Group

:V

Member

: Forbes Islamey Shan (1310532073)

Hardiani Prima Putri (1310531017)

Financial Perspective

1.Linking Financial Objectives to Business Unit Strategy

1.Growth
Early stage of life cycle
Products having Growth
Potential
Committing Resources
Expanding production
facilities
Operating capabilities
Investing in systems

Investing in
Infrastructure
Investing in distribution
network
More cash outflow
Financial Objective%age

sales Growth

customer groups

2.Sustain
Attract investments
Required extra return
Maintain existing
markets
Growth is expected

Enhancing
improvements
Profitability
Return on Investment
Economic Value Added

3.Harvest

Maturity phase
Enough to maintain
equipments
No expansion
New invest with Short

Pay Back
Maximize Cash flow
Reduction in WC
Requirements

The measurements should be focused on a single strategy and be linked,

consistent and mutually reinforcing. Some generic measurements are presented in
the table below.

Perspective

Generic Measurements

Financial

Return of Capital Employed, Economic

value added, Sales growth, Cash flow

Customer

Customer satisfaction, retention, acquisition,

profitability, market share
Includes measurements along the internal
value chain for:

Internal
business
process

Innovation - measures of how well the

company identifies the customers future
needs.
Operations - measures of quality, cycle time,
and costs.
Post sales service - measures for warranty,
repair and treatment of defects and returns.
Includes measurements for:

Learning and
growth

People - employee retention, training, skills,

morale.
Systems - measure of availability of critical
real time information needed for front line
employees.

2. What is a Strategy?
A strategy, according to Kaplan and his coauthors, is a set of hypotheses about
cause and effect relationships. Defining an organization's strategy involves:

 1) Defining the market the organization plans to serve - local, national, global.

2) Defining the customer. Broad or narrow, age group, income level etc.

3) Identifying the critical internal processes needed to capture and satisfy those
customers.

4) Determining the individual and organizational capabilities required in the other

perspectives.
Porter defines Strategy as performing different activities from rivals or
performing similar activities in different ways.
For more on Strategy see a Summary of Porter's article, and MAAW's Strategy
section.

3. An Example related to Cause and Effect

The chain of cause and effect relationships may start with improvements in the
area of learning and growth. These improvements tend to cause improvements in
business processes, which in turn cause improvements in customer satisfaction
and subsequently cause improvements in sales and the financial measurements of
profitability. The direction of the cause and effect relationships is emphasized
below.
Learning and growth > Internal business process > Customer > Financial
For a more specific example showing cause an effect, see the Sears EmployeeCustomer-Profit Chain illustration below.

4. What do you try to Balance?

An important part of the balanced scorecard concept is the emphasis on
establishing a balance between four types of measurements. These types of
measurements include:
1) Short term and Long term,

2) External (for shareholders and customers) and Internal (for critical business
processes, innovation, and learning and growth),

3) Leading indicators (outcomes desired and performance drivers) and Lagging

indicators (outcomes),

4) Objective measures (e.g., financial) and Subjective measures (e.g., many nonfinancial)

Harvest

Revenue Growth Mix

 a.New Product/Service
b. New Application
c. New Customers and Markets
d. New Relationship
e. New Product and Service Mix
f. New Pricing Strategy
Cost Reduction/Productivity Improvement
a.
b.
c.
d.

Increase Revenue Productivity

Reduce Unit Costs
Improve Channel Mix
Reduce Operating Expenses
Asset Utilization Investment Strategy
a.Cash to Cash Cycle
b. Improve Asset Utilization