Balanced scorecard - Solving all problems of traditional accounting systems?
Research Paper (undergraduate) from the year 2009 in the subject Business economics - Business Management, Corporate Governance, grade: 1,0, University of applied sciences, Munich, language: English, abstract: Balanced Scorecard (BSC) is a modern management tool for performance measurement and was developed in the early 1990s to overcome the limitations of managing only with financial measures. The BSC supports translating organization’s strategy into action by defining specific goals and objectives associated with the organization’s vision, providing measures, and indicating initiatives to reach those goals. It helps to solve a big problem in the practice, namely the strategy concept is often brilliant but the realizations fail. The aim of this study is to analyze whether the Balanced Scorecard can solve all problems of traditional accounting systems. To answer this question, firstly, typical problems of traditional accounting systems are studied. Afterwards, the basic concept as well as benefits and drawbacks of BSC are viewed into details. Finally, the limits and difficulties of BSC realization in practice and initiates to avoid the pitfalls are illuminated. It could be stated, that the BSC provides a holistic thinking and a balance between financial and non-financial perspectives: finance, customer, internal business process, as well as learning and growth. It helps organization to implement strategy faster and more effectively. Moreover, BSC supports managers to perform the controlling tasks, namely planning, driving, briefing and monitoring organizational activities. However, the BSC also shows some limitations and difficulties whereby the pitfalls in the practise are based on design and process failures. To avoid these pitfalls useful initiates and special features for practical design of BSC should be implemented. Taking into account this rules BSC could be used as a powerful tool for strategic management accounting.
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achieve the organization’s Activity Based Costing avoid the pitfalls Balanced Scorecard Feedback BSC concept Bundesverband Deutscher Unternehmensberater business process perspective Business Process Reengineering business units cause-and-effect correlations Chrysler Group Communicating & Linking companies control-oriented financial framework Deutscher Unternehmensberater BDU difficulties of Balanced Economic Value Added Feedback & Learning financial perspective four perspectives growth perspective Incentives Budget Review Initiates to avoid internal business process Kaplan and Norton Key Performance Indicator Key success factors KSFs Learning & Growth learning and growth Learning Business Planning limitations and difficulties linkage Linking Balanced Scorecard longer-term strategic view Management Control System management tool organization organization’s strategy organization’s vision Personal Incentives Budget Planning & Capital problems of traditional process failures Return on Sales Review & Reorient stakeholders Strategic Management System Strategy & Vision tacit knowledge tool for translating Total Quality Management traditional accounting systems translating strategy Translating the vision Unternehmensberater BDU e.V. vision and strategy