Week 22

The Balanced scorecard approach:

The balanced scoreboard approach was originated by Drs. Robert Kaplan and David Norton.The balanced scoreboard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organisations worldwide. This approach helps the organisation or businesses to align their activities so as to achieve it's vision and mission. It also monitor organisation's performance against strategic goals and improves the internal and external communications.

The balanced scoreboard has now evolved as a strategic management system as whole. The balanced Scoreboard can be a great help used as a strategic tool, a management methodology or a measurement system (thebalancedscoreboard.com, 2010).

There are four perspective of the balanced scorecard approach so as to evaluate the company's activity:

1. Financial Perspective: It includes return on investment, shareholder value.

2. Internal business Perspective: It includes lead time, process efficiency.

3. Innovation and Learning Perspective: It includes

introduction of new products and basically helps to improve and change from the lessons learned.

4. Customer Perspective: It includes  customer satisfaction and company's image.

The uses of the balanced scorecard for the companies are as follows:

• It can be a great help used as a strategic tool, a measurement system by the companies.
• It can be useful to the companies to clarify their vision and strategy and translate them into action.
• It is used by the companies to gap the difference between the strategies of organisation with the performances measures.
• It can be used by the companies to overcome problems such as rise of intangible assets and performance lack down.
• It is used by the companies for improved decision making in less time.

 The 20 important KPIs of Balanced Score Card:

1. Cost reduction %
2. Sales growth %
3. ROCE (Return on capital employed) %
4. eps (earnings per share) %
5. Customer retention %
6. Customer 'churn' %
7. Customer loyalty %
8. Acquisitions of new customers 000s
9. Customer satisfaction %
10. Training and development %
11. Job turnover %
12. Product quality %
13. Stock turnover %
14. Quality circles-new ideas 000s
15. Projects in 'pipeline' 10
16. Time/speed to market (months)
17. Billing value
18. Average bill rate
19. Cost of services delivered
20. Certification

3. Present your thoughts and understanding on the article “The Strategic Management process”

The article ‘strategic management process’ explains in detail what strategic management process actually is. And also the phases involved in strategic management. The article included Ford’s strategic plan ‘The way forward’ and it also describes how the Ford’s manager has maintained its competitive advantage by matching internal strengths and weaknesses. 

According to the article, Strategic management process is an inclusion of both strategic planning, implementation and evaluation. It is the process of identifying and executing the organization’s action plan. 

There are 7 stages of strategic management process, in which the first five is included in the strategic planning and the other two are implementation and evaluation.

The seven steps of strategic management process identified by the article are as follow:

Step 1: Define the current business:

·         What business the firm should be in?

·         What are the vision and mission of the firm?

·         What are the firm’s strengths, weaknesses, threats and opportunities?

Step 2: Perform internal and external audit:

·         SWOT analysis

Step 3: Formulate new business and statements:

·         New vision, mission

·         Market analysis

·         Situation analysis

Step 4: Translate the mission into strategic goal:

·         Make your mission your goal

Step 5: Formulate strategies to achieve goals:

·         Clearly define your strategies

Step 6: Implement the strategy:

·         Make strategies work

·         Apply it in action

Step 7: Evaluate the implemented strategy

·         Imply strategic control

 References:

balanced scorecard. (n.d.). Retrieved December 14, 2013, from www.balancedscorecard.org: https://balancedscorecard.org/Resources/AbouttheBalancedScorecard/tabid/55/Default.aspx

cambridge mba. (n.d.). Retrieved December 14, 2013, from www.cambridgemba.files.wordpress.com: http://cambridgemba.files.wordpress.com/2011/05/balanced-scorecard-2010-1.pdf