We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

See Pricing

What's Your Topic?

Hire a Professional Writer Now

The input space is limited by 250 symbols

What's Your Deadline?

Choose 3 Hours or More.
Back
2/4 steps

How Many Pages?

Back
3/4 steps

Sign Up and See Pricing

"You must agree to out terms of services and privacy policy"
Back
Get Offer

Why businesses need a balanced scorecard

Hire a Professional Writer Now

The input space is limited by 250 symbols

Deadline:2 days left
"You must agree to out terms of services and privacy policy"
Write my paper

The balanced scorecard was developed by US academics Robert Kaplan and David Norton in response to the shortcomings of traditional financial measures.

• Traditional financial measures are one-dimensional. By definition, they only look at the financial aspects of a business.
• Traditional financial measures are historical. They tell us nothing about what may happen to the business in the future. There are many examples of businesses that have achieved rising profits, as measured by historical financial results, at the same time as there were underlying problems.

Don't use plagiarized sources. Get Your Custom Essay on
Why businesses need a balanced scorecard
Just from $13,9/Page
Get custom paper

Eventually the problems have led to a downturn or even a business failure.
• Conventional financial statements do not explain variances from the expected outturn. Why did things go wrong? There are not necessarily any clues in the figures themselves. To understand the problems, some other perspectives on the business are needed other than the purely financial.
• Financial measures can be manipulated. There are several notorious examples of where preparers of financial statements have deliberately set out to mislead – Enron is simply a recent example.

Even where there is no blatant intention to mislead, there is considerable subjective judgment involved in the preparation of financial statements. This also allows the preparers to manipulate the figures.

Kaplan had already discussed some of these issues in a book, ‘Relevance Lost’, written with T Johnson in 1987. ‘Relevance Lost’ argued that traditional management accounting had failed to keep pace with changes in IT and new ideas about business.

Kaplan and Norton based their ideas about the balanced scorecard largely on a study, ‘Measuring Performance’, sponsored by accountants KPMG. This study looked at how businesses measured performance in practice. They came across several examples of how businesses used measures other than purely financial ones. In.

Cite this Why businesses need a balanced scorecard

Why businesses need a balanced scorecard. (2018, Aug 23). Retrieved from https://graduateway.com/balanced-scorecard-2/

Show less
  • Use multiple resourses when assembling your essay
  • Get help form professional writers when not sure you can do it yourself
  • Use Plagiarism Checker to double check your essay
  • Do not copy and paste free to download essays
Get plagiarism free essay

Search for essay samples now

Haven't found the Essay You Want?

Get my paper now

For Only $13.90/page