“Balance Scorecard and

Its application”

Submitted by:
Jhil Patel-18bba36
Submitted to:
Dr. Abha Kalaiya
Points to be covered
• Introduction
• What is Balance Scorecard?
• Balance Scorecard Perspectives
• How Walmart applies it?
• Conclusion
 Introduction
• Introduced in 1992, by Robert Kaplan and David Norton.
• Balance scorecard is the most commonly used framework for ensuring that organizations
execute their strategies.
• Today around 70% of the fortune 1000 companies utilize the balance scorecard to help and
manage the performance.
• Robert Kaplan and David Norton first publicized the balance scorecard in the Harvard
Business review in the year1992, written a series of journal articles and published this concept
in their book, The Balance Scorecard.
 What is Balance Scorecard?

• A balance scorecard is a performance metric used to identify, improve, and control a

business’s various functions and resulting outcomes.
• It provides an organization with feedback of both the internal business processes and
external outcomes, which allows for continuous improvement of strategic performance and
results.
• The main objective behind balance scorecard is that how to translate an organization mission
and vision into an actual action.
Continued..
1.Balances financial and non
financial measures.

2. Balances short and long term

measures.
Balance Scorecard

3. Balances performance drivers with

outcome measures.

4. Leads to strategic focus and organizational

alignment.
Balance Scorecard Perspectives
• The balance scorecard is centered on four performance metrics or perspectives:
1. Customers
2. Internal processes
3. Financial
4. Learning and growth

• When implemented properly, each one of these perspectives contains four subparts
consisting of:
1. Objectives
2. Measures
3. Targets
4. Initiatives
Continued..
 Financial Perspective
• The financial performance perspective of the balanced scorecard addresses the question of
how shareholders view the firm and which financial goals are desired from the shareholder’s
perspective.
• In private companies, the financial perspective is the main objective (ultimate goal)- without
having to sacrifice the interests of other relevant stakeholders(community, government,
environment etc..)
• Here, the strategic goal is the long term shareholder value. The goal is driven by two factors,
namely:
a) Revenue growth
b) Cost efficiency
 Customer Perspective

• Customer perspective identifies targeted customer and market segments and measures the
organization’s success in the segments.
• It measures the level of customer satisfaction, customer retention and market share held by
the organization.
• There are four broad categories that Kaplan and Norton base the customer perspective
around:
a) Best buy
b) Product leadership and innovation
c) Customer complete solutions
d) Lock in
Internal business process
perspective
• The internal business process objectives address the question of which processes are the
most critical for satisfying customers and shareholders.
• A firm must concentrate its efforts to excel in these areas.
• Metrics based on this prospective allow the managers to know how well their business is
running and whether its products and services conform to customer requirements.
• Examples of internal process objectives might include:
a) Process improvements(such as, streamlining an internal approval process)
b) Quality optimization(such as reducing manufacturing waste)
c) Capacity utilization(using technology to boost efficiency)
 The Learning and Growth Perspective
• The learning and growth perspective includes measures such as employee satisfaction,
employee retention and skills set etc..
• Objectives in learning and growth perspective are drivers that encourage the implementation of
goals set in the financial, customer and internal processes objectives.
• It also identifies the infrastructure that the organization must build to create long term growth
and improvement.
• This perspective is broken into the following components:
a) Human Capital- skills, talent and knowledge
b) Information capital- databases, information systems, networks and technology infrastructure
c) Organizational capital- culture, leadership, employee alignment, teamwork and knowledge
 Walmart’s Balance Scorecard
1. The financial perspective:
• The three objectives are Increase revenues/total assets, Increase revenues/employees and
Increase return on investment.
• The strategy of Wal-Mart is cost leadership, increasing revenues/total assets is a strong
indicator of cost reduction. Further, increasing revenues/ employee will also help maintain its
cost leadership.
• Finally, increase return on investment will be possible only if Wal-Mart control its costs.
Each of its financial objectives is related to the strategy of Wal-Mart.
Continued..
2. The Customer Perspective:
• The three objectives are increasing average customer size of Wal-Mart, increasing customer
rating and reducing the number of customer complaints.
• The mission is to help save money so that they can live better.
• If Wal-Mart helps customers live better, they(customers) will give an improved rating to
Wal-Mart.
Continued..
3. The Internal process perspective:
• The three objectives are reducing administrative expense/total revenues, reducing lead time
from online orders to delivery, reducing waiting time for customers at counters.
• If Wal-Mart helps customers live better, it must make faster delivers and reduce waiting time
for customers.
• The another initiative of Wal-Mart is to train the employees so that they become more
efficient, use automatic packing and handling technology for speeding ups and change the
layout of the store so that more checkouts are opened.
Continued..
4. The Learning and growth Perspective:

• The three objectives are increase training hours per employee at Wal-Mart, reduce employee
turnover rate at Walmart and increase use of employee’s view.
• Their initiatives are they hire outside trainers. Managers should increase their time spent for
training, increase employee participation in decision making and also increase job rotation
and final one is give more decision making authority to employees.
Conclusion
• The balance scorecard model reinforces good behavior in an organization by isolating four
separate areas that need to be analyzed.
• These four perspective encompass the vision and strategy of an organization and require
active management to analyze the data collected.
• The balance scorecard is thus often referred to as a management tool rather than a
measurement tool.
Thank you