BALANCED SCORECARD STRATRGIC TOOL

Running head: BALANCED SCORECARD
Balanced Scorecard
Name of the Student
Name of the University
Author Note

BALANCED SCORECARD1
Balanced Scorecard
The Balanced Scorecard is a strategic tool used in the measurement of the overall
performance of an organization. Dr. Robert Kaplan and Dr. David Norton initially introduced it
in 1992 through an article titled ‘The Balanced Scorecard – Measures That Drive Performance
(Kaplan & Norton, 1992). The key purpose of the Balanced Scorecard is to measure the impact
of all the necessary factors important in determining the overall performance of an organization.
Tools existing prior to the scorecard mostly focused on the financial aspects of the entity. Their
focus laid on improving the profitability of the firm by identifying areas where the financials
could be improved. However, they ignored other important aspects like stakeholders, efficiency
of the internal system and the learnings of a firm from its previous mistakes. The Balanced
Scorecard overcomes these limitations by providing information about a company as a whole
rather than simply focusing on a particular aspect. It aims to align the strategy of the business
with its objectives to identify the areas where value can be created for the business. There are
four major aspects of a Balanced Scorecard (Hoque, 2014). These include the customer
perspective, internal processes, innovation and learning perspective and the financials of the
entity. The customer perspective measures how the consumers view an entity and what are their
expectations from it. The internal process aspect measures the effectiveness of the processes
implemented by the organization. The internal business perspective tries to form objectives
based on the demands of the customers. This perspective tries to form policies and procedures
that are helpful in meeting the customer expectations. The learning and growth aspect measures
how well an entity is able to capture the knowledge from different sources and how effectively
the employees are able to use it. This is essential in an entity obtaining competitive advantage
over the remaining firms (Hakkak & Ghodsi, 2015). It is also useful in improving the internal