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MN30469: Advanced management accounting: balanced scorecard essay
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MN30469: Advanced management accounting
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MN30469 Advanced Management AccountingLecture 7 Essay Question – Balanced Scorecard
Question
Although the Balanced Scorecard has gained widespread use, many believe this is
due more to the writing style of its authors rather than the actual validity of the
model.
With reference to published research discussed in the lecture, critically appraise the
statement above.
ANSWER
Strategic management accounting (SMA) emerged due to the global challenges in
product markets. Simmonds (1981) defined SMA as ‘the provision and analysis of
management accounting data about a business and its competitors, for use in
developing and monitoring business strategy’. A 1980s to 1990s research indicated
a low take up of SMA techniques. Balanced Scorecard (BSC) has endured as a key
SMA tool.
BSC contains outcome measures and the performance drivers of outcomes (Kaplan
and Norton, 1996). It focuses on the drivers of long-term success, translation of
vision and coordination of strategy. BSC links together the measurements from 4
perspectives in a causal chain: the financial, customer, internal-business and
learning and growth. It lets managers introduce 4 management processes:
‘Translating the vision’, ‘Communicating and linking’, ‘Business planning’ and
‘Feedback and learning’. BSC is used in 30% of UK manufacturing companies,
widespread in Spain (Amat, 2002); and in major companies such as KPMG.
The promotional efforts of BSC’s authors (Robert Kaplan – a professor at HBS, and
David Norton – the president of a consultancy firm) have led to the popularity of BSC
(Norreklit, 2003). In a high-ranking scientific journal published by Harvard Business
School Press, which is the most influential publication that shapes business
worldwide, Kaplan used the innovation action research method to prove that BSC is
a new concept to overcome major limitations in contemporary practice. The relations
to academia are dimensions which lead to the assumption that the text includes
sound scholarly argumentation. BSC, which was described with a conceptually
unclear model using attractive adjectives and unrestrained metaphors, is neither
particularly scholarly nor sound. BSC belongs to the genre of the management guru
text: a genre in which sound argumentation is not a prevalent feature, which, by
using convincing rhetoric (certain stylistic devices and a composition that appeals to
the emotions of the audience), persuades its audience to buy a new management
theory.
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