer loyalty and satisfaction. Metrics to measure these include: improving net promoters score, new after sales services, new digital initiatives and social media interaction, new advertising channels and market extension.

3. Internal Business Perspective:

This perspective focusses on the internal policies, plans, procedures and systems that must be put in place to achieve the financial and customer satisfaction goals. Goals can be process improvements, better capacity utilisation, better manpower utilisation. Metrics to measure these: technological improvements, streamlining and automating mundane daily tasks, better HR practices etc.

4. Innovation and Learning Perspective:

This perspective has the following 3 components and the metrics are numerated below:

1. Information capital- networks, database, technology, infrastructure imrpovements etc.

2. Organizational Capital- teamwork, corporate culture audit, employee engagement etc.