Four perspective of balance scorecard

Four perspective of balance scorecard

·         Financial perspective
·         Customer perspective
·         Internal-business process perspective
·         The learning and growth perspective

Financial perspective:

The financial perspective is the most important aspect of balance scorecard. It contributes to the bottom line improvement of the company. Finances are critical for companies to monitor and measure.

The financial perspective to create balance scorecard are as follows:
·         Company’s turnover
four perspectives of balance scorecard·         Profit and loss margins
·         Fixed cost, variable cost and other costs
·         Working capital of organization
·         Investment capital
·         Annual growth of revenue
·         Market share
·         Net and gross profit ratio

The business life cycle of the company is highly dependent on financial goals. Therefore, these stages are comprised with following levels:
  1. Growth stage – this is the primary stage where the company has entered and started growth in market
  2. Sustain stage – at this stage, the company reaches to profitable level and sustain it within market
  3. Harvest stage – at this stage, the aim of the organization is to increase the cash flow and revenue and reduce capital requirements

Customer perspective

These perspectives focus on performance objectives related to customers. The main indicators in this perspective are evaluating performance from customer point of view. This includes customer feedback and customer satisfaction.

The main parameters taken by many organization for customer perspective are:
·         Product offering and service offering
·         Brand identity and brand image
·         Relationship with customers existing or new
·         Providing customer services
·         New product and services
·         Penetration into new markets
·         Customer satisfaction and retention of customers
·         Customer loyalty
·         Quick response on customer query and complaints

INTERNAL BUSINESS PROCESS PERSPECTIVE
The metrics of balance scorecard refers to internal business processes. This perspective enables the managers to know how well their business is running, and whether its products and services conform to customer requirements. In other words it enables to identify the strength and weakness of internal business process systems. The focus areas of business process perspective could be :
  1. Operations Management Processes
  2. Innovation Processes
  3. Customer Relationship Processes
  4. Regulatory & Environmental Processes

LEARNING & GROWTH PERSPECTIVE

The learning and growth perspective is the fourth element of balanced scorecard. This perspective identifies the training, development and learning needs in an organization. This perspective is broken down into the following components
·         Human capital
·         Information capital
·         Organizational capital

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