BALANCED SCORE CARD

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It is an approach which allows strategic policy formation and achievement of results based on the management information system. It may include both financial and non –financial elements and cover areas like profitability, consumer satisfaction, internal innovation and business growth. It has four dimensions as mentioned below :

  • Customer perspective which covers consumer satisfaction through product usage. Competitive price in the market is an example of customer perspective in the business.
  • Internal business perspective which include improving the different business departments. Sales penetration can be measured through sales plan. Another example can be rate of new product introduction in the business.
  • Learning and growth perspective which covers improvement in the business dynamics. The number of new product patented in the area of research and development is a valid illustration in case of learning and growth perspective.
  • Financial perspective which covers operating income by the different business segments. It includes prosperity measure through cash flows analysis, profitability measure through return on investment.

Balanced Score card sometimes fail to provide the desired results due to :

  • The use of non financial measures lead s managers to think that they have a balanced score card already working for strategic purposes.
  • Many time higher management level delegate wrongly the responsibility of the score card implementation to the middle level managers.
  • It is thought that the balanced score card is used only for the reporting purposes
  • It is not seen in a long term perspective by the strategic management.

It is a very popular concept which is applied in western countries and USA.  It is applied in a very limited way in India. It is majorly found suitable for the large corporations.

 

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