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The balanced scorecard and key performance indicators Assignment
The balanced scorecard and key performance indicators Paper
Monitoring the performance of a business is a fundamental activity in the planning process and decision-making. Enterprise performance indicates the ability of a company to maintain current operations and improve innovation. As such, a scorecard is kept to measure the performance of the essential functions of a firm. This paper explores a balanced scorecard, its perspectives, and the examples of KPI used in measuring performance.
The four performance dimensions namely customers, financial, innovation, and internal processes are measured by a balanced scorecard which is a collection of performance goals and outcomes. The balanced scorecard recognizes that companies have responsibilities to different stakeholders (Kaplan, & Norton, 2010). This performance metrics enable the corporation to balance its productivity relating to the four dimensions. The four aspects are also referred to as the perspectives of a balanced scorecard.
The first viewpoint, financial, relates and measures how the strategies developed by the management team and the operations undertaken by the company contribute to financial wealth. It, therefore, identifies the beneficial and costly plans and tasks and how they enhance value to the shareholders (Kaplan, & Norton, 2010). Secondly, the customer perspective relates to adding value to customers. It indicates how the strategies and plans that a company implement adds value to their consumers.
The internal process indicators show how the operations of an organization affect the clients and financial outcomes. The management can intervene and influence the overall results. Lastly, the innovation perspective, also known as learning and growth, measures the capacity of a firm to grow in the long haul through innovation. It does so by determining the strength of the company’s infrastructure (Kaplan, & Norton, 2010).
Each of the balanced scorecard dimensions has some major performance indicators. Profit, a financial perspective KPI, is a measure of how much returns the business generates. It comprises of the gross and net profit margins. It not only shows how successful an organization is but also determines the returns of the shareholder. In a retail business, profit determines whether the enterprise will still be a going concern in the near future and the profits for the owner (Parmenter, 2015). ....................GET A PLAGIARISM FREE COPY