The purpose of BSC for strategic level planning of a business
What is the role of the BSC for the strategic level methodologies of organizations? Before we can answer that, let’s first take a short trip down memory lane. A balanced scorecard is a measurement framework used to track the performance of an organization. Drs. Kaplan and Norton first floated the idea in 1996 and since then it has become such a sensational tool that, in fact, an average of at least 50% of companies around the world have learned to use it. It shouldn’t be surprising if, sooner or later, all organizations will adopt this trend.
I agree when people say that there are a lot of business terms and sometimes there is just no way to memorize them all. I’m not saying that’s why the BSC for strategic level is standardized, but you have to admit that remembering three simple terms will allow you to summarize all of your goals and use your BSC for strategic level methodology purposes optimally. These three terms are:
-Corporate level
-Business unit level
-Functional or departmental level
To develop a BSC for strategic level tactics regarding each, you need to know the differences between these three. Let’s start with the Corporate level.
Basically, there are four areas that really concern a strategy at the corporate level:
1. Scope – What type of business should the corporation be involved in? What are the objectives? How will each business be managed?
2. Competitive Contact – Where should business competition take place and be located?
3. Business Interaction and Activity Management: How will the organization coordinate and share with staff as well as other external resources?
4. Management practices – How will the governance of the business be?
At the business unit level in a BSC for strategic level methodology, the focus is more on maintaining a competitive advantage for the goods and services the organization wishes to provide. In addition to positioning itself against business rivals, the organization must also try to anticipate the future. This means that they have to anticipate technological demands and adjust their respective strategies to accommodate them.
Last but not least is the functional level aspect of BSC for strategic level planning. This level addresses everything related to marketing, finance, human resources, operations and the company’s value chain. All this implies the coordination of resources to execute all the company’s plans efficiently and effectively. This is also the strategy level that is incorporated with higher level strategies because it is the functional level that provides input to the business unit and corporate level strategy.
Returning to our pending question, what is the role of BSC for the strategic level methodologies of organizations? If you look closely at the three levels mentioned above, you’ll notice that it all revolves around the four main aspects of a balanced scorecard: financial performance, customer service, internal processes, and learning and growth. Hence, the purpose of the BSC for strategic level methodologies is issued through the formulation phase of the business itself.
