Question

Explain how a balanced scorecard helps with the evaluation process of internal operations

Answer 1

The balanced scorecard permits managers to consider the business from 4 key viewpoints. It provides answers to 4 fundamental questions:

The Balanced Scorecard Links Performance Measures: 1)How do customers see us? (customer perspective); 2)What must we excel at? (internal perspective); 3)Can we continue to improve & create value? (innovation & learning perspective); 4)How do we look to shareholders? (financial perspective)

The financial perspective: Financial performance measures suggest whether the company’s strategy, implementation, & implementation are contributing to bottom-line progress. Typical financial goals have to do with profitability & growth, & shareholder value. To survive, to succeed, & to prosper. Survival was calculated by cash flow, success story by quarterly sales growth & operating income by division, & wealth by increased market share by segment & return on equity.

The customer perspective:It is important to deliver to your customers. From this perspective, an organization would believe objectives such as increasing satisfaction with products & services delivered, or improving public opinions of the organization.

The internal business process perspective:Also referred to as operational priorities. Customer-based measures are important, but they must be transformed into ways of what the company must do inside to meet its customers’ prospects. After all, excellent customer performing derives from processes, decisions, & acts happening throughout an organization. Managers need to focus on those crucial internal operations that facilitate them to meet customer needs. The 2^nd part of the balanced scorecard gives managers that internal perspective.

The learning & growth perspective:Includes employee learning & corporate cultural attitudes & leadership. Strong global competition necessitates that companies make constant improvements to their existing products & procedures & have the capability to launch completely new products with developed capabilities.

A company’s capability to innovate, improve, & learn links directly to the company’s value. That is, only through the ability to introduce new products, create additional value for customers, & improve operating competences repeatedly can a company enter new markets & improve revenues & margins—in short, grow & thereby increase shareholder value.