Critical analysis Assignment Example | Topics and Well Written Essays - 1500 words

Critical analysis - Assignment Example The reason why the Balanced Scorecard notion has so extensively accepted by manufacturing and service companies, nonprofit institutions, and government bodies globally since its opening in 1992: First, preceding methods that included non financial measurements use unplanned gathering of such measure, for instance, checklist of measures for manager to follow of and improve than an inclusive system of related measurements. The Balance Scorecard stresses the linkage of measurement to strategy (Kapalan, Norton, 1993) and cause-and effect linkages that explain the theories of the strategy (Kaplan, Norton, 1996b). The close link between the measurement method and strategy raises the role for non-financial measures from a set checklist to a complete system for strategy accomplishment (Kaplan, Norton, 1996a) Second, The Balanced Scorecard mirror the shifting nature of technology and aggressive benefit of the 19th and much of 20th centuries, corporations attained viable benefit from their investment in and running of tangible assets such as inventory, property, plant, and equipment (Chandler, 1990). Financial systems subjugated by tangible asset, fiscal measurements were sufficient to record investments on company’s balance sheets. However, many factors avert valid assessment of intangible possessions on balance sheets: First, the value from intangible assets is not direct. Resources such as knowledge and technology rarely have a direct impact on income and profit. Enhancement in intangible resources affects monetary outcomes through chains of cause-and-effect interaction linking two or three intermediate phases (Huselid, 1995; Becker, Huselid, 1998). For instance, think of relationship in the management profit (Heskett et al., 1994): investments in employee training lead to development in service quality that leads to high customer satisfaction that causes increased loyalty which generates increased