Page 196 - DMGT514_MANAGEMENT_CONTROL_SYSTEMS

Unit 9: Performance Measurement Systems

Notes
Figure 9.1: Balance Score Card
How do we look to shareholders?
Financial perspective

Goals Measures
How do What most
customers we excel
see us? at?

Customer perspective Vision Internal business process
and perspective
Goals Measures
strategy Goals Measures

Learning and growth
perspective
Goals Measures

Can we continue to improve
and create value?

It allows managers to look at the business from four different prospects by seeking to provide
answers to the following four basic questions:
1. How do customers see us? (Customer perspective)

2. What must be excelled at? (Internal business process perspective)
3. Can we continue to improve and create value? (Learning and growth perspective)
4. How do we look to shareholders? (Financial perspective)
In order to minimize information overload, the number of measures in each of the boxes to be
restricted to three to five measures.
The measurement focus of the score card is to accomplish the following critical management
procedure:
1. Clarifying and translating vision and strategy into specific strategic objectives and
identifying the critical drivers of the strategic objectives.

2. Communicating and linking strategic objectives and measures. Once all the employees
understand the high level objectives and measures, they should establish local objectives
that support the business unit global strategy.
3. Planning, setting targets and aligning strategic initiative, such targets should be over
3 - 5 years period broken down on a yearly basis so that progression targets can be set for
assessing the progress that is being made towards achieving the longer term targets.
4. Enhancing strategic feedback and learning so that managers may monitor and adjust the
implementation of their strategy and if necessary, make fundamental changes to the
strategy itself.

Self Assessment

Fill in the blanks:
5. ……………………… is the amount in rupees that remains after deducting an “implied”
interest charge from operating income.

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