Question

Please mention the answers according to number.

1) What are the challenges during the implementation of the Balanced Score Card?

2) What are the assumptions of the Balanced Score Card?

3) What are the limitations of the Balanced Score Card?

Answer 1

Answer 1:-  the challenges during the implementation of the Balanced Score Card are

(i) Poorly Defined Metrics:- Metrics need to be relevant and clear. They should be depicted with visual indicators that are easily understood

(ii) Lack of Efficient Data Collection and Reporting :- A primary reason that companies overemphasize financial metrics at the expense of other important operating variables is the simple fact that systems already exist for collecting and reporting financial measures

(iii) Lack of a Formal Review Structure:- Scorecards work best when they are reviewed frequently enough to make a difference. If a metric value changes on a daily basis and the variables within the control of management can be affected on a daily basis, then the metric should be reviewed on a daily basis

(iv) No Process Improvement Methodology :- The value of Balance Scorecard systems relies on the premise that once performance problems are identified, there is an efficient and effective method for diagnosing and addressing root causes.

(v) Too Much Internal Focus:- One major criticism of the Balanced Scorecard is that it encourages an internal focus. This is not as much an indictment of the principle as it is the way companies put the principle into practice.

Answer 2 :- Balanced Score Card has Three basic Asseumptions

(1) a cause-and-effect relationship exist amongst measurement categories

(2) a strategic plan and/or business strategy exist and is in place

(3) the most important drivers (measures of success) have been correctly identified

Answer 3 :- limitations of the Balanced Score Card are

(i) Balanced Scorecard Term is Misleading

(ii) No Focus on External Factors and Competitors

(iii) Lack of Risk Analysis

(iv) Lack of Time Dimension

(v) Won’t Work without Cultural Shift

(vi) The Choice of Indicators is not Validated