Balanced Scorecard
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Transcript of Balanced Scorecard
MENILAI KINERJ
Using Balanced Scorecard as a Holistic Measure of
Performance
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BAGAIMANA MENILAI PERUSAHAAN
Market share. Financial performance…
• Sales• Profitability• Ratios
Stock price.
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Problems
Too simple or too narrow. Biased toward financial results.
• Many believe emphasis is on short-term results (quarterly earnings).
• Difficult to see what actions firm is taking for future.
Operational activities left out.
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Balanced Scorecard – What is it?
Helps “balance” the way company’s look at performance by using four perspectives or lenses: Learning and Growth Business Processes Customer Financial
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Learning and Growth
This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. (Balanced Scorecard Institute)
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Business Processes
This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). (Balanced Scorecard Institute)
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Customer
This perceptive refers to how customers are being satisfied by products and services being provided by the firm. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good.
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Financial
This perceptive focuses on the traditional measures of ROI, profitability, stock price etc.
Financial
Internal Business Processes
Learning and Growth
CustomersVision and
Strategy
Basic Design of Balanced Scorecard System
From “A Balancing Act” by Howard Rohm in Perform magazine.
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Balanced Scorecard
You can see this idea from simulation:• Financial performance• Marketing performance• Marketing effectiveness• Investment in future• Wealth• Asset management• Manufacturing productivity
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Balanced Scorecard
You can see this idea from simulation:• Financial performance• Marketing performance• Marketing effectiveness• Investment in future• Wealth• Asset management• Manufacturing productivity
Customers
Learning & Growth
Business Processes
Financial
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Benefits
Long-term planning is valued. Cumulative impact of building shareholder
wealth is valued over short-term earnings. Highlights areas of weakness and
strength. …It’s a more complete picture of the
firm’s performance.
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Criticisms
Unnecessarily complex. Takes time and effort
Included variables are (a) somewhat arbitrary and (b) simply what’s available.
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Criticisms
All information in BSC is reflected in stock price anyway.
• Assumes you buy the traditional view of firm value.
• Depends on good dissemination of information.• But not appealing to HR, mgmt, engineers and
others who feel alienated with financials.
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Application to Crucible
Financial performance:• Net profit from current operations / total shares
issued• This is operating profit with R&D and quality
improvements added back in
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Application to Crucible
Market performance:• Average market share in targeted segments /
percent of demand actually served• So this accounts for stock outs and customer ill
will• Between 0.0 and 1.0; good score around .4 or .5.
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Application to Crucible
Marketing effectiveness:• Average market share in targeted segments /
percent of demand actually served• So this accounts for stock outs and customer ill
will• Between 0.0 and 1.0; good score around .4 or .5.
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Application to Crucible
Investments in future:• (Current expenditures aimed at future / net
revenues) * 10+1• => 1.0 and good score is > 3.0
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Application to Crucible
Creation of wealth:• Net equity / total stockholder’s equity• = (retained earnings + common stock) / common
stock• = (retained earnings + $5,000,000) / $5,000,000• < 1 means equity is paying for operational
expenses• > 1 means firm is adding to wealth• <= 0 means bankruptcy
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Application to Crucible
Asset management:• Asset turnover * penalty for excess inventory• Good score should be around 3.0
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Application to Crucible
Manufacturing productivity:• Reliability judgment * % of operating capacity
used in production• Score between 0.0 and 1.0, with good score
around 0.80
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Application to Crucible
Total business performance:• The individual measurements multiplied together
into an index• Compare quarter-to-quarter to see improvement• Compare with competitors and industry average
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