Which of the following systems for planning and measuring the economic performance of a firm is best?
* The Balanced Scorecard,
* EVA or
* Financial Ratio Analysis, including Dupont Analysis?"
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Let us analyze each of them one by one:
The Balanced Scorecard is one of many performance management measurement tools that have become very popular in recent years. The balance scorecard first came to prominence in the early 1990's. Dr Robert Kaplan and Dr David Norton of the Harvard Business School developed this system of performance management measurement. Perspectives of Balance scorecard
As in the attached article, the scorecard seeks to measure a business from the following perspectives:
* Financial perspective - measures reflecting financial performance, for example number of debtors, cash flow or return on investment.
* Customer perspective - measures having a direct impact on customers, for example time taken to process a phone call, results of customer surveys, number of complaints or competitive rankings.
* Business process perspective - measures reflecting the performance of key business processes, for example the time spent prospecting, number of units that required rework or process cost.
* Learning and growth perspective - measures describing the companies learning curve, for example number of employee suggestions or total hours spent on staff training.
As opposed to most previous measurement tools, the balanced scorecard didn't just focus on the financial perspective.
The balanced scorecard aims to have a balance over the four areas rather than one area being much more focused upon "The BSC (Balanced Scorecard) divides the business environment into four key business areas" (Hepworth 1998) , e.g. a business putting most of their efforts into trying to gain short term profit.
One of the main advantages of the Balanced Scorecard is considered to be the opinion that it allows managers to view levels of performance all over an organisation at the same time "Primarily, the "balanced scorecard" gives managers the ability to view performance in several areas simultaneously" (Kippenberger 1996).
The Balanced Scorecard tends to focus more on critical performance indicators and missing out what can be considered less important indicators (Kippenberger 1996).
It is important that businesses implementing the balanced scorecard do not completely move away from financially driven targets or revenue may decrease dramatically, Neale & McElroy (2004) back up this point "The trick is to settle on a set of critical metrics which influence the financial results". They also argue that for the balanced scorecard to operate successfully there could be clear linkages between success drivers, e.g. Business growth and the achievement of financial goals. Only when there is a successful balance has the balanced scorecard been implemented properly.
Balancedscorecard.biz explains "it is most often the new and "missing measures" and their interplay with other indicators that drive the value emanating from a Balanced Scorecard. Many of the measures needed to tell the story of the strategy may already be present, but in ...
1818 words to go through each of the planning/measuring systems for economic performance and pick the best out of Balanced Scorecard, EVA and Financial Ratios.
Research The Samsung Group (http://www.samsung.com/us/aboutsamsung/samsunggroup/).
Using your readings, the Library, and the Internet, and any additional resources necessary, you are being asked to complete the following sections of a Strategic Audit (See examples starting on page 78 and appendix 11.C):
Analysis of Strategic Factors. Since you are aware that your analysis of strategic factors or SFAS (Strategic Factor Analysis Summary) is based on IFAS and EFAS tables, and since we will need to understand your choices, you are required to submit the three tables in Excel format in one separate file from your written Word assignment. No comments are needed on the IFAS and the EFAS tables, but comments are needed on the SFAS table, which is the foundation for this assignment (You will submit one Excel file that will include three separate sheets, one for the IFAS, one for the EFAS and one for the SFAS). As a reminder, two files are to be submitted: One Excel file (counting for three pages) and one Word file (five to seven pages double-spaced). You will be graded on your knowledge of the software and math in building the MS Excel tables, and on your ability to communicate in writing and present your arguments.View Full Posting Details