Question

One key element of this course involves understanding the Balanced Scorecard. Explain how the four elements of the Balanced Scorecard (BSC) work together to provide firms with a better planning tool than simply using the historical financial data that has been commonly used by most firms

Answer 1

The four elements of Balanced Scorecard are:

1. Financial perspective - It is used to measure the financial state of the company through its revenues and earnings. It is the return on investment perspective provided to shareholders. It also analyses if the results are in line as per the expectations of the management.

2. Customer perspective: Assists in analysing the customer relations, customer satisfaction, lead time for delivery, cost and transportation of products. It helps the company identify the target markets and geographical areas to increase penetration.

3. Internal Business perspective: It helps in assessing the internal processes of the company as to their efficiency, ability to provide customer service and satisfaction after sales and assessment of the value chain.

4. Learning and growth perspective : The analysis of the internal stakeholders that is necessary for the organization to growth and succeed involved analysing the employee capabilities, infrastructure and policies.