1. The Balanced Scorecard Approach

2. Limitations of Financial Indicators Financial indicators are very important in business evaluation. But they are not enough! • History oriented • Do not suggest strategies and methods for development • Do not timely reflect changes • Do not capture the intangible aspects of the firm (values, culture, etc.)

3. The Balanced Scorecard • Professors Kaplan and Norton, Harvard University, first published in 1992 • The central idea is that business evaluation and development needs to base on different perspectives

4. The Balanced Scorecard • A management system that is based on indicators of different perspectives • Four perspectives: • Customer • Finance • Internal • Growth and development • A long-term development requires a balance between these perspectives

5. The Balanced Scorecard Financial Perspective Customer Perspective Internal Perspective Learning Perspective

6. Applying the Balanced Scorecard • From individual to team and organizational levels • For each perspective: • Goals • Measures

7. Example of a Balanced Scorecard • Choosing objectives • Identifying appropriate measures • Balancing different perspectives in setting objectives (indicators)

8. Special Notes • The four objectives and indicators of the perspectives should relate to and reinforce each other • Good combination of generic outcomes (e.g., customer satisfaction) and performance driver (e.g., short time delivery) • Ultimately, causal paths from all measures on a Scorecard should be linked to financial objectives • Balanced Scorecard only contains strategic measures (not diagnostic measures)

9. Samsung Case • Applying BSC to identify key objectives, measures, and indicators for Samsung

10. Practice: Develop BSC for APIM • In a team of 4-5 people, please develop a BSC 2011-2013 for APIM based on the information provided. THANK YOU!