AFM241 Study Guide - Final Guide: Balanced Scorecard, Strategy Map, Southwest Airlines
30 May 2018
School
Department
Course
Professor
• aims to help managers align performance management initiatives with strategy by
translating the firm’s objective into clear, specific, objects, targets, and measures
• combines non-financial drivers of future with financial drivers for future performance
• financial perspective: how is success measured by our stakeholders? how do we look to
our shareholders?
• customer perspective: how can we create value for our customers
• Internal process customer process: what must we excel at to create value for the
customers?
• Learning and Growth: can we continue to improve and create value? What employee
capabilities, IS, and OC do we need to improve?
Financial perspective focuses on maximizing shareholder value
• value: ST & sustainability: LT
• Measures: cash flow, sales growth, operating income, market share, ROA, or ROE
8.2.1 Strategy Map
- A strategy map provides a visual representation of the linkages among these four areas
of a balanced scorecard that include financial, customer, internal business process and
learning and growth.
- The financial perspective focuses on maximizing shareholder value.
- Shareholders’ concerns tend to fall into two categories, short-term (value) and long-term
sustainability.
- Typical financial measures include cash flow, sales growth, operating income, market
share and ROE or ROE.
- Our goal is to identify potential drivers that could affect these financial measures,
which stem from customer perspective.
- The customer perspective identifies objectives and measures for the firm’s customers
and the firm’s value proposition.
- Customer needs and concerns usually fall into four categories: time, quality,
performance/service and cost.
- The drivers of customer related measures stem from the firm’s internal processes.
- The internal perspective identifies and measures the performance of internal processes
that are pivotal in the firm’s ability to add value to its customers and achieve desired
financial objectives.
- To increase customer loyalty and exceed customer expectations, the firm must main an
ability to create high quality products through efficient and effective operations.
- A firm will generate new ideas for products through research and development
operations.
- The firm’s procurement process will ensure that the firm is using high quality materials.
- The firm’s operations will ensure that the products are generated efficiently.
- A company’s ability to innovate, improve and learn is based on the company’s
value chain.
- A firm can only create maximize revenue and margins through launching new products,
creating more value and optimizing operational efficiency.
8.2.2 Bluebikes: Causality Example
- The element of causality, which can be outlined with a strategy map, is critical in the
development of a balanced scorecard.
- For example, in terms of Bluebikes, the profitability would be one of the typical balanced
scorecard measures that should be included in the financial perspective.
Document Summary
Financial perspective focuses on maximizing shareholder value value: st & sustainability: lt: measures: cash flow, sales growth, operating income, market share, roa, or roe. A strategy map provides a visual representation of the linkages among these four areas of a balanced scorecard that include financial, customer, internal business process and learning and growth. The financial perspective focuses on maximizing shareholder value. Shareholders" concerns tend to fall into two categories, short-term (value) and long-term sustainability. Typical financial measures include cash flow, sales growth, operating income, market share and roe or roe. Our goal is to identify potential drivers that could affect these financial measures, which stem from customer perspective. The customer perspective identifies objectives and measures for the firm"s customers and the firm"s value proposition. Customer needs and concerns usually fall into four categories: time, quality, performance/service and cost. The drivers of customer related measures stem from the firm"s internal processes.
