COST & MANAGEMENT ACCOUNTING Prof. Ranjan Kumar Bal UTKAL UNIVERSITY.
WELCOME. BALANCED SCORECARD A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS Prof. Ranjan K. Bal...
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Transcript of WELCOME. BALANCED SCORECARD A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS Prof. Ranjan K. Bal...
WELCOME
BALANCED SCORECARD
A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS
Prof. Ranjan K. BalFormer President,
Indian Accounting Association
INTRODUCTIONINTRODUCTION HBR: One of the most influential
management ideas of the past 75 years. New tool for measurement of overall / holistic
corporate performance. Shift from lopsided approach to a balanced
one Translate companies vision and strategy into
tangible objectives and measures. Enhances Enterprise Effectiveness
KPMG studyOn “Measuring Performance of the
Organizations of the Future”
FINDING:
“Over-reliance on summary financial performance measures (Viz. ROI) was hindering an organization’s abilities to create future economic value.”
BSCRobert Kaplan & David Norton
1992 - HBR : “The Balanced Scorecard : Measures that Drive Performance”
1996 – BOOK : “ The Balanced Scorecard :Translating Strategy into Action”
BSC Balances:Financial and Non-financial
performance measures
Evaluates: Short-run and long-run
performance in a single report.
APPLICATION OF BSCMany Fortune 500 Companies
More than 50 Indian Companies
Tata Group Companies
Dr. Reddy’s Lab
Bharati Tele
RPG
Godrej
PERSPECTIVE OF BSC
VISION &
STRATEGY
INTERNAL BUSINESS PROCESSCUSTOMER
FINANCIAL
LEARNING & GROWTH
BSCEnables an Organization to answer the
following questions:
How should it appear to its shareholders ?
How should it appear to its customers ?
What business processes must it excel at ?
How will it sustain its ability to change & improve ?
FINANCIAL PERSPECTIVE
REVENUE / INCOME GROWTH
COST MANAGEMENT
ASSET UTILISATIONROI
CUSTOMER PERSPECTIVE
CUSTOMER RETENTION
CUSTOMER ACQUISITION
CUSTOMER SATISFACTION
MARKET SHARE
Customer is the only valid reason for the existence of a
business.
Peter F. Drucker
INTERNAL BUSINESS PROCESS PERSPECTIVES
VALUE CHAIN:
R & D DESIGN PROD. MARKETING
DISTRIBUTION CUSTOMER SERVICE
Process Innovation Product Reengineering: Quality
Operational Efficiency - IT
HUL & INFOSYS
“Reengineering is the fundamental rethinking and redesign of business processes & products.”
Marketing and innovation should come before worries
about finances.
Peter F. Drucker
LEARNING & GROWTH PERSPECTIVE
EMPLOYEE CAPABILITIES
INFORMATION SYSTEM CAPABILITIES
MOTIVATION , EMPOWERMENT
LEARNING & GROWTHArun Moira: Member, Planning Commission, GOI
To be a leader: - Continuous Learning - Bigger Dream
Stephen Covey: Sharpening the Saw
Ajim Premji on JRD: JRD was a life-long learner.
“Knowledge is being doubled in every 18 months.”
Dedicated employees are key to the success of any
corporation.
Peter F. Drucker
IMPLEMENTING A BSCPROCESS
Identify VisionIdentify StrategiesIdentify PerspectivesIdentify MeasuresCreate Action Plan EvaluateFollow Up
ENVIRONMENT OF SAIL• Steel industry witnessing a boom• Increased steel consumption:
30 Kg Vs. 144 Kg• High bargaining power of buyers• Bargaining power of suppliers• Threat of new entrants & competition• Threat of substitutes
SAIL’s CORPORATE PLAN 2012
•To continue in the business of steel & steel related activities•To enhance market share in growth segments•To improve profits by cost reduction & high value added products•To achieve excellence in quality•To secure availability of key raw materials•To build customer centric processes,systems & procedures
SAIL’s CORPORATE PLAN: Comments
• Shows strategic goals, but inter-relationship is absent
• Comprehensive, but lacks focus• Lacks focus on Product Profitability• No focus on Operational Excellence
• No focus on Attracting & Retaining HR• To develop a Culture of Accountability
& Appreciation
“A manager’s job is to pursue the interests of
the society.”
Peter F. DruckerThe Father of Modern Management
CHANGE“Change is the only constant in to-day’s world.” ISB
“A company can not survive without change.”
K.V.Kamath
THANK YOU