Measuring Business Strategy

Through
Balance Scorecard

Paramjit Sharma
Organization Organization Organization Organization

Using balance scorecard

2 tasks

Building Using
Scorecard Scorecard

Paramjit Sharma
 Perspectives Generic Measures
Building
Scorecard
Return on Investment,
Financial Economic value Added

Customer Satisfaction, Retention,

Market and Account Share

Quality, Response time,

Internal Cost New Product

Employee Satisfaction &

Learning Information System

Paramjit Sharma
Financial Perspective

Paramjit Sharma
Linking Financial Objectives to Business Unit Strategy

3 Stages

Growth

Sustain

Harvest

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Growth

Early stage of life cycle

Products having Growth Potential
Committing Resources
Expanding production facilities
Operating capabilities
Investing in systems
Investing in Infrastructure
Investing in distribution network
More cash outflow
Financial Objective-%age
sales Growth
customer groups

Paramjit Sharma
Sustain
Stage

Attract investments
Required extra return
Maintain existing markets
Growth is expected
Enhancing improvements
Profitability
Return on Investment
Economic Value Added

Paramjit Sharma
Harvest
Stage

Maturity phase
Enough to maintain
equipments
No expansion
New invest with Short
Pay Back
Maximize Cash flow
Reduction in WC Requirements

Paramjit Sharma
 Strategic Theme for the Financial Perspective

Growth Sustain Harvest

Revenue Growth Mix

Cost Reduction/Productivity
improvement
Assets Utilization/Investment Strategy

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

•Sales Growth
•Market Share
•Revenue From New Products
Services &
Customers

Paramjit Sharma
 Strategic Theme
Cost Reduction
Revenue Growth Asset
Productivity
And Mix Utilization
Improvement

Growth
Sales Growth rate by
Segment, Percentage Investment(% Of Sales)
Revenue from new Revenue/Employee R & D (% of Sales)
Products, services…
Business Unit Strategy

Share of Targeted
Customers WC Ratios
Cost versus Competitors (Cash to Cash Cycle)
Cross Selling

Sustain
Cost rates
% Revenue from new ROCE
Application Indirect Expenses
( % of Sales) Assets Utilization
Customer & Product line
Profitability Rates

Harvest
Customer & Product line
Unit Costs Payback
Profitability
(Per unit of output
% Unprofitable Customers Per transaction) Throughput

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

New Product/Service

•% Revenue Increase

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

New Application

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

New Customers and

Markets

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

New Relationship

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

New Product and

Service Mix

Paramjit Sharma
Strategic Theme for the Financial Perspective

Revenue Growth Mix

New Pricing Strategy

Paramjit Sharma
Strategic Theme for the Financial Perspective

Cost Reduction/Productivity
Improvement

Increase Revenue
Productivity

Paramjit Sharma
Strategic Theme for the Financial Perspective

Cost Reduction/Productivity
Improvement

Reduce Unit Costs

Paramjit Sharma
Strategic Theme for the Financial Perspective

Cost Reduction/Productivity
Improvement

Improve Channel
Mix

Paramjit Sharma
Strategic Theme for the Financial Perspective

Cost Reduction/Productivity
Improvement

Reduce Operating
Expenses

Paramjit Sharma
Strategic Theme for the Financial Perspective

Asset Utilization
Investment
Strategy

Cash to Cash Cycle

Paramjit Sharma
Strategic Theme for the Financial Perspective

Asset Utilization
Investment
Strategy

Improve
Asset
Utilization

Paramjit Sharma
Questions

Paramjit Sharma