BALANCED SCORECARD: SITUATIONAL AND APPLICATION ANALYSES
When the globalization of the business environment began to become a reality for most corporations in the mid-1990s, many theorists and corporate managers began to realize that the conventional measures and procedures for evaluating business success were not completely up to the tasks for which they were being relied upon by corporate managers. Corporate managers needed tools that told them (a) how well the corporation was performing, (b) the extent to which the various activities of the organization were actually contributing to the attainment of organizational objectives, and (c) how future strategies should be structured to assure future success.
Some years earlier, Robin Cooper and Robert Kaplan (1994) had developed and introduced a management tool that was called activity-based cost systems, which became a part of activity-based management. Activity-based costing and activity-based management allowed corporate managers to assess the contributions of the many different tasks performed by an organization to the overall success of the organization. Activity-based management, however, was still primarily an accounting exercise. As important as financial results are, the tool still did not provide all of the information in the format that was most useful to corporate managers in relation to:
How well the corporation was performing
The extent to which the various activities of the organization were actually contributing to the attainment of organizational objectives, and
How future strategies should be structured to assure future success
In an effort to provide corporate managers with the tools needed to meet the three needs stated above, Robert Kaplan and Norton (2001a) developed and introduced the balanced scorecard concept. The balanced scorecard provides corporate managers with a comprehensive picture of the organization's performance that includes (Kap...