IntroductionA balanced scorecard refers to a strategic planning and management system which is used comprehensively to align business undertakings to the visions and strategies laid. It is mainly used by business entities, the government and non governmental organizations worldwide. With the help of a balanced scorecard, mostly focusing on short term measures a firm can easily succeed in improving its financial strategy, in addition to improving financial management. The scorecard helps the company to measure its financial position hence determines what set forth from the statements of the score card. It is a very vital performance statement that is used to evaluate important functions in the company (Hannerbarger, 2007). According to Kaplan and Norton (2000), a balanced scorecard improves the financial capability of the company and this signifies the beginning point of internal control.
Strategies are laid and they become effectual when they are communicated and implemented in the whole organization. The balance scorecard is precisely concerned with choosing procedures and targets. The ranges of designed ways proposed in the balance scorecard are supposedly used to assist in the recognition of the measures and targets.
It helps in expanding the business aims further than the summary fiscal measures. Corporate company executive can measure the company ability and create value for the existing and future clients and how they can enhance interior abilities. The executive venture into people’s systems and establish measures necessary to enhance future financial performance of the company. Financial aims can be different significantly at every stage of the company’s operational cycle (Maisel, 1998). The balanced card outlines stages to evaluate the financial position of the business. Maisel (1998) notes that if the company is at growth stage, that is, the early stages of operation, the company will have to capitalize on the potentiality of growth of its products and services, they will have to commit significant resources to expand and enhance new goods and services construct and develop manufacturing facilities.
If the company increases the volume of production in addition to prices, it will also increase the earning per share which will increase the overall company’s income. This will enable the company deliver positive results to the shareholders. The balanced scorecard will provide measures that will show if the strategy of the company will have any effect on the company’s cash flow, growth of sales and the earnings per share (Kaplan & Norton 2000). The balanced scorecard gives the company a chance to reinvent financial business partners.
The companies transform the finance so that they are more effective in putting their products and services at a higher competition compared to the rest of the companies providing the same service or product. The Company is challenged to reduce its cost but go on to meet the responsibilities it provides in the market.
Maisel (1998), in his journal points out that we are currently living in a recession times and therefore companies should be prepared to come out while strong. Prosperous firms are restructuring their business plans to succeed in post-recessionary times. Therefore balanced scorecards help the firms to set objectives that are implemented hence boosting the operational decisions of the company (Maisel, 1998).