MIS 4322
Chapter 3 Insert:
Assessing the Health of Online Firms
The Balanced Scorecard
• Introduced in response to their perception that
managers overwhelmingly focus on short term
financial performance.
• Firms must balance their financial perspective by
analyzing other domains of the business,
including internal business processes and
customer responses.
• Introduces 4 categories of metrics: financial,
customer, internal business systems, and learning
and growth.
Strategy Into Operational Terms
FINANCIAL
To succeed financially, how
should we appear to our
shareholders?
CUSTOMER INTERNAL BUSINESS
Vision PROCESS
To succeed financially, how
should we appear to our
and To satisfy our shareholders and
shareholders? Strategy customers, what businesses
must we excel at?
LEARNING AND GROWTH
To succeed financially, how
should we appear to our
shareholders?
Source: Robert S. Kaplan and David P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” Harvard Business Review 74 (January-February, 1996): 76.
Assessing the Health of Online Firms
Financial Metrics: They are designed to assess the
financial performance of the company.
Typical financial measures include revenue, revenue
growth, gross margins, operating income, net margin,
earnings per share and cash flow.
Customer Metrics: Customer metrics are intended to
assess the management of customer relationships by the
firm.
These measures typically focus on a set of core
measurements, including market share, customer
acquisition, satisfaction, and customer profitability.
Assessing the Health of Online Firms
Internal Business Process Metrics: These focus on operations
inside the company. Divided into three groups:
Innovation
Operations
Post-sale service
Learning and Growth Metrics: These broadly cover employee,
information systems, and motivation metrics.