Balanced scorecard - Solving all problems of traditional accounting systems?

Research Paper (undergraduate) from the year 2009 in the subject Business economics - Business Management, Corporate Governance, grade: 1,0, University of applied sciences, Munich, language: English, abstract: Balanced Scorecard (BSC) is a modern management tool for performance measurement and was developed in the early 1990s to overcome the limitations of managing only with financial measures. The BSC supports translating organizations strategy into action by defining specific goals and objectives associated with the organizations vision, providing measures, and indicating initiatives to reach those goals. It helps to solve a big problem in the practice, namely the strategy concept is often brilliant but the realizations fail. The aim of this study is to analyze whether the Balanced Scorecard can solve all problems of traditional accounting systems. To answer this question, firstly, typical problems of traditional accounting systems are studied. Afterwards, the basic concept as well as benefits and drawbacks of BSC are viewed into details. Finally, the limits and difficulties of BSC realization in practice and initiates to avoid the pitfalls are illuminated. It could be stated, that the BSC provides a holistic thinking and a balance between financial and non-financial perspectives: finance, customer, internal business process, as well as learning and growth. It helps organization to implement strategy faster and more effectively. Moreover, BSC supports managers to perform the controlling tasks, namely planning, driving, briefing and monitoring organizational activities. However, the BSC also shows some limitations and difficulties whereby the pitfalls in the practise are based on design and process failures. To avoid these pitfalls useful initiates and special features for practical design of BSC should be implemented. Taking into account this rules BSC could be used as a powerful tool for strategic management accounting.