Scorecard Strategy Vision

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THE EFFECTIVENESS OF THE BALANCED SCORECARD IN ACHIEVING THE STRATEGY AND VISION OF ORGANISATIONS (A CASE STUDY OF BARCLAYS BANK OF GHANA LTD)

EXECUTIVE MASTER OF BUSINESS ADMINISTRATION (eMBA)

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CHAPTER 1: INTRODUCTION

1.1Background

Traditionally, managers have used a series of indicators to measure how well their organisations are performing. These measures relate essentially to financial issues such as business ratios, productivity, unit costs, growth and profitability. While useful in themselves, they provide only a narrowly focused snapshot of how an organisation performed in the past and give little or no indication of likely future performance.

During the early 1980s, the rapidly changing business environment prompted managers to take a broader view of performance and a range of other factors started to be taken into account, exemplified by the McKinsey 7-S model and popularized by the In Search of Excellence by Peters and Waterman. These provide a broader assessment of corporate health in both immediate and longer term. It is in this same regard that Robert Kaplan and David Norton of Harvard Business School in 1992 introduced the Balanced Scorecard with the aim of providing a balanced view of an organisation’s performance. Setting up the balanced scorecard, Kaplan and Norton argued that strategies often fail because they are not converted successfully into actions that employees can understand and apply in their everyday work.

The Balanced Scorecard is defined as a strategic management and measurement system that links strategic objectives to comprehensive indicators (Kaplan and Norton 1992). The key to the success of the system is that it must be unified, integrated set of indicators that measure key activities and processes at the core of the organisation’s operating environment. It takes into account not only the traditional ‘hard’ financial measures but three additional categories of ‘soft’ quantifiable operational measures. These include:

  • Customer perspective – that is how an organisation is perceived by its customers
  • Internal perspective – in which issues an organisation must excel
  • Innovation and learning perspective – in which areas an organisation must improve and add value to its products or services or operations.

Kaplan and Norton argue that measurements taken across these four categories are seen to provide a rounded Balanced Scorecard that reflects organisations’ performance more accurately and which helps managers to focus on their mission, rather than merely on short term financial gain. Accordingly it also helps to motivate staff to achieve the strategic objectives.

This thesis undertakes a case study of Barclays Bank of Ghana ltd. to ascertain its effectiveness in achieving the vision and strategy of the company.

  • Statement of the Problem

Most key performance measurement indicators talk about how well organisations have performed in the past.

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