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BSC - Developing a Balanced Scorecard with System Dynamics...

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Developing a Balanced Scorecard with System Dynamics Prepared for: Professor Ahn
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Introduction Balanced Scorecard (BSC) : a performan ce measurement system with an integrate d set of financial and non-financial measur es introduced by Harvard Professors John son and Kaplan several decades ago. The BSC has become a topic of considera ble interest in both the business world and in academia. It originates from the field of Management Accounting, and has quickly become popul
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Current BSC Theory and Practic e Instead of relying solely on financial measures , a scorecard translates the vision and strateg y of a business unit into objectives and measu res in four different areas: 1. The financial perspective : how the company wishes to be viewed by its shareholders; 2. The customer perspective: how the company wishes to be viewed by its customers; 3. The internal business process perspective : in which pro cesses the company must excel in order to satisfy its s hareholders customers;
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A BSC links measures of process performance, or key perf ormance indicators (KPI’s) , together in a casual chain that leads through all four perspectives. Current BSC Theory and Practic e cont. Influence Act Upon Drive Enhance
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Introduction cont. Conventional Measures Balanced Scorecard Criticism Have to work through piles of statistics Simplicity: Focus on monitoring three to five measures for each of the four perspectives. How can one be sure that the few ones selected are indeed the right ones? All the relevant inputs from different functional areas had to be translated into financial data. Non- financial managers faced difficulty to understand.
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