Balanced Scorecard

Evaluate the usefulness of a balanced scorecard approach in assessing business performance.

To: Marketing Director

From: Marketing Consultant

Date: 12th November 2007

Subject: Evaluating the balanced scorecard approach

Introduction

A balanced scorecard is used to describe the strategy of an organisation. This report will critically evaluate the scorecard as a measure when assessing business performance.

The balanced scorecard

A balanced scorecard tells you the knowledge, systems and skills that employees in a company will need (innovation and learning) to innovate and build the correct strategic capabilities (internal) that deliver specific value to the market (customers) which should eventually lead to higher shareholder value (financial).

An example of a balanced scorecard for Alliance & Leicester Commercial Bank is detailed below:

Objectives Measures

Financial Profitability Net margin

Profitability growth Volume growth rate against industry

Loan loss rate of 10% or less No of problem loans

Customer Good customer service Customer satisfaction survey

Competitive price Competitor information e.g. Moneyfacts

Customer satisfaction Customer tracker research

Value for money Customer tracker research

Internal Product development Increase in number of sales

New product success Increase in number of sales

Sales penetration Actual versus plan

Targeted marketing material Number of sales

Innovation and learning Enhance job skills Training sessions completed

Increased upward career movement Number of internal promotions

Continuous improvement Employee suggestions

Advantages

• The balanced scorecard ensures the evaluation and control processes are in place

• It provides a much wider perspective and incorporates the measures important to employees, customers and other external stakeholders

• Used to measure stakeholder value and therefore assess company performance against goals and expectations

• Provides a...