Page 272 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes

Caselet Balanced Scorecard: A Concept for the Future

W HY is it difficult for successful companies to remain so on a continuous basis?
Is it because companies only focussed on the financial numbers?

Yes, says Dr Anil Naik, a consultant and an expert on this concept called `Balanced
Scorecard'. "Balanced Scorecard gives a picture of the future," says Dr Naik. "There were
many successful companies like Nirlon, Paragon Textiles, Mafatlal in the past. Where are
they now? They failed because they could not devise proper strategy for the future," Dr
Naik told Business Line on the sidelines of a seminar organised by Indian Electrical and
Electronics Manufacturers' Association (IEEMA) here recently.
`Balanced', as the name suggests, calls for a balance between financial and non-financial
measure, long term and short-term objectives and external and internal performance.
`Scorecard' initially came into being as a measurement system, and gradually evolved
into a core management system.
Dr Naik said Balanced Scorecard continues to emphasise on the financial performance
measure but at the same time highlights future performance drivers, key initiatives to be
taken and provides a framework for strategic management. It has been designed around
four perspectives - financial, customer, internal and learning and growth.
In Balanced Scorecard, financial perspective is always important. But a healthy revenue
growth, proper utilisation of assets and investment strategy are also must for any
organisation. Balanced Scorecard articulates customer and market-based strategy that
will deliver super value to customer, build customer loyalty and bring superior financial
results. It specifically looks at the value proposition that the organisation will deliver to
the customer in target market segment. It propagates building better understanding and
leveraging relationship with customers.

Source: thehindubusinessline.com

14.5 Role of Organisational Systems in Evaluation

There are six types of organisational system involved in evaluation.

Information System

Organisations evaluate by comparing actual performance with standards. Purpose of information
management system is to enable managers to keep the track of performance through control
reports. Whether strategic surveillance or financial analysis, are based on information system to
provide relevant & timely data to managers to allow them to evaluate performance & strategy
& initiate corrective action

Control System

The control system is core of any evaluation process & is used for setting standards, measuring
performance, analysing variances, & taking corrective action.

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