ch09 - The Balanced Scorecard Chapter 9 Achieving Success...

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The Balanced Scorecard Chapter 9
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Achieving Success in the Information Era To achieve success in the information era, companies need more than prudent investment in physical assets and excellent management of financial assets and liabilities Companies mobilize and create value from their intangible assets as well as their physical and financial ones
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Intangible Assets An organization’s intangible assets include: Loyal and profitable customer relationships High-quality processes Innovative products and services Employee skills and motivation Databases and information systems
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Measuring Intangible Assets Difficulties in placing a reliable financial value on intangible assets have prevented them from being recognized on a company’s balance sheet These assets are critical for success Managers have searched for a system that would help them measure and manage the performance of their intangible, knowledge-based assets
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The Balanced Scorecard The Balanced Scorecard (BSC) provides a system for measuring and managing all aspects of a company’s performance The scorecard balances traditional financial measures of success, such as profits and return on capital, with non-financial measures of the drivers of future financial performance The Balanced Scorecard measures organizational performance across different perspectives
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Perspectives Four different but linked perspectives are derived from the organization’s strategy Financial : Customer Internal Learning & Growth
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Balanced Measurements The BSC enables companies to: Track financial results Monitor how they are building the capabilities for future growth and profitability With customers With their internal processes With their employees and systems
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Connecting the Four Perspectives A strategy map provides a visual representation of the linkages in the four perspectives of the BSC Financial Perspective Return on Investment Customer Perspective Customer Loyalty On-Time Delivery Internal Perspective Learning & Growth Perspective Process Quality Cycle Time Employees’ Process Improvement Skills
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Connections Return on investment (ROI) is a widely recognized measure of financial success Repeated and expanded sales from existing customers, the result of a high degree of loyalty among existing customers, could be one driver of this financial measure
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Connections Analysis of customer preferences may reveal that on-time delivery (OTD) of orders is highly valued by customers The company must excel at internal processes to achieve exceptional OTD
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Connections Short cycle times and high-quality production processes are two drivers of on-time delivery The company must have skilled production workers, well-trained in process improvement techniques A measure of employees’ skill and capabilities in process improvement is used in the Learning & Growth perspective
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Strategy and the BSC A BSC tells the story of the business unit's
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This note was uploaded on 11/16/2010 for the course ECN 5050 taught by Professor Yamashita during the Spring '10 term at Nova Southeastern University.

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ch09 - The Balanced Scorecard Chapter 9 Achieving Success...

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