Question

what are the criteria to measure enterprise performance that are provided by Balance Scorecard?

Answer 1

As per Balanced Scorecard, the four parameters used for assessing enterprise performance are the following:

•          Financial Perspective
•          Customer Perspective
•          Internal Process
•          Organizational Capacity

Financial Perspective – This parameter is used to ascertain Revenue Growth and Increased Profitability. For Revenue growth, it is required for the organization to gain new business/revenue streams, otherwise they must maintain the existing business for stability. For Increased Profitability, the organization needs to either lower expenses or increase margins.

Customer Perspective – This parameter focusses on three important aspects, which are Competition, Value Proposition & Product Mix. By differentiating oneself from Competition, the organization can focus on attracting new customers and retaining existing customers and deepen relationships. Value Proposition helps to define operational excellence, customer intimacy and product leadership. Organizations must define their Mix of Product, Price, Service, Relationship and Image.

Internal Process - This parameter enhances the efficiency and effectiveness of the organization and it consists of levers like Operational Processes, IT Systems, Customer Service, Marketing Management Processes, Service Development, Innovation Processes, etc.

Organizational Capacity – This parameter focused on aligning the resources to the ultimate organizational objective. It consists of levers like Employee Capabilities, Skill Capabilities, Employee Life cycle activities, etc.