Question

What can a balanced scorecard offer management over traditional financial reports used in the production cycle? Describe how an integrated system makes this possible with relative ease.

Answer 1

In today’s world the business does not just have to focus on increasing revenue but it also has to consistently focus on other factors which can help it consistently grow in the market and make sure that the growth is fueled by innovation and is sustainable. Traditional financial report has always focused on the financial aspect of running an enterprise but not paid enough attention to other factors like internal culture of the company and environment, innovation. The balanced scorecard has four component, Financial perspective, learning and growth, Customer and Internal business processes. The financial perspective section focuses on the financial aspects like the ROE, ROA, Cash flow and other parameters. The learning and growth section focuses on as to how the innovation aspects has been going, whether the people have been learning and growing and are able to develop new solutions. The customer aspect focuses on the customer satisfaction aspect because they are key for revenue generation. The internal business and processes focus on the improvement of the process in the way the task is being done. An integrated system makes it easy because when the systems are integrated then the balance scorecard can be easily prepared. The integrated system makes it easier to get the data for all the section of the scorecard and makes it easier to prepare.