Evaluating Balanced Scorecard Implementation at Microsoft

This report examines the suitability of the balanced scorecard (BSC) for Microsoft, a leading multinational technology company. It begins with an overview of Microsoft's mission, ambitions, and strategy, followed by an introduction to the BSC model and its four perspectives: financial, customer, internal business process, and learning and growth. The report details the benefits of the BSC, including its ability to focus on breakthrough performance, integrate community programs, and support operational strategy. It highlights the features of a balanced scorecard, such as strategic objectives, strategy mapping, and effective communication. Furthermore, the report contrasts the BSC with traditional performance measurement systems, emphasizing the BSC's suitability for dynamic environments and its comprehensive approach to both financial and non-financial measures. The report concludes by assessing the BSC's overall suitability for Microsoft, considering its potential to enhance performance measurement and align with the company's strategic goals.

Management Accounting
Microsoft
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Contents
Introduction......................................................................................................................................2
Overview of company......................................................................................................................3
Ambitions of company................................................................................................................3
Strategy........................................................................................................................................3
Balanced Scorecard.........................................................................................................................4
Financial perspective...................................................................................................................5
Customer perspective...................................................................................................................6
Internal business process perspective..........................................................................................6
Learning and growth perspective.................................................................................................7
Major benefits..............................................................................................................................8
Features of a balanced scorecard.....................................................................................................8
BSC is different from traditional performance measurement systems............................................9
Suitability to firm’s client..............................................................................................................10
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

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Introduction
The aim of the report is to talk about identification of the suitability of the balanced scorecard for
the client’s firm. Being the recently employed consultant in the management consultancy firm
the work that is assigned to you is the evaluating of the budgeting system of the client’s firm that
is Microsoft. The company is one of the well-known and leading companies across the world.
Recently the CEO of the Microsoft Company has attended a seminar related to the BSC in one of
the private companies. After the seminar, the company is looking to know the whether BSC
model is suitable for the company or not. This report is prepared with the motive to provide the
suitability of the model to the company. Moreover, the report will also include the difference
between the traditional approach and the balanced scorecard model of the company. In the end,
this report will reflect the suitability of this approach to the firm.
It is essential for any business to analyze all the features and benefits of the accounting method
before implementing the same in the business. Moreover, the companies also check the
suitability of the approach with their current business strategies because every company brings
changes in their business strategies and objectives considering the changes in the environment in
which the company performs its operations.

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Overview of company
Microsoft Corporation is a well-known American multinational technology company with the
headquarters in Redmond, Washington. The company develops, licenses, manufactures, supports
and sells computer software, consumer electronics, and the services. The company was
established by Paul Allen and Bill Gates in the year 1975 on 4th April. The company offers its
services in approx. more than 190 countries across the world (Microsoft, 2018). The mission of
the company is to empower every person and then every company that is available on the planet
to accomplish the more. The company believes in the innovation to reinvent productivity so that
their operations become a competitive advantage. The company believes in the technology
innovation which is one of the critical to the sustainable social development and the economic
growth.
Ambitions of company
 Reinvent business processes and productivity
 Build the intelligent cloud platform
 Formation of more personal computing
Strategy
The company’s strategy is to form the best-in-class platforms and productivity services for an
intelligent cloud. The company brought the changes in their phone strategy that result in the
reduction in the units that are sold and linked with the expenses in the fiscal year 2016 and 2017.
This change in the strategy brought the opportunity under which they can increase the strategic
investment and acquisitions to drive the cloud innovation (Microsoft, 2018).

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Balanced Scorecard
A balanced scorecard is a model that is used by the company for the measurement of the
performance to enhance and determine the numerous internal functions of a business and their
resulting external outcomes. This method also provides the appropriate feedback to the managers
of the company so that they can improve their operations and can effectively achieve the goals
and objectives of the company (Agarwal, 2018). This modern approach of management
accounting was first presented by Dr. Robert Kaplan along with Dr. David Norton. The BSC
model is used by the organization to strengthen good behaviors in a company by isolating the
four different areas that are essential to be analyzed by the company (Balanced Scorecard
Institute, 2017).
The four legs of the balanced scorecard involve business processes, finance, customer and
learning, and development. This method is used by the company for attaining the objectives,
measurements, initiatives, and targets that result from these 4 primary functions of a business.
The company who make use of the balanced scorecard can easily determine the factors that
hinder the performance of the company (Investopedia, 2018). The below given is the image of
the balanced scorecard with its 4 perspectives.

