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Balanced Scorecard

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Name: Ram Kumar Matrix No.: #### Assignment: The Balanced Scorecard

A. Definition

The Balanced Scorecard is a method of performance measurement that combines conventional financial measures with non-financial measures to provide management with richer and more relevant information about activities they are managing.

Mainly used for two activities:

* Management Control - Monitoring and control the delivery of pre-defined activities

* Strategic Control - Used to articulate the strategic objectives of an organisation and monitor the activities required for their requirements

And through four perspectives suggested by Robert S. Kaplan and David P. Norton:

* Financial Perspective

o Assess project risks

o Cost benefit analysis of proposed activities

o Data available to monitor cash flow, planned versus actual

* Customer Perspective

o Understanding of who are internal and external customers

o Activities driven by customer needs satisfaction

o Define levels of service to match levels of customer satisfaction

* Internal Perspective

o Mission orientated processes and support orientated processes

o Metrics to display areas in which organisation excels

o Compare metrics with what customer actually requires

* Learning and Growth Perspective

o Avoidance of brain drain through focussed training in identifiable areas of risk

o Organisational development through people improvement

o Knowledge workers in continuous learning mode

B. Application in Real World

In real world that includes profit organization, non-profit and government organizations, balance scorecard has been trusted and used since year 1988.

There has been a significant evolution from Kaplan & Norton's original approach which was found to have elements which were unworkable in usual practice. There were heated almost ideological arguments whether it was appropriate to tamper with Kaplan's model. This didn't consider the development of the model that occurred pre Kaplan. "The balanced scorecard translates an organization's



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