ITPEC IP April 2019 Question 82

Setting strategy and evaluating performance from the financial, customer, internal business process, and learning and growth viewpoints — the definition of the Balanced Scorecard.

The BSC (Kaplan and Norton) breaks a vision and strategy down into objectives, KPIs, targets and initiatives for each of the four perspectives. They form a chain of cause and effect: learning and growth improves internal processes, better processes satisfy customers, and satisfied customers produce financial results. "Balanced" means non-financial drivers are measured alongside financial outcomes.

Answer (b)

Why not others:

• •(a) — analysing which activities create the value delivered to customers is value chain analysis
• •(c) — keeping debits and credits equal in a ledger is double-entry bookkeeping; only the word "balance" connects it to the BSC
• •(d) — scoring business partners' creditworthiness from financial indicators is credit assessment (credit scoring)

Key rule: The BSC measures strategy from four perspectives, three of them non-financial, so that the drivers of future results are managed and not only past financial figures.

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