Strategic Management Accounting: Balance Scorecard

Question 1

What is the balance scorecard

Answer 1

A strategic planning management system used to align business activities to strategies by monitoring performance against goals

By Kaplan and Norton

Question 2

What are the 4 quadrants

Answer 2

• Financial
• Customers
• Learning and growth
• Internal business processes

measures of performance

Question 3

What is the financial perspective

Answer 3

How we look to shareholders, typical measures include return on investment, profit margin, revenue growth etc

Question 4

What is the customer perspective

Answer 4

How customers see us, measures include customer satisfaction, delivery times, market share

Question 5

What is the internal business processes perspective

Answer 5

What must we excel at? For example innovation (develop new markets), operations (increase efficiency) or post-sales service

Question 6

What is the learning and growth perspective

Answer 6

Can we continue to improve and create value? Focus on infrastructure and comes from 3 sources: employees, systems, procedures

Question 7

Benefits of the balance scorecard

Answer 7

• Clarifies the vision as it links strategies to performance
• feedback and learning is encouraged
• improves business planning by setting targets and initiatives

Question 8

Limitations of the balance scorecard

Answer 8

• assumes cause and effect but unproven to be true
• uses generic measures which may not apply to their strategy and position
  -non financial measures are not evaluated in monetary terms

Question 9

What was a more advanced conceptualisation of the BSC

Answer 9

Kaplan and Norton put forward strategy maps, based on the 4 perspectives of the BSC. Helps managers explore ‘if’ ‘then’ relationships more detailed