Finacial Perspective

7/24/2019 Finacial Perspective

1/5

Group : V

Member : Forbes Islamey Shan (1310532073)

Hardan !rma !u"r (1310531017)

Fnan#al !erspe#"$e

1. Linking Financial Objectives to Business Unit Strategy

1%Gro&"h

Early stage of life cycle

Products having ro!th

Potential

"o##itting $esources

E%&anding &roduction

facilities

O&erating ca&abilities

'nvesting in syste#s

'nvesting in

'nfrastructure

'nvesting in distribution

net!ork

(ore cash out)o!

Financial Objective*

+age

sales ro!th

custo#er grou&s

2%Sus"an

,ttract invest#ents

$e-uired e%tra return

(aintain e%isting

#arkets

ro!th is e%&ected

Enhancing

i#&rove#ents

Protability

$eturn on 'nvest#ent

Econo#ic /alue ,dded

3%Har$es"

(aturity &hase

Enough to #aintain

e-uients

0o e%&ansion

0e! invest !ith Short

Pay Back

(a%i#ie "ash )o!

$eduction in 2"

$e-uire#ents


2/5

The measurements should be focused on a single strategy and be linked,

consistent and mutually reinforcing. Some generic measurements are presented in

the table below.

Perspective Generic Measurements

Financial Return of Capital Employed, Economic

value added, Sales growth, Cash flow

Customer

Customer satisfaction, retention, acuisition,

profitability, market share

!nternal

business

process

!ncludes measurements along the internal

value chain for"

!nnovation # measures of how well the

company identifies the customers$ futureneeds.

%perations # measures of uality, cycle time,

and costs.

&ost sales service # measures for warranty,repair and treatment of defects and returns.

'earning and

growth

!ncludes measurements for"

&eople # employee retention, training, skills,morale.

Systems # measure of availability of critical

real time information needed for front lineemployees.

2. What is a Strategy?

( strategy, according to )aplan and his coauthors, is a set of hypotheses about

cause and effect relationships. *efining an organi+ations strategy involves"


3/5

- *efining the market the organi+ation plans to serve # local, national, global.

/ *efining the customer. 0road or narrow, age group, income level etc.

1 !dentifying the critical internal processes needed to capture and satisfy those

customers.

2 *etermining the individual and organi+ational capabilities reuired in the other

perspectives.

&orter defines Strategy as performing different activities from rivals$ or

performing similar activities in different ways.

For more on Strategy see a Summary of &orters article, and 3((4s Strategy

section.

3. An Example related to ause and E!!ect

The chain of cause and effect relationships may start with improvements in thearea of learning and growth. These improvements tend to cause improvements in

business processes, which in turn cause improvements in customer satisfaction

and subseuently cause improvements in sales and the financial measurements of

profitability. The direction of the cause and effect relationships is emphasi+ed

below.

'earning and growth 5 !nternal business process 5 Customer 5 Financial

For a more specific e6ample showing cause an effect, see the Sears Employee#

Customer#&rofit Chain illustration below.

". What do you try to #alance? (n important part of the balanced scorecard concept is the emphasis on

establishing a balance between four types of measurements. These types of

measurements include"

- Short term and 'ong term,

/ E6ternal 7for shareholders and customers and !nternal 7for critical business

processes, innovation, and learning and growth,

1 'eading indicators 7outcomes desired and performance drivers and 'agging

indicators 7outcomes,

2 %b8ective measures 7e.g., financial and Sub8ective measures 7e.g., many non#

financial


4/5

Revenue 9rowth 3i6

Harvest


5/5

a.:ew &roduct;Service

b.'e& ppl#a"on

#%'e& us"omers and Mar*e"s

d%'e& +ela"onshp

e%'e& !rodu#" and Ser$#e M,

-%'e& !r#n. S"ra"e.y

os" +edu#"on/!rodu#"$"y Impro$emen"

a% In#rease +e$enue !rodu#"$"yb% +edu#e n" os"s#% Impro$e hannel M,d% +edu#e pera"n. ,penses

sse" "la"on In$es"men" S"ra"e.y

a%ash "o ash y#le

b%Impro$e sse" "la"on

Documents

Finacial Perspective