BALANCED SCORECARD

PREPARED BY:
ITA SAFRINA BINTI AHMAD SAFRI 2013191195
NABILA NAZIRAH BINTI MOHD DOHAN
2013535745
PREPARED FOR:
ASSOC. PROF. DR ROSIATIMAH BT MOHD ISA

CONTENT
INTRODUCTION
STAGES OF BSC
FOUR PERPECTIVES OF BSC
STRATEGY MAPS
ADVANTAGES
DISADVANTAGES
CONCLUSION

INTRODUCTION
First developed in 1992 by Norton and Kaplan.

Tools that translate an organisations mission, objectives and strategies into

four different perspectives through strategy maps
Purpose -implement strategy
-monitor/manage performance
-form planning cycle

Using balances performance drivers (leading indicators) with

outcome measures (lagging indicators)

THE BALANCED SCORECARD

SHOULD CONTAIN A MIX OF LAG
AND LEAD MEASURES OF
PERFORMANCE
LAG

LEAD

DEFINITION

Measures focusing on result

at the end of a time period,
normally characterizing
historical performance

Measures that drive or lead

to the performance of lag
measures, normally
measuring intermediate
processes and activities

EXAMPLES

-Market share
-Sales
-Employee Satisfaction

-Hours spent with customers

-Proposal written
-Absenteeism

ADVANTAGES

-Easy to identify and capture

-Predictive in nature
-Allow company make
adjustments based on results

DISADVANTAGES

-Historical in nature
-Lack predictive power

-May prove difficult to

identify and capture
-Measures with no history at
the organization

STAGES OF BALANCED SCORECARD

Vision, mission
Objectives measures
Plan, set, align strategic initiatives
Feedback

LEARNING
AND
GROWTH
INTERNAL
BUSINESS
PROCESSE
S

FINANCIA
L

CUSTOME
R

PERPECTIVES OF BSC

CONNECTING THE FOUR

PERSPECTIVES
A strategy map provides a visual representation of the linkages in the four
perspectives of the BSC
Financial Perspective
Return on Investment
Customer Perspective

Customer Loyalty
On-Time Delivery

Internal Perspective
Learning & Growth
Perspective

Process Quality

Cycle Time

Employees Process Improvement Skills

THE BALANCED SCORECARD TELL THE STORY OF THE STRATEGY

Illustrative Example: Southwest Airlines

What will drive operating efficiency?

More customers on fewer planes

How will we do that?

Financial

Use Fewer
Planes

Flights On
Time
Internal

Provide Fast
Ground
Turnaround

Fast ground turnaround

Will our people do that?

Educate and compensate ground crew regarding how they
contribute to the firms success
Employee stockholder program
8

Add More
Customers

Customer

Attract targeted customer segments that value price and on-time

arrivals
What must the internal focus be?

Increase Profitability

Learning
& Growth

Align
Ground Crew

Lowest
Prices

Involving a broad base

of leaders, managers
and employees

ADVANTAG
ADVANTAGES ES

Helps align key

performances measures
with strategy at all
levels of an organization
Simple to use and
understand
Serves as a
Communication Tool

Time consuming method

Lack of a well defined

strategy

DISADVANTAG
ES
Tend to get what measure in
scorecard

Lead to higher cost

BSC SUMMARY

Communicate the strategy to all employees and

organizational units
Align employees individual objectives and incentives to
successful strategy implementation
Integrate the strategy with ongoing management processes