In the competitive world, organizations use balance scorecard to predict future financial success with the help of financial as well as non financial measurement. Balance scorecard was developed in 1992 by Kaplan and Norton. They proposed balance scorecard as a kind of managerial system which assist the organization to carry out the strategies. It is a most influence management instrument, which helps the organization to measure performance (Niven, 2005). Balance scorecard helps the organization to transform vision and strategies into objectives and measurement indicators.
The balance scorecard helps the organization for the long term investment in customers, employees, in new product development and in system. An organization can use the effective balance scorecard to deliver high performance in the market with the help of four interrelated perspectives such as financial, customers, internal business process and learning and growth (Hubbard, 2004).
Financial perspective is an important component of balance scorecard in the for-profit, public and non-profit organizations. In the for-profit organizations, the measures in financial perspective help the organization management to find out that strategy execution in the organization improve the financial performance and bottom line results. In the public and non-profit organizations, financial perspective ensures the management that organization achieving their desire result with effective and efficient manner with cost minimization (Niven, 2005). In order to deliver high performance in the market, financial perspective helps the organizations to maximize assets utilization, revenue and profitability in the market.
Customer perspective of balance scorecard also helps the organization to deliver high performance in the market. In the customer perspective, organizations identify the customer and market segments for competition with other market players. The customer perspective helps the organization to compare their core customer outcome measures such as satisfaction, loyalty, retention, acquisition and profitability to targeted customer and market segments. Most of the organizations chose value proposition to create differentiation from competitors by the operational excellence, product leadership and customer intimacy (Hubbard, 2004). These help the organizations to measure customer perspective and also help organizations to deliver high performance in the market.
Internal Processes Perspective:
In the internal process perspective of balance scorecard, organizations identify the key processes by which organizations can add values for the customers in order to sustain in the market. By this perspective, an organization can identify those processes and develop their best possible measures that help organization to deliver high performance in the market.
Organization can choose any discipline to deliver high customer satisfaction in the market. In order to satisfy customers, organization has to identify entirely new internal processes that help the organizations to deliver best products to the customers (Niven, 2005). In internal processes perspective, an organization can improve their service delivery system, community partnership and reporting etc. This can be helpful to organization to deliver high performance in the market.
Learning and Growth Perspective:
By developing learning and growth perspective, organizations can deliver high performance in the market. The learning and growth perspective provides the framework to identify that the objectives are achieved or not. The objectives of learning and growth perspective are the drivers of achieving excellent outcomes in the first three scorecard perspective (Hubbard, 2004).
Thus, from the above discussion, it can be concluded that balance scorecard helps the management and employees to achieve success and long term goals of the organization. Balance scorecard helps the organization to achieve competitive advantage and deliver best products and services to the customers in the market. By the four perspectives of balance scorecard such as financial, customer, internal processes and learning and growth, an organization can measure the performance and try to develop strategies to attract customers in the market.
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