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Balanced Scorecard
The balanced scorecard is a managerial approach based on the principle that four different elements of a business are interrelated. Thus, to optimize one, a strategy should seek to optimize all of them. The four elements in question are the financial, the business processes, the learning & growth and the customer. If one element is prioritized in the business, then the business will be unbalanced. The businesses that thrive in the long run are the businesses that are the most evenly balanced (QuickMBA, 2010).
According to the Balanced Scorecard Institute (2017), the balanced scorecard is used in a few different ways, including to communicate what management is trying to accomplish, to align the day-to-day work with strategy, to prioritize projects, and to monitor progress towards strategic targets.
Perhaps the easiest element of the scorecard is the one most managers are familiar with – the financial. Financial measures include things like sales targets, profit targets, market share and margins. For Quest's market entry partnership with Duzen, there are specific financial targets that have been set out for revenue and net income. The revenue target can also be expressed in market...
By targeting a specific share of the market, the revenue target will fall in line. The profit target will not only reflect revenue but also the cost structure of the joint venture, aligning managers with smart, measured growth rather than unsustainably expensive growth at any cost.
In order to achieve revenue and market share targets, the joint venture will need to deliver a certain amount of customer satisfaction. For a new venture – Quest is using this as a market entry – it is harder to measure customer satisfaction because there are few customers, none of which have been with the company long. But for the first year, Quest can measure customer awareness and perception of the brand. Awareness can be measured by the number of leads in their system – how many contacts do they have for their salespeople to follow up with. For perception of the brand, surveys can be conducted by a third party, or even Duzen, just to gauge after the first year how many people in the market have even heard of Quest. The more, the better.
Internal businesses processes are what will drive both the customer-facing KPIs and the margins. A…
References
Balanced Scorecard Institute (2017). Balanced scorecard basics. BSI. Retrieved August 1, 2017 from http://www.balancedscorecard.org/BSC-Basics/About-the-Balanced-Scorecard
Quick MBA (2010). The balanced scorecard. QuickMBA. Retrieved August 1, 2017 from http://www.quickmba.com/accounting/mgmt/balanced-scorecard/
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