Assignment 1

Assignment 1
Course: Strategic Management

Instructor: Prof. Hany El-Hifnawi
Student: Abraam Fahmy
1. How does the Balanced Scorecard get around the problem of just using financial performance to
measure overall performance? Why financial only is not enough?
Balanced Scorecard includes non-financial as well as financial measures. This approach is especially useful
given that research indicates that non-financial assets explain 50% to 80% of a firm’s value.
The balanced scorecard combines financial measures that tell the results of actions already taken with
operational measures, which are the drivers of future financial performance.
In the balanced scorecard, management develops goals or objectives in each of four areas:
Financial: How do we appear to shareholders?
Customer: How do customers view us?
Internal business perspective: What must we excel at?
Innovation and learning: Can we continue to improve and create value?
Each goal in each area is then assigned one or more measures, as well as a target and an initiative.
2. Why quantification of Vision is important in BSC? Why ENOC used consultant for implementation
in addition to use of multifunctional Task Force?
Quantifying the vision is creating tangible goals that represent achieving the vision. When using the balanced Scorecard
methodology, the key performance indicators for the vision are the 3-5 most significant goals at the top of the BSC map.
These KPIs have a goal for the final year of the vision as well as a breakdown every year up to the final year.
ENOC vision: “to be regional integrated oil & gas group highly profitable and socially responsible towards employees,
community and environment”.
Consultants play an important role in the successful implementation of the scorecard project bringing lacking knowledge
and serving as an outside expert. The main functions of consultants in the balanced Scorecard project are planning,
managing, and facilitating the scorecard development process, coordinating working terms, facilitating the process by
with executive team reaches agreement on key strategic and scorecard issues.
3. Why do we have to evaluate initiatives that are in line with Strategy?
It is important to test initiatives with what-if scenarios and update them based on the results. When you apply the
revised model, it not only enhances your initiative, but also helps you take actions that take you closer to your objective.
Well, opting for an enterprise performance management software would help, but you need to ensure that it keeps
evolving with the way your organization works. This results in the organizations not actually knowing what truly drives
their business. What are the key performance indicators, metrics, etc. that drive your overall business objective?
A scorecard would be a perfect way to monitor the strategic alignment within the organization. From top-down the
leadership team gets to see the business performance dashboards and daily performance dashboards that provide
analytics and meaningful visualization of the performance at various levels.
4. Bain consultant indicated in a last study that BSC is the most widely used out of 25 management
methodologies? How you see its application in your firm?
The BSC has gained worldwide popularity. Spender (2014) noted that the BSC has been adopted in more than half of all
major firms. As the BSC has been more and more extensively used, executives appreciated the comprehensive
performance measurement system. However, they wanted to use this system in a more powerful way than just
measuring performance. They wanted to use the BSC in a new application – as the strategy execution system (Kaplan &
Norton, 2004).
Currently, the BSC is treated as a complete strategy management system rather than just performance measurement
method (Kaplan & Norton, 2008; Niven 2005; White 2004). One of the most powerful tools developed under the BSC
concept umbrella is the strategy map. The strategy map could be seen as a one-page picture showing the paths of the
firm's movement from the present to the desired future. This poster outlines what the organization has to do in four
perspectives of the BSC in order to successfully execute its strategy (Niven, 2008). The crucial feature of strategy map is
its simplicity - one-page picture can tell us the short story that explains how the organization defines its success and
signals to everyone what must be done in order to execute the strategy (Niven, 2008; Smith, 2007).
Pharmaceutical companies need organizational performance measurement systems that are tailored to and match their
specific goals and characteristics. The proposed approach is a step towards introducing such systems. The main
advantage of the proposed BSC model can be summed up as follows:
 Position in international rankings – A well designed and updated BSC model enables to understand the reasons
of a specific positioning and improve the quality performance;
 The system can be adjusted to the changes in environment – BSC measures should be verified periodically and
checked if the current set of indicators is still relevant to monitor the organizational performance;
 Measurement of intangible assets – human capital.

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Course: Strategic Management

3. Why do we have to evaluate initiatives that are in line with Strategy?

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