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the financial perspective and the customer perspective

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In Module 1, we begin our application of the Balanced Scorecard with a close look at the financial perspective. Actually, we need to start a bit further back, with the fundamental ideas of corporate vision and mission that underlie all effective business strategy. Here is a good brief introduction to this topic:

Robin, D. (ND) Vision, Mission and Values: Management Tools for Building a Better Workplace. Daniel Robin & Associates. Retrieved July 20, 2010, from http://www.abetterworkplace.com/027.html

So the balanced scorecard rests ultimately on corporate vision and mission, and ultimately, all organizations, whether they are designed to make a formal "profit" or not, hope to accrue more resources than they expend. So the financial (or "effectiveness") perspective is the logical place to start our consideration. But as we observed in the Course Overview and the Introduction to this module, all the perspectives or components are integrally related. So let's take a good look at the relationship of financial perspectives to the rest of the balanced scorecard before we dive into it specifically:

MyStrategicPlan (N.D.) Balanced Scorecard: Performance Measurements for Success. Retrieved July 20, 2010, from http://www.mystrategicplan.com/strategic-planning-topics/balanced-scorecard.shtml

As we noted, the financial perspective of the balanced scorecard defines the "bottom line" of the system. So here is a useful brief summary of the approach:

Niven, P. (N.D.) Financial perspective. EPM Review. Retrieved July 20, 2010, from http://www.epmreview.com/Resources/Articles/Delivering-shareholder-value-growing-revenue-and-enhancing-productivity.html

There are any number of possible cases where we could begin. But let's start in this case with an assessment of the use of the balanced scorecard in Saatchi & Saatchi, one of the premier advertising and "creative service" organizations (although they have certainly had their ups and downs over the last ten years or so. Here's how this process has been described:

"Faced with a set of brutally tough choices in the Nineties, Saatchi & Saatchi's leadership team defined a new vision and global strategy and set stretching three-year financial goals. In this case study, Paul Melter, Worldwide Director, CompaSS, explains how the balanced scorecard was used to turn ambitious strategic aspirations into operational reality."

The article from which this summary is taken can be found here:

Greenhalgh, C. (2004) Building a Strategic Balanced Scorecard: Saatchi & Saatchi Complementary Case Study. Business Intelligence Company. Retrieved July 20, 2010, from http://www.business-intelligence.co.uk/PDFdownloads/strat_bsc/Saatchisr.pdf

As your case assignment for this module, you are to carefully review this article, and then (in 3-4 pages) prepare your analysis of how Saatchi & Saatchi implemented the balanced scorecard and its apparent effects.

Assignment Expectations:

Your analysis should be structured in terms of the following four issues (you will be using essentially this same comparative evaluation framework for the first four modules of this course):

Introduction: What was the situation for Saatchi & Saatchi in the mid 1990s? The management team adopted an approach that was primarily two-pronged: the financial perspective and the customer perspective. In terms of the financial perspective, what goals did the new leadership set for the company?

Analysis: How did the company categorize its different business units (agencies)? What strategies were chosen for each unit? Saatch & Saatchi also adopted several strategies that related best to a customer perspective. What were they?

Conclusion: Did the financial strategies make sense for each given unit? Why or why not? Did the acquisition by Publicis Groupe SA change the results of the BSC? Now that you have analyzed both "prongs", did the two approaches worked in synthesis or in conflict?

Evaluation: Assuming that it would be best if the customer perspective strategies meshed with the financial strategies, do you think the customer perspective reinforces or conflicts with their financial strategies? In your opinion (supported, of course, by your readings), was the implementation done well or poorly?

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Introduction: What was the situation for Saatchi & Saatchi in the mid 1990s? The management team adopted an approach that was primarily two-pronged: the financial perspective and the customer perspective. In terms of the financial perspective, what goals did the new leadership set for the company?

In the mid 90's, the recession led to steep decline in the growth of the company and brought the company on the brink of recession. In order to deal with the situation and as part of the restructuring strategy, the new leadership set various goals from the financial perspective, such as targeting above average revenue base as compared to the industry average, ensuring doubling of earnings per share and conversion of thirty percent of the incremental revenue of the firm to operating profit.

Analysis: How did the company categorize its different business units (agencies)? What strategies were chosen for each unit? Saatch & Saatchi also adopted several strategies that related best to a customer perspective. What were they?

The company's agenices located across the globe were categorized into three different categories based on the number of employees, expected growth ...

Solution Summary

What was the situation for Saatchi & Saatchi in the mid 1990s? The management team adopted an approach that was primarily two-pronged: the financial perspective and the customer perspective. In terms of the financial perspective, what goals did the new leadership set for the company?

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