Balanced Scorecard Implementation at Philips


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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

Case Details:

Price:

Case Code : BSTR270 For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Growth Strategy | Balanced Scorecard
Case Length : 18 pages
Period : 1995-2007
Pub Date : 2007
Teaching Note : Not Available
Organization : Philips
Industry : Consumer Electronics
Countries : Netherlands

Abstract:

The case examines the implementation of Balanced Scorecard in the Netherlands-based Royal Philips NV. The Balanced Scorecard model, developed by Dr. Robert Kaplan and David Norton in the early 1990s, proposed that organizations should be mission driven rather than finance driven. During the late 1990s, rapid changes in the external environment necessitated Philips to make its operations flexible, innovative and value adding. This led the company to introduce a program called Business Excellence through Speed and Teamwork (BEST) in July 1999. Several tools were used in BEST, and one such tool was the Balanced Scorecard. There were four perspectives in Philips' Balanced Scorecard - competence, processes, customers, and finance.

Philips identified critical success factors (CSFs), which were important to create value and grouped them under these four perspectives. Each of the business units had their own CSFs which were established with the help of the guidelines provided by the corporate quality department at Philips. The success of the CSFs was measured through performance indicators. To measure the performance of the key indicators, a traffic light system was used.

Issues:

Understand how the implementation of Balanced Scorecard model can help in improving the performance of the organization.

Examine the use of Balanced Scorecard as a tool to communicate corporate strategy.

Appreciate the role of senior management in initiating and implementing business transformation initiatives.

Know the importance of goals and strategies in guiding an organization.

Contents:

  Page No.
Introduction 1
Background Note 2
The Need for Balanced Scorecard 4
Implementing Balanced Scorecard 10
Measuring Results 11
Exhibits 12

Keywords:

Philips NV, Balanced Scorecard, Business Excellence through Speed and Teamwork, Philips Business Excellence Model, Critical Success Factors, Business Performance Review, European Foundation for Quality Management (EFQM) Excellence Model, BBS Online, Result Measurement, Traffic Light System, Vision, Mission and Values, Strategic Direction, Business Enablers, Business Transformation, Corporate Communication

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