Misr University for Science & Technology

Faculty of commerce and business administration

Research submitted by

Student name: Mohamed Wael Mohamed Habib

Student ID: 88683

Course name: Advanced Study in Cost Accounting

Course code: ACC 407

Research title: Balance Scorecard

Supervised by:

Name of supervisor:

Dr / Mahmoud Mohamed Zaki

Fall/2022-2023

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 The contents of the research

Subject Number of page

Introduction 3
Definition of balance scorecard 3-4
Historical background of BSC 4
Components 5
How to be applied 6
Advantage and disadvantage 7-8
Conclusion 9

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➢ First the introduction of Balance scorecard

The balance scorecard is based on management system in which it

aims on translation the goals of the organization to be easily to work
with and also it have an important role in setting of organization
performance objective and also key premise of the balanced scorecard
approach is that the financial accounting metrics companies
traditionally follow to monitor their strategic goals are insufficient to
keep companies on track and financial results based on what has
happened in the past.

➢ The definition on the Balance Scorecard

The Balanced Scorecard (BSC) is a business framework used for tracking

and managing an organization’s strategy and also the BSC framework is
based on the balance between leading and lagging indicators in which
can respectively be thought of as the drivers and outcomes of your
company goals.
in the Balanced Scorecard framework these key indicators tell you
whether you’re accomplishing your goals and whether you are on the
right track to accomplish future goals
so, the Balanced Scorecard is a performance based on metric tool which
is used extensively by various businesses or its old business across sectors
to align activities to the vision or the overall goal of the organization. The
approach is very effective in setting, as well as tracking key objectives of
the organization.
Balanced scorecard approach is a system that is designed to divide the
company's mission statement into small but well-defined goals it helps the

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company to monitor the performance with respect to the overall goal and
objectives set in the mission statement.

➢ Historical background of balance scoreboard

The concept of a balanced Scorecard was presented for the first time in a
series of founding articles published by Harvard Business Review in 1992,
The Balanced Scorecard Measures in which that drive performance
Then Both authors Robert Kaplan and David Norton then completed this
study of field experiences and published by Harvard Business Press the
best seller in which the define the balanced scorecard: Translating
strategy into action.
So in the new book both Robert Kaplan and David Norton explain and
describe the best way to decline the Balanced Scorecard at the corporate
level. It is indeed about uniting and coordinating efforts of different
entities in order not to miss any opportunity for the development.
In the mid-1990s, the scorecard was modified to strengthen the link
between performance measures and strategic objectives using a strategy
map.
The balanced scorecard approach to management gained popularity
worldwide following the 1996 release of Kaplan and Norton's text so the
Balanced Scorecard is translating strategy into action.

A 2013 brief by Bain and Company so the management tools and trends
in 2013 based on lists the balanced scorecard as the fifth most used
strategic management tool globally.

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➢ The component of the Balance scorecard (BSC)

the Balanced Scorecard is divided into four main components. An

organization is considered as to be successful if it make a balance
between the four. Each component represents different aspects of the
company for it to operate at best possible capability.

1. Financial component
are evaluated by investigating how well products are manufactured.
Operational management is analyzed to track any gaps, delays,
bottlenecks, shortages, or waste.
2. Customer Component
are collected to gauge customer satisfaction with the quality, price,
and availability of products or services. Customers provide feedback
about their satisfaction with current products.

3. business Process Component

, such as sales, expenditures, and income are used to understand
financial performance. These financial metrics may include dollar
amounts, financial ratios, budget variances, or income targets.

4. Growth and Learning component

are analyzed through the investigation of training and knowledge
resources. This first leg handles how well information is captured
and how effectively employees use that information to convert it to a
competitive advantage within the industry.

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➢ How balance of Scorecard will be applied on

Balanced scorecards allow companies to measure their intellectual

capital along with their financial data to break down successes and
failures in their internal processes. By compiling data from past
performance in a single report, management can identify inefficiencies,
devise plans for improvement, and the communicate goals and
priorities to their employees and other stakeholders.

So the element of the BSC are based on 4 types in which:-

1. Preparation
The organization identifies the business unit for which a top-level
scorecard is appropriate. Broadly defined, this is a business unit that
has its own customers, distribution channels, production facilities and
financial goals.
2. The first round of interviews
A balanced scorecard facilitator interviews senior managers for about
90 minutes each to obtain input on strategic goals and performance
measures.
3. First executive workshop.
Top management convenes with the facilitator to start developing the
scorecard by reaching a consensus on the mission and strategy and
linking the measurements to them. This can include video interviews
with shareholders and customers.
4. he second round of interviews. The facilitator reviews, consolidates
and documents input from the executive workshop and interviews
each senior executive to form a tentative balanced scorecard.

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➢ Advantage of BSC (Balance Scorecard)

Overall the balanced scorecard helps companies focus on performance

measurement in more than one area.
It considers items that can sometimes get overlooked in a company
such as internal processes and current customer satisfaction. Here are
some of the biggest advantages of using this method in your business
and also in divided into 4 advantages of the BSC

1. Brings structure to business strategy to different departments

within an organization may have their own way of measuring
performance and what they consider to be important in terms of
metrics. With a balanced scorecard, different leaders and
departments can still individualize their performance measurement.

2. Makes communication easier in communication across team

members and departments becomes easier when everyone is
speaking the same language. In other words, having a streamlined
performance measurement system means that it’s easier to talk
about strategy and progress within the organization.

3. A balanced scorecard helps employees keep their eyes on the prize

so-to-speak in terms of goals. Individual workers may find it helps
their own performance when they can see the greater purpose
behind the goals and objectives they’re aiming to hit. It also has the
added benefit of helping employees find purpose in the organization,
thus keeping them engaged in their work.

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➢ Disadvantage of the BSC (balance scorecard)

While there are so many advantages to implementing a balanced

scorecard system into your workplace, there are also potential
roadblocks and disadvantages to balanced scorecards and also it
divided into 4 disadvantage and every item of these disadvantage are
play an important role on it

1. it must be tailored to the organization

A balanced scorecard is surrounded to provide a framework from
which to work from, however, it will still need to be customized to
every organization using this system and also this can take up a lot of
time, and while examples are helpful, they can’t be copied exactly due
to the unique needs of every business.
2. It needs buy-in from leadership to be successful.
For the balanced scorecard system to be fully effective, it must be
implemented from the bottom all the way to the top of the organization
this means getting buy in from leaders in which can sometimes take
some convincing and also not to mention the learning curve involved
with getting the whole organization to use the new system.
3. It can get complicated
The framework itself of balanced scorecards takes some time and
dedication to understand. There are countless resources and case
studies to read from and it’s easy to get bogged down with the many
different ways of using this method.

4. It requires a lot of data

Most of the time balanced scorecards require managers and team
members to report information, which means logging data.
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Many don’t like this because they find it tedious and also it can get in the
way of doing the work required to meet objectives.

➢ The conclusion of the BSC

As the name denotes, balanced scorecard creates a right balance

between the components of organization's objectives and vision and
also it is a mechanism that helps the management to track down the
performance of the organization and can be used as a management
strategy and also It provides an extensive overview of a company's
objectives rather than limiting itself only to financial values.
And also BSC creates a strong brand name amongst its existing and
potential customers and a reputation amongst the organization
workforce.

Thank you