Balanced Scorecard: Performance Measurement Programme or Strategic Cost Management System?

- Dharmesh Shah, Gujarat Law Society

Abstract:

Strategy is the foundation around which all other activities take place. Organization needs a framework for integrating strategy into all parts of the organization. Balanced Scorecards provide the framework by which an organization executes its strategy. The groundwork for building organization’s balanced scorecard is to set the organization around a clear and concise strategy. From this strategy, organization can translate organization’s strategic objectives into a set of grids, connected over four perspectives:

Financial - Delivering expected financial results for investors.

Customer - Delivering value and benefits for customers.

Internal Processes - The set of processes that must be in place in order to meet the requirements of customers.

Learning & Growth - The set of values and principles related to intangibles (employees, systems, and organization), supporting and providing the required internal processes.

The Financial and Customer perspectives tend to represent the deliverables; i.e. those things the organization must deliver on whereas the Internal Processes and Learning and Growth perspectives tend to represent those things the organization must do.

This paper provides insights on various aspects of balanced scorecard like financial, customer, internal process and learning & growth of manufacturing organizations and service oriented organizations.

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