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Transcript of 4015078 Balance Score Cardneed
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Paramjitsharma
Why does business need aBalanced
Scorecard
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Paramjitsharma
If you cant measure it,
you can cant manage it
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Paramjitsharma
BSCTranslate Strategy& Missioninto performance
measures as a strategic management system
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Paramjitsharma
Once again let us see what BSC does
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Paramjitsharma
Financial Measurement
attempts
Return on Investment
Operating & Cash BudgetsRatios
DuPont Analysis
Trend Analysis
Common size Statements
Financial Auditing
All these
tells about
past than
future
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Financial
perspectives
Profitability,Operating Income
Return on capital
Economic value added
Sales Growth
Cash flow
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Financial performance measures indicates
Whether an organization's strategy,
implementation and execution are contributing
to bottom lineimprovement ?
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Customer
perspectives
Market Segment,Customer Satisfaction
Customer Retention
New customers
Customer profitability
Market share
Account share
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The Customer perspective enables business unit
managers to articulate the customer and market
based strategy that will deliver superior future
financial returns
Customer
perspective
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Internal
business
perspectives
Critical processes to excel
Innovation Process
Operation Process
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The internal Business process perspective of the
Balance scorecard incorporates measures for short
and long term innovation & operations processes
to give better valueto the customers and sholders
Internal
Process
perspective
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Learning and
Growth
Perspective
People
Systems
Procedures
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Paramjitsharma
Learning &
Growth
perspective
The Financial, Customer and Internal Process
Objectives on the BSC typically will reveal large
Gapsbetween the existing capabilities of people
Systemsand procedures and what will be
required to achieve break through performance
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Paramjitsharma
Learning &
Growth
perspective
To close these Gaps,businesses will have to
invest in reskillingemployees, enhancing
information technologyand systems and aligning
organizational procedures and routines
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Paramjitsharma
alignment is not an easy task
but it needs to be there for
http://images.google.co.in/imgres?imgurl=http://www.executiveconsultinginc.com/resources/organization-alignment.jpg&imgrefurl=http://www.executiveconsultinginc.com/case-studies/case-studies-by-competency/organizational-alignment&h=306&w=800&sz=33&hl=en&start=2&sig2=-lZ_Ygx1MnYFeVkJrRZZwA&tbnid=Tdq9NS4z4To-5M:&tbnh=55&tbnw=143&ei=tMWiSJGEK5-CtAKfuLT-Bw&prev=/images%3Fq%3Dalignment%26gbv%3D2%26hl%3Den -
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Paramjitsharma
Customer
perspectives
Market Segment,
Customer Satisfaction
Customer Retention
New customers
Customer profitability
Market share
Account share
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Paramjitsharma
Linking Scorecard Measures to a Strategy
Cause and Effect Relationship
Outcome Measures & Performance Drivers
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Paramjitsharma
The measurement system should make the relationshipamong objectives and measures in the various
perspectives explicit so that they can bemanaged and
validated. The chain of cause and effect should pervade
all four perspectives of Balanced Scorecard.
ROCE as Measure
Driver of measure
Repeat sales
Customer Loyalty
Customer Satisfaction
On time delivery
Cause and Effect Relationship
Financial
Perspective
Customer
Perspective
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Paramjitsharma
Cause and effect
Relationship
ROCE
Customer
Loyalty
On time
Delivery
Process Cycle
Time
Process
Quality
Employee SkillLearning
&
Growth
Internal
Process
Customer
Financial
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Paramjitsharma
Performance Drivers
Activities which helps in achieving theobjectives through outcome measures
ROCE
Sales GrowthCustomers Loyalty
Quick Delivery
Trained Manpower
Measure Performance Drivers
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Paramjitsharma
Balance Scorecard
Lagging
Indicators
(Outcome Measures)
Leading
Indicators(Performance Drivers)
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Paramjitsharma
Question
Should Financial Measures be Scrapped ?
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Paramjitsharma
Could beYes;
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Paramjitsharma
In todays technologically
and customer driven global
competition
Financial measuresprovide
Poor guidelines for
Success
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Paramjitsharma
Managers should focus
On improving
Customer Satisfaction
Quality
Cycle times
Employees skills
Motivation
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Paramjitsharma
Impact of other 3 perspective
On financial perspective
Sales
Return
Physical Assets
Growth
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Paramjitsharma
Four Perspectives: are they sufficient
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Paramjitsharma
More perspectives
watch interest of
EmployeesSuppliers
community
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Paramjitsharma
Strategic Positioning or competencies driven
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Paramjitsharma
Strategic Positioning or competencies driven
Strategy for choosing the market & customer
Segments it wish to serve, identifying criticalinternal processes and to excel in that to give
value to the customers
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Paramjitsharma
Competencies/capabilities driven
Alternatively many organizations exploit their
Competencies, resources and capabilities to
Give better services or product
Hero Honda- engines
Canon - cameras
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Paramjitsharma
to sum Up.
Balance Scorecard is primarily a mechanismfor
Strategy implementationand nor strategy formulation
It can accommodate either approach for formulatingBusiness Strategy- starting from customer perspective
or Starting from excellent internal process capabilities
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Paramjitsharma
to sum Up.
What ever approach is followed toFormulate the
strategy,
the BSCwill provide an Invaluable Mechanismfor translating the strategy into specific Objectives,
measures and targets and monitoring the
Implementation of that strategy during Subsequentperiods
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Paramjitsharma
and.
Management should disclose the financial and
Non financial measurement it uses in managingthe business unit that quantify the effects of key
activities and events.
It is possible through Balance score card
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Questions