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It combines financial and operational measures to provide a dashboard which can be read to give an indication of a company’s performance. The Balanced Scorecard (BSC) measures performance from four key perspectives; 1) The customer perspective, 2) The internal perspective, 3) The innovation and learning perspective and 4) The financial perspective. A fifth external perspective has also been suggested to take account of external factors beyond the control of management. Each perspective should be examined with consideration for each of the other perspectives. This allows managers to recognise whether any improvements in one area are achieved at the expense of another. It is this understanding of the interrelationships between perspectives that gives the BSC the ability to assist with strategic
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Also, what is measured and how it is measured are entirely at their discretion. Therefore, theoretically, two sets of DM's could produce two completely different strategies for the same company. It must be pointed out however that this is more likely the case for the BSC as MCDM attempts to measure efficiency using the actual inputs and outputs of the relevant DMU’s. In neither case is there a formal selection process for DM's, for example what level within the company should they be? What about the suitability of external DM's? How many DM's or what, if any, level of expertise should they possess and how is that expertise …show more content…
MCDM is primarily an operations research tool and thus is more generally found in academia rather than industry (Toloie-Eshlaghy & Homayonfar, 2011). MCDM has however been successfully applied in industry (Bufardi et al., 2003) but by no means to the extent of the BSC. Both processes have been applied to a wide range of sectors.
Data.
While not hugely contrasting as both processes can handle both qualitative and quantitative data is clear that the BSC leans more towards qualitative type data (Kaplan & Norton, 1993) then MCDM. The majority of the BSC process could be carried out using qualitative data, quantitative data only becoming necessary when considering the financial perspective. MCDM however is a highly mathematical process and ultimately all data must be qualitative. Quantitative data requires manipulation with the application of fuzzy logic in order to render it usable as qualitative data (Rao & Patel, 2010).
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Also, what is measured and how it is measured are entirely at their discretion. Therefore, theoretically, two sets of DM's could produce two completely different strategies for the same company. It must be pointed out however that this is more likely the case for the BSC as MCDM attempts to measure efficiency using the actual inputs and outputs of the relevant DMU’s. In neither case is there a formal selection process for DM's, for example what level within the company should they be? What about the suitability of external DM's? How many DM's or what, if any, level of expertise should they possess and how is that expertise …show more content…
MCDM is primarily an operations research tool and thus is more generally found in academia rather than industry (Toloie-Eshlaghy & Homayonfar, 2011). MCDM has however been successfully applied in industry (Bufardi et al., 2003) but by no means to the extent of the BSC. Both processes have been applied to a wide range of sectors.
Data.
While not hugely contrasting as both processes can handle both qualitative and quantitative data is clear that the BSC leans more towards qualitative type data (Kaplan & Norton, 1993) then MCDM. The majority of the BSC process could be carried out using qualitative data, quantitative data only becoming necessary when considering the financial perspective. MCDM however is a highly mathematical process and ultimately all data must be qualitative. Quantitative data requires manipulation with the application of fuzzy logic in order to render it usable as qualitative data (Rao & Patel, 2010).
Available