What Is Balanced Scorecard (bsc)

1.0 Introduction

The balanced scorecard (BSC) is a management accounting technique and it is developed as a reaction to changing information needs driven by a growing competitive environment. It relates current decisions and actions to long-term financial benefits (Kaplan, RS & Norton, DP 1992). It is used to evaluate business performance by a set of indicators (i.e. a financial, customer, business and organizational learning perspective). The difference between traditional management accounting systems and new developed techniques merely lies in the expansion of the type of management information they generate (Maisel, L 1992). Non-financial and qualitative information, such as quality and process times and more subject information on customer satisfaction and new product performance, are considered important aside the traditional financial related information. This paper aims to analyze the efficiency and effectiveness of management accounting techniques in an organisational setting (Kaplan, RS & Norton, DP 1996).

2.0 What is Balanced Scorecard (BSC)?

The Balanced scorecard (BSC) was developed in the early 1990s by Robert Kaplan and David Norton. It is essentially a performance measurement system that connects employee behaviour to the organisation's strategic objectives (Maisel, L 1992). The BSC includes the firm's critical success factors in four perspectives that are financial performance; customer satisfaction; internal processes; and learning and growth (Blocher et al. 2010). The financial performance measures the profitability and market value, among others, as indicators of how well the organisation met its owners and shareholders. The customer satisfaction measures the quality, services, and low cost, among others, as indicators of how well the firm met its customers (Olve, NG & Sj¨ostrand, A 2002). The internal processes measure the efficiency and effectiveness with which the organisation produces the product or service. The learning and growth measures the organisation's ability to

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