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(Source: Kaplan, Norton and Rugelsjoen, 2010)
The below given is the description related to the four perspectives of the company that helps
them in measuring the performance.
Financial perspective
This is one of the most important measures on which the companies mostly rely. This measure of
BSC helps the company in measuring on the basis of return on investment and net income of the
company. The reason behind the use of this basis is that almost all the companies make use of
these measures to evaluate the financial performance of their company. This measure follows the
mutual language of comparing and analyzing a financial aspect of different companies (Agarwal,
2018). Most of the investors who invest their amount in any company with the motive of profit
consider these factors as the major factors. Therefore, these factors are considered as one of the
important measures for the shareholders. Along with this if any of the banks are lending their

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funds to the company they ensure that the company is capable enough to pay back the loan taken
by them which is possible with the help of these measures only. Moreover, the company who is
conducting these financial measures can easily understand the issues faced by the shareholders
and lenders with the help of the financial perspective of BSC.
Customer perspective
Balanced scorecard includes customer perspective which is another one of the important
measures which are evaluated by most of the companies. This method contributes to identify the
customers and the market subdivision in which the business will perform the activities and
compete with others (Marr, 2018). Along with this, this method supports the company assesses
the units of the corporate performance in these targeted segments. This measure includes the
different elements which are core and non-specific measure but are essential for the company
such as customer satisfaction, customer retention, customer profitability and many others
(Bergeron, 2017). On the other hand, this specific measure consists the evaluation of the value
proposition that the company provides to its targeted customers.
Internal business process perspective
The internal business process of this modern approach to the accounting helps the company
critical evaluating the internal business activities that are performed by the company in the
present business environment (Smith, 2010). This perspective measures the value that the
company provides for attaining and retaining the customers in the market. Moreover, this method
meets the expectations of the shareholders and they will be able to get the maximum returns form
the investment made by them (Perkins, Grey and Remmers, 2014). The company can easily
achieve the success well all its internal process work smoothly and they will be able to maintain
the consistent improvement in the products and services.

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Learning and growth perspective
This is one of the important perspectives of the BSC model as this model contributes to improve
the capabilities and skills of the personnel of the company. Managers know the fact that it is very
essential to provide the training to the employees because without training they won’t be able to
work effectively and they will not contribute to the productivity of the company. The key
measures that are used in the BSC model to analyze the manager's performance are employee
satisfaction and retention. Along with this, they can measure the growth in the operations of the
business because this reflects the productivity of the company.
Employee’s satisfaction: - The employee’s satisfaction is one of the essential factors which is
required to be considered by the company. The employee satisfaction comes in an organization
when the morale of the employees increase. The high employee’s satisfaction will contribute to
the enhanced customer satisfaction. Manager of the company tries to satisfy the needs of the
employees available in the company. They can motivate the personnel towards the objective of
the company along with this they can take the feedbacks through an interview, one-on-one
meetings and can observe the employees at work. This measure helps them in understanding the
lacking point and will contribute to resolve the issues which are essential for the employee’s
satisfaction.
Employee retention: - It is another important measure that is required to be maintained by the
company because of employee's works as an asset to the company. Moreover, this method helps
in analyzing the loopholes in the operations due to which the employees are not retaining in the
company. In addition, the company incurs the extra cost if they hire new employees in the place
of the employee who left the organization.

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Employee productivity: - It determines the necessity of the productivity of the employees in an
organization. Employees in the organization can generate both financial and physical output.
Major benefits
 BSC approach helps the companies in focusing on what has to be done in relation to form
a breakthrough performance.
 BSC approach works like an integrating device for a range of community programmes.
 This approach provides a support to the business for making the operational strategy by
decoding it into different measures and targets (Erbasi and Parlakkaya, 2012).
 BSC helps in the breaking down the corporate level measures so that the local managers
and personnel of the company can analyze what they have to do to for bringing the
improvement in their performance.
These are some of the benefits that a company get if they will decide to apply the balanced
scorecard model in their business.
Features of a balanced scorecard
 Strategic objectives and strategic initiatives are prepared by the company with the help of
this method.
 Most of the companies make use of this modern approach to implement the strategy
mapping that helps them to see where a value is added to an organization (Lueg, 2015).
 BSC measure those perspectives which are crucial for the company.
 BSC enhance the effective communication among the departments of the organization
(Balanced Scorecard, 2018).
 BSC gets align with the day-to-day operation strategy of the company.

