What is BSC? The role of the BSC model in business

What is BSC? What elements does this model include? What role does BSC play in business operations? How to apply the BSC business model effectively in the enterprise? All these questions will be answered in the following article of Viindoo. Let's find out now!

1. What is BSC?

BSC (Balanced Scorecard) is a strategic management model at the most basic level in enterprises. This model will play a role in guiding the business throughout the process of setting up, implementing, controlling and evaluating the completed results of the set business strategy.

what is bscBalanced Scorecard

The BSC model aims to balance factors such as short-term and long-term goals; financial/non-financial factors, input and output targets, internal operations and social orientation. At the same time, this model is interested in 4 important metrics: finance, customers, internal processes, learning and development.

2. What does the BSC model include?

2.1 Financial metrics

Financial measure is the factor that the BSC model cares about first. This measure is made up of many different factors such as costs, profits, growth rates, profits, or how businesses capital management, ... This is an important measure to evaluate the situation. business activities of an enterprise.

Factors in financial measures are not the only factors that businesses need to pay attention to in today's digital era. Because finance is only a small piece of the whole picture of the business. Therefore, in addition to finance, managers also need to pay attention to many other factors to have an overall and more objective view of the business situation.

What is the bsc modelFinancial metrics

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2.2 Measures of internal activities in the enterprise

Internal performance measurement is an aspect that managers need to consider when considering the business status of the enterprise. This is a measure that helps businesses measure their achievements in the process of production and business.

When operating, a business will always have better performing parts and less effective parts. What managers need to do now is to review business activities to know what are the strengths and weaknesses in business processes and operations. From there, businesses will have appropriate strategies to promote their strengths, business risk management and deal with challenges effectively.

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2.3 Measures of learning and development

The measure of learning and development is a factor that businesses need to pay attention to when applying the BSC model. In this criterion, there is no maximum limit. All abilities can be cultivated and developed over time.

When businesses are interested in employee training plans, employees will be able to apply modern technology tools to improve performance even more. This will help businesses adapt more quickly to the rapid changes of the market in the current digital age. At the same time, this also helps to increase the competitiveness of enterprises with competitors in the same industry.

what is bscLearning and growing

2.4 Customer metrics

Customer measurement is an important factor that cannot be ignored in any business. This is the most important and direct factor affecting the revenue that the business earns now and in the future. This measure also helps businesses know the level of customer satisfaction. From there, the business will develop a plan to increase customer satisfaction. It can be said that taking customers centric is an effective and sustainable business strategy.

Businesses can ask some questions to know the level of customer satisfaction such as:

  • Is this the target audience that the business is targeting? Do they have a positive review of your product?
  • What is the percentage of positive / negative reviews about the service quality of the business? How does this ratio compare to other competitors?
What is the bsc systemCustomer measure

3. What is the role of BSC in the business?

BSC plays an important role in the production and business activities of enterprises, specifically as follows:

  • Supporting businesses to build better strategies: BSC helps businesses have a certain basis for the cause-and-effect relationship between many different factors in the organization. This helps businesses create a perfect core strategy, in line with the internal capabilities of the organization itself.
  • Supporting businesses to link different projects: The BSC model has helped businesses create an important foundation and core strategy. This will help businesses ensure that the plans are implemented in accordance with the overall strategy, without wasting any resources.
  • Support to improve communication capacity: Once businesses have an overall strategy, implementing communication plans becomes a lot easier.
  • Increased reporting efficiency: The results in the BSC model can be used as an overview reporting outline. This will help the report focus on the important issues of concern, avoiding verbosity and waste.

4. Which businesses should use BSC?

BSC has an important role in the business. However, not all businesses are suitable to use the BSC model. Here we will suggest some businesses that should use this governance model:

  • The company operates in many different fields and industries.
  • Enterprise with social goals, operating in the form of non-profit.
  • Enterprises with 100% state investment capital.
  • Small and medium sized enterprises.
what is bscWhat types of businesses should use BSC?

5. How does the enterprise apply the BSC model?

5.1 Step 1 - Data Control

Data control has always been a problem for many businesses. Therefore, it is important for businesses to identify the necessary core strategies and put them on a centralized platform such as management information systems in enterprise, integrated management software,... This helps businesses measure metrics for relevant factors and see how others are doing.

What is bsc in businessData control

5.2 Step 2 - Measure and evaluate target factors

Measuring and evaluating goals is always a must for businesses to ensure business activities are on the right track. Enterprises need to evaluate these factors objectively to avoid encountering the necessary errors. Businesses can use color to evaluate results such as: Yellow is a self-regulating factor, red is a project that needs support, blue is a business that is on the right track.

5.3 Step 3 - Evaluate target factors according to KPI

KPI is considered an effective method to evaluate employee performance and know if they have achieved strategic goals or not. KPIs may vary depending on the orientation goals of each business. This will help businesses have a better view of the overall picture, assign tasks and control performance properly.

what is bscUse KPIs to measure goals

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5.4 Step 4 - Connecting Goals

Enterprises should align goals with the overall strategy set out. This will help businesses achieve higher efficiency in the production and business process. Goals should also be linked together in a cause-and-effect form for best measurement.

Hopefully, after reading the above article, readers will understand what is BSC as well as the role and application of this model in businesses. Please regularly follow the next articles on Viindoo website to know other effective business management methods.

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What is BSC? The role of the BSC model in business
SEODO 22 March, 2023

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