How Balanced Scorecard Is Used For A Competitive Advantage Within The Business Industry
This report outlines the way the balanced scorecard is used as a tool used in the business industry. It outlines its historical development and analyses its usefulness.
The Balanced Scorecard
The balanced scorecard is a performance management tool that assists in the management of an organisation’s business strategy (Candle 2008). Kaplan and Norton (1992), the creators of the concept, introduce the business scorecard as 4 main perspectives, customer, learning and growth, financial and internal business process. They breakdown the meaning behind each perspective as follows: The customer leg measures the customer satisfaction for an organisation. It allows an organisation to determine how customers view their business and if customers are being retained. The second leg, learning and growth, highlights how effective the management system is by measuring things such as employee satisfaction and retention. This leg also focuses on how information is used by the organisation to transform it to a competitive advantage within the industry. The financial leg analyses data to understand financial performance. This data can be obtained from values such as sales, operating costs and revenue. For the final leg, internal business processes are evaluated to maximise profit by establishing any inefficiencies or bottlenecks in the management or production system.
These four legs comprise the balanced scorecard that has since been utilised by many private and public companies…