Saturday, May 18, 2013

Balanced Scorecard: A Balanced Approach to Business Analysis


Balanced Scorecard is a modern business analysis model that provides a quite balanced or 'holistic' analysis of the business. This means that Balanced Scorecard does not mrerly focus on one aspect of business such as financial preformance, but rather focuses on the improvement of the business aspects all around.

Balanced Scorecard focuses on four main aspects as depicted by the diagram below.

Dimensions of Balanced Scorecard


01) Financial Perspective

Financial perspective focuses on the achievement of the financial objectives of the organization. Pretty much most of the objectives of a general business organization tend to financial in nature, such as, achieving a certain level of profits, reaching a specific revenue target, reducing costs etc. These are all important and relevant objectives for a business, but the Balance Scorecard shows that merely financial objectives are not enough for a successful enterprise.

02) Customer Perspective

This is where a business has to be concerned, in almost all the ways, about the customer. 'Customer is the King , so needs to be treated as such. Customer feedback on satisfaction level, required additional products or services, customers' expectations etc are variables of this dimension. Always the focus will be on providing a 'better' service to the customer so that the customer will retain and hopefully bring in more customers in the long term.

03) Internal Business Process Perspective

This aspect mainly focuses on the improvement of the process of the business. Aspects such as improving the efficiency, productivity, success of the internal controls, systems and processes etc are the variables of thsi dimension.

04) Learning and Growth Perspective

This says that an organization always has to be positive about 'learning and growing'. Or simply put, the organization has to continuously be improving and keeping up with the changing environment. Employee and management training and development, improving technologies used in organization, focus on expansions and growth are a few variables of this dimension.


Balances Scorecard is a relatively modern business analysis tool and is being recognized as a valuable tool for measuring business performance. An overall idea of the concept is critical for the successful management of the modern business organizations. 

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