Teaching guide: Kaplan and Norton's balanced scorecard model (for last exams in 2024)
Highlights the range of influences on the success of a business beyond that of the traditional view of looking at profit. It combines non-financial measures alongside financial measures.
Model/theory
The model looks at the business from the point of four different perspectives; each one should be assessed using quantifiable data:
- financial perspective
- customer perspective
- internal business process perspective
- learning and growth perspective.
Key points
The model provides a more holistic view of the business than just looking at the profit the business generates. This provides a clearer idea as to whether the business is achieving its overall strategy and objectives.
It also provides a framework that the success of the business can be measured against. This allows a manager to assess the current position and create targets in order to improve and help achieve their overall objectives.
When you can use this
When discussing strategy, objectives, strengths and weaknesses of a business to assess if it's performing well.
When analysing the different components to suggest targets and changes in strategy in order to improve business performance.