Question

A balanced scorecard is a performance-measurement approach that uses both financial and non-financial measures to evaluate a company's operations in an integrated way. What is a balanced scorecard?

1) a performance-measurement approach that uses both financial and non-financial measures to evaluate a company's operations in an integrated way.
2) a tool used to measure the benefits and costs of implementing a new strategy.
3) used only by small organizations that cannot afford more expensive methods of evaluating their operations.
4) focuses on non-financial measures in order to balance the many other financial reports companies use to evaluate their operations.

Answer 1

The balanced scorecard is a comprehensive performance-measurement and management system incorporating financial and non-financial metrics to align organizational activities with the overall strategy. It provides a broader perspective by evaluating four key areas: Financial, Customer, Internal Business Processes, and Learning and Growth. The correct definition is option 1.

Step-by-step explanation:

A 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. Developed by Robert S. Kaplan and David P. Norton in the early 1990s, the balanced scorecard is not only a measurement system but also a management tool that provides a comprehensive view by incorporating both financial and non-financial performance measures. It evaluates a company's operations through four perspectives: Financial, Customer, Internal Business Processes, and Learning and Growth.

Given the options presented in the question, the correct definition of a balanced scorecard is 1) a performance-measurement approach that uses both financial and non-financial measures to evaluate a company's operations in an integrated way. It is not exclusively used by small organizations, nor does it focus only on non-financial measures. Additionally, it does more than just measure the benefits and costs of implementing a new strategy; it helps in monitoring and managing performance across different aspects of organizational operations.