Balance Scorecard

Presented By: Hani Zamani (MC112030) Muhammad ALiif Ahmad

(MC112098)Nesa Nabipour (MC112075) Nurhayati Othman (MC112100)Sakirin Tam (MC112109)

Introduction

an approach for driving organizational improvement toward pre-selected goals

integrated management system components: 1) strategic management system2) communication tool,3) measurement system

Is an framework for a strategic measurement and management system Balance

Scorecard

History of BSC 1990s• Robert Kaplan

and David Norton develop BSC

• links strategy with• performance

1993• Putting the

Balanced Scorecard to Work

1996• Using the

Balanced Scorecard as a Strategic Management System

Currently• used by some of

the world's most successful companies

Component of BSC

Identify financial measures.- return on capital employed- operating income- economic value added- Salve growth & cash flow

- Customer retention- Customer satisfaction- Market share target segments

- Operation- Internal value chain- Innovation- Sale service

where it can improve and create value- Employee satisfaction- Skill & moral- Employee retention.- Real time system

Component of BSC

Component of BSC

Paul Niven’s analogy of the Balanced Scorecard is that of a tree

Phases of BSC

Readiness Assessment• Identify

Needs• Identify

Resources• Confirm

Leadership Commitment

Planning•

Leadership Team

• Strategic Review (mission/vision/strategic plan)

• Assign Strategies to BSC Perspectives

• Develop Strategy Map

• Identify/Agree on Measures

• Develop Implementation Plan

Technical Implementation• Input

Information (vision/strategies/measures)

• Build Scorecards

• Set Targets and Alert Levels

• Standardize Data Definitions

• Presentation of Data

Organizational Integration•

Integrate /Existing

• Communicate Objectives

• Assign Measurement Data Responsibility

Operation/Modification• Data

Update• Analysis• Regular

Reporting•

Refinement

Kaplan and Norton, 2000

CASE STUDYSuccessful Executing Strategy by Implementing the Balanced Scorecard

0Zhang Shu Engineering.0Revenue of approximately 10 million US dollars per

year. 0 It is striving to maintain its viability in the highly

competitive engineering market.0 It develops its business strategy along with objectives.

Perspective Strategy Objective

Financial • We will ensure that we use our resources and people to maintain financial success.

• Financial success.

Customer • We will meet or exceed our customers’ current and future expectations and requirements with innovative, high quality engineering solutions and superior service, at a reasonable cost. 

• Customers impressed with quality of engineering solutions and services.• Attract new customers.• Retain current customers.• Provide on-time delivery of solutions, goods and services.

Internal • We will provide our engineering and programming professionals and staff with an efficient and effective means to produce and deliver high quality, innovative technical engineering solutions and services in a timely fashion. 

• Achieve and maintain cutting-edge production capability.• Maintain or if necessary acquire well-functioning facilities.

Innovation Learning and Growth

• We will attract and retain high calibre people and promote an environment that develops their technical, interpersonal, and business skills and knowledge.• We will strive to develop and maintain an active means of attracting new clients and a means to expand our practice into related engineering and computer development areas.• We will strive to be aware and on the cutting-edge of engineering and computer technology. 

• Maintain a trained and knowledgeable workforce.• Be on the cutting edge of engineering, computer and business technology.• Develop business through innovative client identification and acquisition

STRATEGY MAP – STRATEGY & OBJECTIVES

Perspective Measures Targets

Financial • Increased operating income.• Dollar amount of operating expenses.  

• Increase by 10%.• Maintain expense levels.

Customer • Number of new customers.• Number of repeat customers.• Number of requests for clarifications.• Number of required revisions.• Number of missed project deadlines. 

• Increase by 50%• Increase 10%• One per sheet• Decrease by 30%• Reduce to zero

Internal • Software version currency.• Number of departures from the firm’s engineering standards.• Use of templates.• Number of common elements used. 

• Use latest software versions• Reduce to zero

• Use at least 90%• Increase by 10%

Innovation Learning and Growth

• Amount of language training for each employee.• Amount of business training for each employee.• Amount of technical training, seminars or conferences attended for each employee.• Number of price quotations from innovative client sources. 

• 2 hours per week • 2 sessions year • 5 per year  • Increase by 10%

STRATEGY MAP - MEASURES

& TARGETS

0From both strategy map, we found that the company’s targets is tied to measure and each measure is tied to an objectives.

0Other point is each objective is tied to at least one element of company’s strategy.

0The success of any balanced scorecard implementation is depend in that critical connection.

0The reason: Short-term strategy execution, and strategy is the means of realizing the company’s mission, values, and vision.

Advantages of BSC

1. Balance between financial and non-financial indicators of success

2. Balance between internal and external constituents of the organization

3. Balance between lag and lead indicators of performance

LimitationsCause-and-effect relations are not time-wise connected and not related in reality

External environment and several interest groups are out of picture

Hierarchical top-down set-up creates problems in implementation

Unsuitability to unique or unhealthy enterprises

Thank You Q&A