Final answer:
The Balanced Scorecard is a strategic management tool with four typical components: Financial Perspective, Customer Perspective, Internal Business Processes, and Learning and Growth. By aligning activities to the vision and strategy of the organization and monitoring performance against strategic goals, it helps improve organizational performance.
Step-by-step explanation:
The Balanced Scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals. It is typically composed of four components:
- Financial Perspective: Considers traditional financial goals and measurements. It looks at how the company is performing financially and is typically concerned with profitability, growth, and shareholder value.
- Customer Perspective: Focuses on customer satisfaction and market share goals. This perspective examines the company's relationships with its customers and measures how well the company is meeting their needs.
- Internal Business Processes: Evaluates the efficiency and quality of the company's internal operations. This perspective seeks to identify the critical processes at which the company must excel to satisfy customer and shareholder objectives.
- Learning and Growth: Explores the development of organizational culture, employee skills, and knowledge. This perspective emphasizes continuous improvement and the capacity to innovate by developing human capital.
A Balanced Scorecard functions by translating an organization's mission and vision statements into a set of performance objectives that provide the framework for a strategic management system. It helps improve organization performance by providing a comprehensive view of the business, which allows managers to see if they are achieving their desired results and where they may need to make adjustments in strategy or operations.