Balanced scorecard is a performance measurement tool, which allows companies to monitor the achievement of the company strategy and organizational goals. Unlike most of performance measurement systems that narrowly focus on financial performance indicators, balanced scorecard gives a holistic picture of the company performance by evaluating it from 4 perspectives: customer perspective, business process perspective, learning and growth perspective, and financial perspective (Niven, 2008).
Customer perspective is central for most organizations, as customer satisfaction is the greatest determinant of company success. This part of the balanced scorecard measures how well the company manages to add value for their customers. Although the choice between a no-frills strategy, differentiation and a hybrid of the two depends on the company internal and external environments, it is often necessary to maintain at least a minimum performance in all areas. Thus, if a company chooses to deliver low prices, it should also provide adequate quality as customers will not be satisfied otherwise. Business perspective relates to the development of internal business processes, which help to increase customer value and to facilitate the achievement of internal objectives.
In this case, balanced scorecard does not only measure operating efficiency, but also deals with the development of new ways to enhance internal processes and customer value. Financial perspective evaluates the achievement of certain financial objectives, such as the level of revenues. This part of the scorecard is the easiest to quantify and often allows evaluating the achievement of the ultimate goal of the for-profit organizations, the increase of shareholder value. Finally, learning and growth perspective lays the foundation for the other three perspectives, measuring improvements in every area, comparing results to the targets and identifying performance and resource gaps (Niven, 2008).
McDonald’s is an American multinational company that operates more than 33,000 fast food restaurants in more than 119 countries and employs approximately 1.7 million people (McDonald's, 2012). The company pays careful attention to all balanced scorecard perspectives. Firstly, McDonald’s is committed to customer satisfaction and puts a lot of effort in designing their restaurants and menus, as well as in training their employees and in offering competitive prices in order to make the experience of every customer enjoyable. Customer orientation is reflected in the company mission to "place the customer experience at the core of all we do". Business perspective is crucial for the company as they are only able to maintain low costs and high efficiency worldwide by continuously optimizing processes and emphasizing standardization. Monitoring of financial objectives is reflected in the mission to "grow business profitably" and to provide growth to shareholders. Finally, McDonald’s aims to continuously improve the way they operate, to anticipate the changing customer demands and to strive for constant innovation (McDonald's, 2012).
References
McDonald's. (2012). Mission & values. Retrieved from http://www.aboutmcdonalds.com/mcd/our_company/mission_and_values.html
