Financial Perspective In The Balanced Score Card Commerce Essay


The financial perspective of the balance score card shows the organizational financial situation and what is vision of the share holders . The shareholders are only interested with the financial performance of the organization such as sales revenues , share price cost reduction etc. The financial perspective helps the organization to lower the costs which ultimately makes a growth in the revenues and increase in the shareholders values can be seen .It also helps the firm to utilize the assets in terms on increasing the revenues.

Customer perspective:

The customer perspective arises the question that how the customers view the firm , now adays not only for the service industry for every business customer satisfaction and customer relationship is very important . Companies and organization spending millions in order to target new customers and to retain the old ones. The balanced score card approach help the organization to focus on customer services, retention actually what they want, what you can offer , how to increase the customer loyalty. the performance can be measured by using the metrics of customer satisfaction index , what is number of complaint now and how many new customers are acquired etc.

Internal business processes:

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This perspective refers to the companies process internally, helps the managers to see how are they performing , are they targeting right customers or else the product or services is satisfying the customers , it also helps to focus on share holders satisfaction . The goals for this perspective include quality and inventory management , developing the customized products and services for the prospect customers , technology enhancement. These goals can be measured with the help of certain metrics e.g. efficiency improvement, increased productivity etc

Learning and growth perspective

This perspective arises a question that how the firm learn, improve innovate and grow . .This perspective mainly focus on employees as they are the representatives of a company , which is possible area in which a company can grow , and what should be done to improve and create value in the future. The goals related to this perspectives can include the new product development , improvements in existing products, the development with the human recourse . The metrics which can be used to measure the results can include number of new products and its sales figures, the training of employees and its effect , the suggestions of employees etc

The benefits of using a balanced score card include:

Planning -

The Balanced Scorecard helps to plan and communicate strategy in an organization.

Communication & Execution -

It help to communicate the strategy to everyone in the company and also helps to execute it

Performance Reporting -

It helps the companies to produce better performance reports because the everyone from top to bottom , internally or externally , strategies or execution are being measure

Strategic Alignment -

It helps the organizations to align itself with its strategic objectives.

Organizational Alignment -

It helps the companies to align processes such as budgeting, costing & risk management.

The drawback or the difficulties with the balanced score card include:


The balanced scorecard is relatively costly to develop


The metrics used to measure the performance should not be adopted which is being used by the successful firms .


The greatest disadvantage on a balanced score card is the resistance from the employees especially the top management . implementing a balance score card requires a commitment form the all employees of the company

Lipe and Salterio(2000) states that the balanced score card enhance the decisions made by the managers to align performance measures according to the goals of the company

Centra electronics plc which is related to the service industry therefore the balanced score card can be used as a performance measurement.

Financial perspective:

The financial perspective of the balance score card can be used in terms of increasing the profitability as it also helps to plan the strategies perfectly. It will also help the company to reduce the cost hence increase the revenues . this performance measuring tool is a lot better then the standard costing where the company can only analyze the performance of the past but with this tool centra electronics can focus on the present situation also plan for the future strategies.

Customer perspective:

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The companies like Centra Electronics who have to give their customers 100% satisfaction with their services and the products, because it's a big loss of a company if it looses one potential customer. With the help of balanced score card it can focus on customer services and satisfaction, new services and also what should Centra do to remain the valued supplier to its customers? The objectives of Centra should be fast response to customers because if they fail to do so customer will look for some other supplier. Efficiency and reliability should be increased do that the customers should get loyal with Centra electronics.

Internal business processes:

With this perspective it will get an advantage to target the right customers, and to make a judgment that Whether the products and services offered meet customer expectations. It will also help Centra electronics to measure how are they performing in comparison with the other companies.These goals can be measured with the help of certain metrics e.g. efficiency improvement, increased productivity etc

Learning and growth perspective

This perspective will help a lot to Centra Electronics as it will to learn, improve innovate and grow . .This perspective mainly focus on employees as they are the representatives of a company . The goals should be continues improvement ,product diversification and it should learn from the past experience that where they were wrong , what were the reason behind losing a customer , they should tackle these issues , take suggestions from the employees and build up a new modified strategy and implement it.

Shiba et al. (1993)defines the total quality management as set of tool which is used to manage organization who aims to satisfy customers in quickly shifting environment

Total Quality Management is a tool which management uses to increase the satisfaction of internal and external customers on an often changing environment , it is also used to manage functions of a business and the people to satisfy and when it is combined with the leadership result in an organization

Doing the right things right, first time

The fundamental of TQM are




commitment ,





the first fundamental of the total quality management are the customers, they can be internal or external customers . In the context to Centra plc , it must be clearly defined that who are the customers of the company. What are their true need or what do they want , what are their expectations from centra plc and their product or services . these are some very important questions which the people at Centra plc should know in according to measure the ability & capability to meet these expectations. And how should they monitor the changes in the need and expectation of the customers.


on the second step the company should know that who are their potential supplier , distinguish between internal and external suppliers , what are their expectations from your supplier, how do they comminute with them Centra plc should have this information that if the supplier are capable to measure the needs and expectation and how to Centra plc will communicate if there is a change in the needs and expectation .


everything which we do in a company is called a process , which is transformed in the form of input which include some method to get the desired output which is done to fulfill customer needs and wants. Centra plc here have to disguise between the key and core business processes which are carried out to achieve the objective .


the organization always needed a commitment to a continuous improvement . the commitment will be from its employees to work to achieve the objectives and goals of the company . The employees of Centra plc should make a commitment to the management to make it a the uk best computer servicing company


communication is a very important tool to improve the teamwork . To enhance the communication the barriers between the department should be removed so that the information can travel freely


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To develop the culture in an organization values, norms etc are required a cultural change needs two key elements

• Commitment from the management

• Involvement of people attached to the company.

Its proved that the change in culture is not successful if the employees of the organization is not committed to the company


quality management system not only helps an organization to achieve its objective but also to set out its policy and procedures . Is also proved that the management take the overall responsibility of develop, implement and enhance any new system in an organization therefore with the case of Centra plc the management when implement a quality measurement system takes the responsibility and at the same time ask for the commitment from the employees to work for the goals collectively .

Eskildson (1994) states that due to unclear definitions of TQM many organizations are failed in their effort of TQM

The benefits which Centra can enjoy include

Reduction of errors or deficiency because Total Quality Management focus on the quality and allow the employees of the organization to control the quality therefore the quality assurance and quality control department came into existence

The problems can be solved easily with the help of Total quality management because of it tools like failure analysis etc

Total quality management continuously improve the efficience of people, processes and systems.

The customer satisfactions is guaranteed with the help of TQM at Centra plc.

Due to the reduction in cost and continuous improvements in the efficiency , it helps the organization to increase the profitability .

Cost of quality measurement

The cost which Centra plc have to incur while introducing the TQM to there business include

Prevention costs

The cost which hold the other cost like failure and appraisal cost at a minimum is called the preventation cost

Appraisal costs

The cost which have incurred to evaluate the customers & suppliers, the materials procured from the vendors is called appraisal cost

Failure costs

The cost which Centra plc have to incur to control the internal and external failure.

Internal failure costs

• Waste

• Scrap

• Rework or rectification

• Failure analysis

External failure costs

• Repairs and servicing

• Warranty claims

• Complaints

• Returns