The Balanced Scorecard, Competitive Strategy, and Performance

The objective of this summary is to explain the different types of indicators and various types of groups who give emphasizes on these perspective indicators in balanced scorecard for the purpose of formulating competitive strategy.

The Balanced scorecard (BSC) takes both financial and Non-financial performance indicators for the purpose of measuring the performance for an accurate decision making.  The major indicators/management control perspectives considered by the BSC are Customer perspective, internal business perspective, Innovation and learning perspective, and financial perspective.  Taking these things will allow the business to tailor its strategy, communicate those objectives to all, and seek for feedback.

In product-market strategy under competitive environment, four person are said to be involved, namely Prospectors, is a person who constantly tries to innovate new product and look for new market opportunities.  Defenders, who heavily try to create an efficient production for the purpose of creating a stable set of products and customer base.  Defenders can be further be classified into two, Low-cost defenders and Differentiated defenders. Analyzers, are the ones who tries to maximize the opportunity for the profit, they closely follow prospectors to respond quickly.  The fourth and final is Reactor, who does not respond to any product or market problems.

In a study conducted among many firms to find out the competitive strategy type adopted by them, and the emphasis placed by them on different dimension in the balanced scorecard.  Further all the archetypes are further divided in High performer and Low performers for better analysis which say, High and Low performing Prospectors are giving almost equal importance on the Innovation and growth perspective, however high performing prospectors give more emphasis on Financial and Customer Perspective than low performing prospectors. High performing Analyzers gives more emphasis on all perspective than low performing Analyzers.  A low cost defender has given lesser emphasis on Customer perspective and the innovation and growth perspective as these things will quest for efficiency. Finally, the High performing differentiated defenders are more of maintaining a greater relationship with customer, and should keep on working to server better for them. So it can be said that they give more emphasize on Customer and Innovation perspective as expected.

In can be concluded that, Irrespective of any type of group it can be said that the emphasize has given more on Customer Perspective compared to other perspective, which will further gives birth to the concept of Customer Relationship Management (CRM) principle, for a better management and further it can be said that there is no need to place equal weight for all the four perspective, but only to those which it needed based on the type of the group it falls under and only those which are considered as major contributors for business success.  But, the firm must also improve it bottom-line for satisfying its investors and maintain their confidence, so the emphasis has to be done even on Internal Business Perspective.

Which means it can be said that a fairly balanced approach of perspective has to be marked in the Balance scorecard and should achieve it not only for company’s growth but also for gaining a competitive advantage.