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Kaplan and Norton - Essay Example

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Kaplan and Norton

Their scorecard requires managers to answer the basic question for accounting: "How do we look at shareholders"
The Kaplan and Norton describe the innovation of the balance scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation." (Kaplan, Norton, 1996). So, the process of the Balance Scorecard planning helps to identify specific procedure and processes required at different levels of the organization. The organization's strategic, tactical, and operational goals and plans must be consistent and mutually supportive.
There are four primary cells in the Balance Scorecard: financial, customer, process, and people/learning. In each cell, company should identify the key drivers that help translate strategic goals to operational accounting issues. Each of those goals would also have a set of metrics. For example, under customer metrics, a company might look at growth rate.
(b) Using the balanced scorecard system allows the food retailer industry ...Show more

Summary

(a) The concept of the balanced scorecard was originally developed by Kaplan and Norton (1992). They took the view that 'what you measure is what you get', and they emphasize that 'no single measure can provide a clear performance target or focus attention on the critical areas of the business…
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