About Balanced Scorecard
The Balanced Scorecards developed by Robert and Kaplan is a strategic management tool that allows the management to have a holistic view of the performance of the company in light of the actions that they take. Since time immemorial, the measurement of the performance of the company was done so only on the basis of financial metrics including its profitability, stock prices, and levels of debt. However, other aspects of the business including customer service, learning and growth, innovation, and other internal business processes were ignored. The Balanced Scorecard as a tool allows the company to not only measure the performance of their actions by using the financial metrics as a benchmark but also understand the results of their actions by understanding how it affects customer service, innovation, internal processes, and learning and growth opportunities for the employees.
Capsim as a business simulation tool is an immersive platform that allows its users to run a virtual business and be their own boss. Winning at Capsim is about balancing the Balance Scorecard diligently. The Capsim includes the Balance Scorecard to make it more realistic and help the users understand the actions of their results in various departments of the company and not just focus on financials alone.
It uses the following four categories:
- Financial - It reflects the stock prices of the company, profitability, and leverage.
- Internal business processes - It reflects other parameters including days of working capital, inventory costs, stock out costs, contribution margin, and plant utilization
- Customer services - This reflects on the awareness and accessibility of your products, expenses related to distribution, and how well the company meets the customer buying criteria.
- Learning and Growth - The focus is on the TQM initiative, employee turnover, and productivity.
How to get the balanced scorecard right?
Capsim uses the scores of the Balanced Scorecard to rate the performance of the various companies participating in the industry. In order to score well a company must perform well in all four categories.
- The priority of the team should be to maintain a contribution margin of 30% and more which will help them improve their profitability in the long run. However, in the short run, they should also be concerned about improving their capacity and introducing of new products.
- To get the scores on the higher side one must invest in TQM activities, and promotion and sales budgets to raise their awareness and accessibility.
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