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Managerial Accounting - Essay Example

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Managerial Accounting

The balanced scorecard method comprises of four different perspectives like, customer perspectives, financial perspectives, innovation and learning perspective and lastly the internal business process perspective. By the implementation of these perspectives the balance scorecard captures the lagging and the leading indicators which gives a balanced notion over the performance of the organisation. The leading indicators of the organisation measure the development of a new product, timely delivery of the product, satisfaction of the customer, competency of the employee, etc. However, under the lagging indicator of the organisation comes the financial measure of the organisation related to the profitability and its revenue growth. Thus the adoption of the balanced scorecard method is widely accepted around the globe because this enables the organisation in aligning staffs of all the levels under a single strategy for its successful execution. The main benefits that can be drawn from the implementation of the balanced scorecard method are the translation of the strategy into more easily understandable operational goals and metrics, alignment of the organisation around a coherent, single strategy, increasing the feasibility of strategy making it an attainable task for both the superiors and the subordinates as well, making the development of the strategy of the organisation a continuous process and lastly mobilizing change through effective and strong leadership (Johnson, n.d., pp.1-5). The main aim of balanced scorecard is to make a contribution towards the change of the factors related to the intangible assets and the long-term financial which would otherwise be uncontrollable. This has become feasible through the implementation of the perspectives of balanced scorecard. The main four perspectives of balanced score card has been mentioned earlier. Out of which the financial perspective shows the transformation of the strategy that leads to the economic success. Thus a double role is performed by the financial measure of the balanced scorecard. In application of the financial perspective of the balance scorecard in government arena differs from the private sectors. The objectives set by the financials of the private sector sets clear targets for profit seeking organisation which operates under a purely commercial environment. However, the success for the public undertakings is different in the sense that it is completely based on its efficiency and effectiveness to meet the needs of the constituencies. Thus, the financial perspective emphasises on the cost efficiency of the organisation so as to enhance the ability to deliver maximum value to the customers. The customer perspective of the balance scorecard method indicates the market segment under which the business of the organisation is operating. By means of appropriate strategic objectives, targets, measures and initiatives, the value proposition of the customer is represented in the customer perspective through which the organisation wants to draw competitive advantage in the envisaged market segments. In other words it can be said that the ability of the organisation to provide enhanced quality of goods and services through effective delivery services to gain overall customer satisfaction and service. However, in a ...Show more

Summary

In today’s complex system of business balanced scorecard is the most widely used performance measurement strategy. This measurement of performance strategy was initially developed by Dr. David Norton and Dr. Robert Kaplan in 1992. …
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Managerial Accounting essay example
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