With the passage of time, new inventions, innovations and improvements emerge which help overcome the drawbacks of the old systems. In the present era of liberalization, privatization and globalization, business environments, financial markets, financial instruments and products have changed drastically. The structural changes and emerging trends associated with the new open regime have rendered the traditional performance measures like Return on Investment (RoI), Residual Income, Economic Value-Added (EVA), etc., which concentrate only on financial performance (ignoring the non-financial aspect), ineffective. The drawbacks associated with such traditional measures have led to the emergence of a new innovative tool of performance management - the Balanced Scorecard.

The Balanced Scorecard (BSC) was first developed at Analog Devices Inc., a mid-sized semiconductor company, during 1986-92 and was later popularized by Robert S Kaplan and David P Norton as an Integrated Performance Management System for turning strategy into action, combining both financial and non-financial performance measures. However, till now, very few people in the corporate world actually know how to use this strategic tool of performance management. It has been used successfully only in a very few companies, in a very limited manner, and, that too, mostly outside India. The article deals with the concept, development, basic perspectives and limitations of BSC, from an Indian perspective.

Experience shows that linkage of strategy, tactics and related measurement is usually an unplanned endeavor, which lacks some elements even in the best-run businesses. A tool has been developed to address this issue, which is known as BSC. Robert Kaplan and David Norton have used as a performance measurement framework that added strategic non-financial performance measures to traditional financial matrices for managers and executives to have a balanced view of organizational performance. The BSC approach emphasizes the need to provide management with a set of information, which covers all relevant areas of performance in an objective and unbiased fashion. The information provided may be both financial and non-financial and cover areas such as profitability, customer satisfaction, internal efficiency and innovation.

Treasury Management Magazine, Balanced Scorecard, Globalization, Economic Value-Added, EVA, Business Environments, Financial Markets, Performance Management, Decision-making Process, Customer Loyalty, Product Development, Organizational Goals, Performance Management Tools, Management Accounting.