What
is your understanding on the Balanced Score Card approach? How useful is it for
the Companies?
The popularity of Balanced Score Card
has been increasing in the business world. Many businesses left a gap between
strategy development and implementation which was caused by building their
objectives focusing on financial targets and goals of little relevance to
long-term goals or visions.
Thus, the Balanced Score Card approach enables
business to bridges the gap between the development and implementation. It is a
great strategic tool which provides the organization the ability to clarify the
vision and strategy and turn them into action. It focuses on both the internal
business process involved and external outcomes from so that it can
continuously improve the strategic action, performances and results.
Balanced Score Card can be defined as a
strategic and management tool that can be used to draw a line between the
business activities and vision of an organization.
Balanced Score Card approach looks into four perspectives:
·
Financial perspectives – return on
investment
·
Customer perspectives- customer
satisfaction, corporate image.
·
Process – what process we excel at?
·
Innovation –how we will go from lesson
learned and sustain our ability to change and improve?
Balanced
Score Card is useful for the
companies in the following ways:
ü Increase in creativity and useful ideas
generation.
ü It
helps to bridge the gap between the strategies of various level of organization
with the performances measures.
ü Useable
results can be obtained – change strategy into action and desired behavior.
ü Helps
in overcoming problems such as performances measurement, rise of intangible
assets and implementation of strategy.
ü Transforms the vast amount of information
gathered by the business houses into essential information.
ü Provides
the management with the coverall picture of the business operations.
ü Unique
Competitive Advantage- less time, improved decisions, improved process.
2. Identify and list the 20 important KPIs of
Balanced Score Card?
The 20
important Key Performances Indicators of Balanced Score Card are:
1. Client’s
value
2. Billing
value
3. Contribution
to profit
4. Contribution
to revenue
5. Cost
of services delivered
6. Average
bill rate
7. Consultancy
projects managed
8. Labor
multiplier
9. Billable
hours
10. %
chargeable ratio
11. Certification
12. Ideas for
new services
13. % attained
objective rate
14. Clients handled
15. Length of
tenure of clients
16. New client
inquires received
17. % client
satisfaction
18. % customer
retention rate
19. %
professional development requirements met
20. %
conversion rate of potential prospects to clients
(Smart KPIs , 2009-2011)
3.
Present your thoughts and understanding on the article “The Strategic
Management process”?
The article “Strategic Management Process” starts
with an inspiring tale of Ford’s strategic plan “ The Way Forward” by the Ford’s manager for how to
match internal strength’s and weakness with external opportunity and threats in
order to maintain its competitive advantage. Furthermore the article looks more
deeply on what is strategic management process?
What are the phases or steps involved in strategic management?
The main highlight I concluded from the article was
Strategic Management is:
·
An inclusion of both strategic planning,
implementation and evaluation.
·
Process of identifying and executing the
organization action plan.
·
Matching of company’s compatibility with
demands of its environment.
In simple
pictorial representation Strategic Management Process can be shown:
·
Strategic planning includes the first 5
stages of Strategic Management Process.
·
Then the last stages are –
Implementation/Execution and Evaluation.
The article highlights
on the 7 step strategic management process. They are listed below:
Step 1: Define the
current business
The
first step of strategic management deals with defining the following:
·
What business the firm should be in?
·
What are the company’s strength and
weakness,threats and weakness?
·
Vision of the business.
·
Direction of the business.
Step 2: Perform internal and
external audit
The second stage
involves:
·
Conducting SWOT analysis.
·
Determining strength’s, weakness,
opportunities and threats.
Step 3 : Formulate new business
and statements
The
third stage revolves around:
·
Situation analysis.
·
New business selling- WHAT, WHERE,
COMPETITORS DIFFERERCE.
·
New vision and mission.
Step 4
: Translate the mission into strategic goals
The fourth stage includes:
·
Change missions into strategic goals.
Step 5:
Formulate strategies to achieve strategic goals
The fifth stage includes:
·
Clear and Concise strategy.
Step 6:
Implement the strategy
This stage includes:
·
Converting the strategies into action
and results.
·
Drawing on and applying all management
functions
Step 7: Evaluate performance
The last stage includes
evaluation of performance and it includes:
·
Imply strategic control.
Chapman, S.M.a.A., 2008. businessballs.com.
[Online] Available at: http://www.businessballs.com/balanced_scorecard.htm
[Accessed 10 december 2013].
Sarkissian, A.,
n.d. Demand Media. [Online] Available at: http://smallbusiness.chron.com/advantages-balanced-scorecard-59821.html
[Accessed 10 December 2013].
Smart KPIs ,
2009-2011. eab group Pty. Ltd. [Online] Available at: http://www.smartkpis.com/blog/2011/02/09/kpis-at-individual-level-grouped-by-balanced-scorecard-perspectives/
[Accessed 10 December 2013].
The balance
scorecard, 2010. ProSatis A/S. [Online] Available at: http://thebalancedscorecard.com/what_is_bsc.htm
[Accessed 10 december 2013].
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