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 It provides the support for prioritizing projects, products, and services of a company.
 This method provides the feedback to the company after measuring all the perspectives.
 BSC model measures and monitors the progress towards the strategic targets that can be
formed with the help of this model.
 BSC model highlight company's strategy by emphasizing the cause-and-effect
relationship of the company (Hendricks, et.al, 2012).
BSC is different from traditional performance measurement systems
BSC model is one of the modern approaches to the accounting method which is used by most of
the companies in the current working environment. This method is totally different from the
traditional performance system. The traditional accounting management system only keeps the
record through the financial analysis. Though, on the other hand, BSC model include the 4 major
perspectives that is mostly taken care by the company while evaluating the performance. These 4
perspectives provide the analysis of the financial and non-financial measure that can help the
company in improving the performance of the company (Cooper and Ezzamel, 2016).
The business prefers BSC model to the most because they found this model is also suitable for
the dynamic environment of the company. On the other hand, the traditional approach of the
accounting is different as it is not suitable for the business who deals with the changing
environment (Coe and Letza, 2014). BSC model measures the performance of the company and
provides the feedback to the company considering the analyses. The traditional method just
evaluates the financial aspect and do not provide the information related to the improvement and
capabilities of the company. The analysis reflects that the BSC model removes all the limitation
of the traditional model. The limitations of the traditional model are; it doesn't get aligned with

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the strategies and vision of the company, less accurate, only financial perspective and many
others.
The balanced scorecard model recovers all the limitations that are available under the traditional
model. This BSC model is linked with the organization's vision and strategy which is essential to
measure the perspective considering in mind about the vision and strategy of the company. The
evaluation is done considering the strategy which is effective for the company as they can get
more accurate results and can make the future strategies to improve the performance of the
company (Striteska and Spickova, 2012). Moreover, the accuracy of the performance evaluations
is based on the correct implementation of the BSC model.
This is the fact that the implementation of the BSC model in an organization is one of the
difficult things to do. Therefore, the companies will be requiring an accountant expert who can
help for implementing the BSC model within the organization. Though, the traditional
accounting methods are not difficult to implement within an organization. These traditional
methods include cash flow, fund flow, profit and loss statement and many others. In the end,
there are many differences that are available in both the methods of the accounting management.
According to the analysis, this is the fact that BSC model is the appropriate model that is
required to implement by the company as this is suits to the current need of the company and the
environment in which they are operating its business.
Suitability to firm’s client
This section of the report will include the details which explain the suitability of the BSC model
to the Microsoft Company. The BSC will support the Microsoft Company in achieving the
returns on people, customers, processes and the information technology. BSC will help the

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company to accomplish the success faster and more reliable so that they can achieve the vision of
a company (Biazzo and Garengo, 2012). Below given are some of the aspects which will help in
analyzing the suitability of the method for the Microsoft Company.
 BSC offers some specific capabilities to the company that supports the operations of the
company. These capabilities are used by the company in their product and services
development which will help the company in managing the standard development tool
which is essential for the IT departments (Keyes, 2016).
 BSC model helps the company in managing the knowledge management at all the level
of departments of the organization and this knowledge permit sharing and control of the
documents, workflow, document searching and many others. All these aspects contribute
in improving the performance of the company which is essential for the company at this
point of time.
 BSC model supports the company in an operational and actionable tool that is essential to
enhance and work in conjunction with the BI tools in the company.
 Balance scorecard model is effective for the companies as this method supports the
company to determine the performance and capabilities (Northcott and Ma'amora
Taulapapa, 2012). These analytic capabilities of the company can effectively bridge the
gap between the problem identification and the analysis to determine the underlying
opportunities for the performance enhancement.
An organization that is looking to implement balanced scorecard that is striving to become a
strategy focused organization. Strategy focused organization is Microsoft that exploit the BSC
and technology so that they can become agiler. The implementation of the BSC will allow the
organization to attain incremental returns on their processes, customers, employees, and