Strategic Financial Management-Balanced Score Card: Assignment-2
Strategic Financial Management-Balanced Score Card: Assignment-2
Strategic Financial Management-Balanced Score Card: Assignment-2
ASSIGNMENT-2
Methodology
Common uses
Financial perspective addresses the question of how shareholders view the firm and which
financial goals are desired from the shareholders perspective. The specific goals depend on
the company’s stage in the business cycle.
For example:-
The customer perspective addresses the question of how the firm is viewed by its customers
and how well the firm is serving its target customers in order to meet the financial objectives.
Generally the customers view the firm in terms of time, quality, performance and cost. Most
customer objectives fall in to one of the four categories. The following table outlines some
examples of specific customer objectives and measures. :-
Internal business process objectives address the question of which processes are most critical
for satisfying the customers and shareholders. These are the processes in which the firm must
concentrate its efforts to excel. The following table outlines some examples of process
objectives and measures.
delays Plan
This perspective includes employee training and corporate cultural attitudes related to both
individual and corporate self improvement. In the current climate of rapid technical changes
and global competition, it is becoming necessary for an organisation to learn compulsorily.
A company's ability to innovate, improve, and learn ties directly to the company's value. Only
through the ability to launch new products, create more value for customers, and improve
operating efficiencies continually can a company penetrate new markets and increase
revenues and margins—in short, grow and thereby increase shareholder value.
The integration of these four perspectives can be shown in a graphical way as:-
For each perspective of the balanced score card, four things are monitored.
5
The measurements should be focused on a single strategy and be linked, consistent and
mutually reinforcing. Some generic measurements are presented in the table below.
Internal business Includes measurements along the internal value chain for:
process
Innovation - measures of how well the company identifies the
customers’ future needs.
CHARACTERISTICS
It is the method by which this 'most relevant' information is determined (i.e. the
design processes used to select the content) that most differentiates the various
versions of the tool in circulation.
It is flexible.
The Balanced Scorecard translates Mission and Vision Statements into a
comprehensive set of objectives and performance measures that can be quantified and
appraised.
Balanced score card allows managers to consider both soft and hard types of measures
in a balanced way.
The balanced scorecard provides a framework for managers to use in linking different
types of measurements together.
An important part of the balanced scorecard concept is the emphasis on establishing a balance
between four types of measurements. These types of measurements include:
2) External (for shareholders and customers) and Internal (for critical business
processes, innovation, and learning and growth),
4) Objective measures (e.g., financial) and Subjective measures (e.g., many
non-financial). See the Exhibit below (item 7) for the idea.
Short
Financial vs. Term vs.
Generic Non- Long Leading vs. Internal vs.
Perspective Measurement financial Term Lagging External
Lead &
Lagging
Organizational Employee
Learning retention, Non-financial Long term Lead & Internal
Technology, Non-financial Long term Lagging Internal
Climate for Leading
action or Non-financial Long term Internal
Culture. Leading
Financial Perspective
Financial perspective concerns itself with increasing the ROI for the organization. SOA
Financial Perspective consists of objectives that SOA needs to achieve to be financially
successful. These are explained below
Change The revenue for any organization can be increased by increasing the markets
Channel to which its products can be exposed to diversified market. Customers utilize
Mix to channels as conduits to access the services of the organization. Multiplying
Increase these conduits increases the ability to access to these services
Revenue
Reduce There is a cash-to-cash cycle for any organization. This is the time between
Operatin the account payable to account receivable. This objective deals with the
g Cost ability to reduce this time.
15
Reduce The products that the organization supplies / sells will always have an actual
Risk demand and a forecasted demand. The gap between the actual and forecasted
demand causes organizations to lose money i.e. when there is more demand
than forecast, lost market and when there is more forecast than demand,
unused inventory. This objective is for reducing this gap
Customer Perspective
External External Partners are vendors who are integrated into the organizations
Business supply chain. This includes vendors who are connected to the enterprise as
Partners supply's supply or demand's demand. This category also includes
customers who are serviced indirectly through external business partners
(B2B2C)
Compliance Audit teams which are interested in establishing policies so that the
Team organization is compliant with internal and external standards
Ease of Ability to integrate internally and externally with ease. Ease of integration
Integration can be characterized by lack of overhead in integration, ability to adopt to
/ Agility change / entropy (Agility) and minimal technology debt (low technology
issues).
Pervasive This value proposition describes the capability to extend the information
Informatio access across multiple channels, multiple semantic formats, multiple data
n Access protocols across multiple partners thereby ensuring the end customers get
access to it wherever they need it
Process Perspective
SOA Process Perspective is divided into 3 types of processes and groups the process
execution along the lines of these three types
Innovation
These are the processes in SOA that create innovation in the enterprise. Innovation primarily
leads to change in other processes mostly for the betterment
Technolog Processes through which new technologies are onboarded into the
y Selection enterprise. This process has to be cognizant of the partner capability to
Process ensure the greater goal of best strategy as opposed to the tactical goal of best
practices only while balancing it with the aspect of being standards based.
Best Process through the standards are created, adopted, governed and executed
Practices in the enterprise. This plays a key role in establishing the standards based
and value proposition
Standards
Adoption
Operational
Operational processes are the activities through the customer value propositions are
facilitated. These processes are described below.
These are governance processes that ensure that the objectives are being achieved in a
rightful manner. These governance processes could be internal governance processes to
conform to internal organizational policies or they could be external such as PCI, PII,
HIPAA, etc.
Service Process for managing the lifecycle for service provider and service
Governanc consumers. As service providers move to newer versions of service
e endpoint due to functional or non-functional requirements, the consumers
should be migrated appropriately so as to up the QoS. Service governance
also ensures that the technology and security standards are followed by the
service implementation and service consumption
Complianc There are typically two aspects to compliance and audit function i.e. the
18
e and Audit policy / design time aspect and the runtime aspect. This process is to
facilitate the ability to design these policies for internal and external
compliance and instrumentation of the transaction pipeline to conform to
the policy guidelines
This perspective highlights the objectives that need to be achieved to facilitate the process
perspective. These are described below
Training Training the enterprise to embark on the SOA program. This includes
establishing change management processes to raise SOA awareness across
the enterprise and identifying and addressing large knowledge gaps to
facilitate voluntary compliance to the SOA Program.
Core Group Training the core participants of the process perspective to ensure that the
Skilling process can be executed efficiently.
Participation to ensure the appropriate standards are being adopted by the enterprise.
and This objective also involves the aspect of contributing back to the
Contribution community to help the industry. The standards can range from horizontal /
business agnostic standards to vertical / business specific standards.