7.3d - Kaplan and Norton

Question 1

Kaplan and Norton Balanced Scorecard definition

Answer 1

A model for assessing non-financial measures of performance

Question 2

What are the aims of the K&N Balanced Scorecard?

Answer 2

• Align business activities to vision of the business
• Improve internal and external communicates
• Monitor business performance against strategic goals

Question 3

What are the perspectives of the Balanced Scorecard?

Answer 3

• Financial
• Internal processes
• Organisational capacity
• Customer

Question 4

What does ‘internal processes’ focus on?

Answer 4

Business efficiency

Question 5

What does ‘organisational capacity’ focus on?

Answer 5

Knowledge and innovation

Question 6

What do managers need to consider for each perspective of the Balanced Scorecard?

Answer 6

• Objectives
• Measures
• Targets
• Initiatives

Question 7

Key features of the Balanced Scorecard:

Answer 7

• Top-down approach
• Starts with mission and vision of the business
• Identifies key performance indicators
• Emphasises importance of non-financial measures

Question 8

Advantages of Balanced Scorecard:

Answer 8

• Broader view of business performance
• Links performance measurement to long-term
• Constant monitoring
• Involves everyone in the business
• Flexible

Question 9

Disadvantages of Balanced Scorecard:

Answer 9

• Danger of too many key performance indicators
• Getting balance between perspectives is difficult
• Senior management may still be too concerned with financial performance
• Needs to be updated regularly to be useful