balanced scorecard - Prof. Ranjan Kumar Bal

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Transcript balanced scorecard - Prof. Ranjan Kumar Bal

WELCOME

BALANCED SCORECARD

A NEW MEASURE OF ENHANCING ENTERPRISE EFFECTIVENESS Prof. Ranjan K. Bal Former President, Indian Accounting Association

INTRODUCTION

HBR: One of the most influential management ideas of the past 75 years.

New tool for measurement of overall / holistic corporate performance.

Shift

from

lopsided approach

to a

one balanced

Translate companies vision and strategy into tangible objectives and measures.

Enhances Enterprise Effectiveness

KPMG study

On “Measuring Performance of the

Organizations of the Future

” FINDING: “Over-reliance on summary

financial performance measures (Viz. ROI) was hindering an organization’s abilities to create future economic value

.”

BSC

Robert Kaplan & David Norton

1992 HBR : “The Balanced Scorecard : Measures that Drive Performance” 1996 – BOOK : “ The Balanced Scorecard :Translating Strategy into Action”

BSC

 Balances:

Financial and Non-financial performance measures

Evaluates

:

Short-run and long-run performance in a single report.

APPLICATION OF BSC

Many Fortune 500 Companies More than 50 Indian Companies

Tata Group Companies Dr. Reddy’s Lab Bharati Tele RPG Godrej

PERSPECTIVE OF BSC

FINANCIAL CUSTOMER VISION & STRATEGY INTERNAL BUSINESS PROCESS LEARNING & GROWTH

BSC

Enables an Organization to answer the following questions:

How should it appear to its

shareholders

?

How should it appear to its

customers

?

What business

processes

must it excel at ?

How will it sustain its ability to

change

& improve ?

FINANCIAL PERSPECTIVE

REVENUE / INCOME GROWTH COST MANAGEMENT ASSET UTILISATION ROI

CUSTOMER PERSPECTIVE

CUSTOMER RETENTION CUSTOMER ACQUISITION CUSTOMER SATISFACTION MARKET SHARE

Customer is the only valid reason for the existence of a business.

Peter F. Drucker

INTERNAL BUSINESS PROCESS PERSPECTIVES VALUE CHAIN

: R & D DESIGN PROD. MARKETING DISTRIBUTION CUSTOMER SERVICE

Process Innovation Product Reengineering: Quality Operational Efficiency - IT

HUL & INFOSYS “Reengineering is the fundamental rethinking and redesign of business processes & products.”

Marketing and innovation should come before worries about finances.

Peter F. Drucker

LEARNING & GROWTH PERSPECTIVE

EMPLOYEE CAPABILITIES INFORMATION SYSTEM CAPABILITIES MOTIVATION , EMPOWERMENT

LEARNING & GROWTH Arun Moira

:

Member, Planning Commission, GOI

To be a leader: - Continuous Learning - Bigger Dream

Stephen Covey

: Sharpening the Saw

Ajim Premji

on JRD:

JRD

was a life-long learner.

“ Knowledge is being doubled in every 18 months.”

Dedicated employees are key to the success of any corporation.

Peter F. Drucker

IMPLEMENTING A BSC

PROCESS Identify Vision Identify Strategies Identify Perspectives Identify Measures Create Action Plan Evaluate Follow Up

ENVIRONMENT OF SAIL

Steel industry witnessing a

boom

Increased steel

consumption

: 30 Kg Vs. 144 Kg High bargaining power of

buyers

Bargaining power of

suppliers

Threat of

new entrants

& competition Threat of

substitutes

SAIL’s CORPORATE PLAN 2012 To continue in the business of steel & steel related activities To enhance market share in growth segments To improve profits by cost reduction & high value added products To achieve excellence in quality To secure availability of key raw materials To build customer centric processes,systems & procedures

SAIL’s CORPORATE PLAN: Comments

Shows strategic goals, but inter-relationship is absent Comprehensive, but lacks focus Lacks focus on Product Profitability No focus on Operational Excellence

No focus on Attracting & Retaining HR To develop a Culture of Accountability & Appreciation

“A manager’s job is to pursue the interests of the society.”

Peter F. Drucker

The Father of Modern Management

CHANGE

“Change is the only constant in to day’s world.”

ISB

“A company can not survive without change.”

K.V.Kamath

THANK YOU