BALANCE SCORECARD

Introduction
The balanced scorecard is also a management system (not only a measurement system). It enables organizations to clarify their vision and strategy and translate them into action. It provides feedback around both the internal business processes and external outcomes in order to continuously improve strategic performance and results. Fully deployed, the balanced scorecard transforms strategic planning from an academic exercise into the nerve center of an enterprise. It is reported that over 50% of Fortune 1000 firms now use the Balanced Scorecard methodology. It acts as both a catalyst and as a platform for learning.

The Balanced Scorecard Focuses on Factors that Create Long-Term Value

Traditional financial reports look backward Reflect only the past: spending incurred and revenues earned Do not measure creation or destruction of future economic value The Balanced Scorecard identifies the factors that create long-term economic value in an organization, for example: Customer Focus: satisfy, retain and acquire customers in targeted segments Business Processes: deliver the value proposition to targeted customers innovative products and services high-quality, flexible, and responsive operating processes Customers excellent post-sales support Organizational Learning & Growth: Processes People develop skilled, motivated employees; provide access to strategic information . align individuals and teams to business unit objectives

Why Do a company need a Balanced Scorecard? To Implement Business Strategy!

Business Strategy is now the single most important issue and will remain so for the next five years
Business Week

Less than 10% of strategies effectively formulated are effectively executed

Fortune

Advantages
The balanced scorecard provides a broad consideration of all business aspects, both financial and human. Makes strategy operational by translating it into performance measures and targets Provides a comprehensive view that overturns the traditional idea of the organisation as a collection of isolated, independent functions and departments.

Limitations
Requires clear understanding and high initial cost. Shareholders who want your company to make as much money as possible may feel that the balanced scorecard plan wastes money. The environment is dynamic and ever-changing. The scorecard is not a stand-alone process. Hence, it requires maintenance and renewal.

TATA Steel
Multinational steel company headquartered in Mumbai, India Subsidiary of the TATA group, started as TISCO TISCO was established by Jamsethji Tata in year 1907 Changed the name to TATA Steel in2005 India's second largest and second-most profitable private-sector company Tata Group became the world's fifth largest steel maker after acquisition of UK steel company Corus.

Need for the BSC in TATA Steel

Imperative for TS to adopt a global strategy to survive BSC had become critical in integrating various components of the strategy, and communicating it throughout the organization After the initial adoption of the BSC, the company felt the need to strengthen its use TS invited Ted Jackson, then President of the Balanced Scorecard Collaborative, to conduct management seminars on the use of the scorecard

ArcelorMittal
Global steel company headquartered in Avenue de la Libert, Luxembourg It is the largest steel producing company in the world The company was formed in 2006 by the takeover of Arcelor by Mittal Steel It ranks 99th on the 2010 Fortune Global 500 list Lakshmi Mittal (owner of Mittal Steel), is the Chairman and CEO and owns 40% the shares and voting shares in the company