Question

Prepare a review of the literature on The Balance Score Card (BSC) and its usefulness for not-for profit entities and government organisations in relation to activity based costing. Your review should be no longer than 1500 words. You are required to prepare a review of the literature on activity based costing. The second option are required to defined the scope or their review in terms of industry or sector. Suggested Structure Although no specific structure is prescribed, you should include the following in your review of the literature. Explanation of the balance scorecard including a brief summary of its origins. Define the context to which you will be review the literature on Score Card (BSC) including the definition of any terms used Outline the key issues identified in the literature Outline the key findings of the literature Any weaknesses and strengths Your own interpretation of the literature that you have reviewed.

Answer 1

Nonprofit organizations are those corporations that are not incorporated or established with the main aim of earning profits, there main aim is to meet or fulfil some social cause and help the society by achieving the specific objective for which the NPO is established.

Since profit is not the main aim of NPO, it becomes difficult to measure how the organizations is working or what is the result of the operations of the NPO. Whether the NPO is successful or not.

To measure the success of an NPO, Balance score card was introduced. BSC was firs introduce in 1992 by Drs. Robert.

BSC helps an NPO in evaluating the staregies that were implemented.this method translates the vision and mission into objectives and then these mission and objectives are measured.

BSC consist of following four main components or it deals with the below main components.

1. Strategic targets

Under this components, the NPO make strategies for the success of an organization. Various goals are identified and then statgeies are formulated. Here strageies are formulated that are can be evaluated at the year end .

1. Financial perspective

No organization can work without the sufficient availability of funds, since NPO main purpose is not to please the shareholders they are more concerned about the better utiliazation of the money they receive from the society in form of charirty, grants.

The BSC of the NPO contains more of the methods that can help in the more effective use of the budgets allocated to specific tasks or plans.

1. Customer perspectiver

For NPO the term customer has a different meaning then the PO organizations, in NPO the customer is the society instead of single individual and here the main aim is to serve this customer rather then making money from them. In NPO the society is to be provided with the purpose for which the NPO is created.

For example if the NPO is established for cancer treatment then the m,ain aim is not to get more patients and earn revenue but the main aim is to cure the cancer so that the society can be served.

The BSC for this componenets contaions the measures by which complaints of the customer can be decreased and the satisfaction level can be increased.

1. Internal business process perspective

Every organizations has some standard set of actions to perform tasks but in case of NPO they are some different since there is no manufacturing or production activities. In NPO standards are set that can be followed to achieve better service quality and develop new innovations.

1. Growth and learning process.

The main asset of any organization are the human resource and since in NPO is more concerned and revolves around the humans there BSC has more plans about increasing the capabilities of the employees, increase the satisfaction and to reduce the employee turnover.

When the NPO BSC is to be reviewed then the above main components are to be reviewed and then the success of implementing BSC is to be seen.

----- For any organization creating the components of the BSC is not easy as many fails to understand what are main focuses and plans and where they want the company after given point of time.

BSC for an NPO can be evaluated at the yearend against the below targets.

• Finance part- the finance part of the BSC can be evaluated against the increase in the net revenue and the value of net increase in the level of donations.
• Customer part- this can be evaluated against the decrease in customer complaints and increase in the customer satisfactions level.
• Internal business process- This can be evaluated by seeing the cost reduction in the delivering the same level of service to the society.
• Growth and learning- this can be measured seeing the level of growth seen in the employees of an organization and by calculating the employee’s turnover ratios. Survey can be conducted regarding the employees welfare schemes.

Conclusion:-

BSC serves an important tool to measure the growth of the NPO’s, every organization have different goals that they want to achieve.so in this way the BSC for different organization will be different.

Some of the organization may give more value to the customer part, some may give more value to the employee’s part and some any give more weightage to the financial part so this must be seen that the BSC is prepared keeping in mind the strength and weakness of an organizations.