According to Kaplan and Norton (2007), Balanced Scorecard (BSC) is a strategy performance management tool which using a mixture of financial measures and non-financial measures to monitor operation progress. Recently, the BSC has evolved to become an effective strategy execution framework that transforms an organization’s vision and strategy into operational objectives and performance. It consists of four perspectives, namely financial, customer, internal business process, and learning and growth. BSC is applied in Capstone simulation to achieve the key’s strategies. 

 

In Capstone simulation, the key strategy of our Digby group was broad differentiation. We maintained a presence in every segment of the market. Thus, BSC measured performance across four categories to translate the vision and linked them to a strategic management system. 

In financial aspect, we charged a relative high price in high-end, performance, size and traditional products since we differentiated our products. Meanwhile, we charged a relative low price in low-end products through getting large market shares and low costs to generate a high profit. In addition, leverage was also utilized in this perspective, which required balancing between the equity and debt. In customer aspect, examining the preference of customer in each segment, we developed R&D frequently to keep our design advanced and improved the production line or price adjustment to meet customers buying criteria. Besides, we largely invested in the promotion budget and strengthened our distribution channels to achieve customer awareness and accessibility. For example, in high-end analysis, customer buying criteria is ideal position, age, reliability, and price in sequence. The internal business process and customer perspectives can cross-check performance. In internal business process aspect, profit is indicated by contribution margin, the contribution margin of our group is certain high due to high price and low costs. We also focused on plant utilization to avoid paying depreciation and interest on underused assets. Specially, within a plant utilization range of 100% - 180%, we are deemed to be working our assets productively. In learning and growth aspect, it was a measure to evaluate employee productivity. Strategic learning consists of link individual efforts, job satisfaction and gathering feedback. For Capstone simulation, we cannot gather the employees’ satisfaction and feedback. We connect Training, Turnover and Total Quality Management (TQM) to measure productivity alone. For instance, because of requiring high R&D, we decided to invest on the TQM to increase the speed of R&D. 

We evaluated the performance in each round according to the score in Balanced Scorecard points. Take an example in Picture 1 above, souring from the Capstone website Digby. In round 8, in financial perspectitive, the profit was only 3.3 point and the leverage was 2.7 point. So the sales, costs and the strcuture of capital was the issue. We should pay attention to this part. However, in our simulation, the profit was failure because of the lowest price and small market share.