Usefulness of the Balanced Scorecard
Introduction
The purpose of this report is to assess the usefulness of the balanced scorecard (BSC) model within a business and strategic management accounting. To acquire such information, the model will be applied to a company and then critiqued giving both the benefits and any practical implications regarding the use of the BSC. The BSC was introduced by Kaplan and Norton (1992) as a new approach to strategic management accounting. ‘The purpose of the balanced scorecard is to guide, control and challenge an entire organisation towards realising a shared conception of the future’ (Chavan, 2009, p398). It involves measurement over four perspectives each defined by Kaplan and Norton (1992, p72) as: ‘Financial – How should we appear to our shareholder? Customer – How should we appear to our customers? Internal business Processes – What business processes must we excel at Learning and growth – How will we sustain our ability to change and improve?’
The objectives of the BSC should link directly to the vision and strategy of the business.
The case study company is the BMW Group (BMWG). It is an automobile manufacturing company offering mobility products over three brands, BMW, MINI and Rolls Royce. It is a worldwide organization that currently has 23 production and assembly plants in 13 different countries (BMW Education Programme, 2012). They also have over 107,000 (in 2011) employees producing a total of 1,738,160 vehicles and had a revenue of £68,821 million for the financial year ending 2011 (BMW Group Annual Report, 2011). Their competitors are businesses in the premium automobile market, such as Mercedes-Benz and the Volkswagen Group, which owns premium brands Audi and Porsche. The target customer base for the BMWG is within the upper middle class sector – professional employees high in the corporate world. The Group’s ultimate objective is to be the world’s leading supplier of premium products and services through to 2020 (BMW Group Annual Report, 2010).
The purpose of this report is to assess the usefulness of the balanced scorecard (BSC) model within a business and strategic management accounting. To acquire such information, the model will be applied to a company and then critiqued giving both the benefits and any practical implications regarding the use of the BSC. The BSC was introduced by Kaplan and Norton (1992) as a new approach to strategic management accounting. ‘The purpose of the balanced scorecard is to guide, control and challenge an entire organisation towards realising a shared conception of the future’ (Chavan, 2009, p398). It involves measurement over four perspectives each defined by Kaplan and Norton (1992, p72) as: ‘Financial – How should we appear to our shareholder? Customer – How should we appear to our customers? Internal business Processes – What business processes must we excel at Learning and growth – How will we sustain our ability to change and improve?’
The objectives of the BSC should link directly to the vision and strategy of the business.
The case study company is the BMW Group (BMWG). It is an automobile manufacturing company offering mobility products over three brands, BMW, MINI and Rolls Royce. It is a worldwide organization that currently has 23 production and assembly plants in 13 different countries (BMW Education Programme, 2012). They also have over 107,000 (in 2011) employees producing a total of 1,738,160 vehicles and had a revenue of £68,821 million for the financial year ending 2011 (BMW Group Annual Report, 2011). Their competitors are businesses in the premium automobile market, such as Mercedes-Benz and the Volkswagen Group, which owns premium brands Audi and Porsche. The target customer base for the BMWG is within the upper middle class sector – professional employees high in the corporate world. The Group’s ultimate objective is to be the world’s leading supplier of premium products and services through to 2020 (BMW Group Annual Report, 2010).
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