Management Accounting · Performance measurement - overview

Balanced Scorecard and Other Performance Frameworks for ACCA MA

Updated 11 October 2026 · Fact-checked

The balanced scorecard (Kaplan and Norton) measures performance from four perspectives: financial, customer, internal business process, and innovation and learning. It stops a firm relying on profit alone. To solve questions, identify the perspective a measure belongs to, then link it to the strategic goal.

Understand Balanced Scorecard and Other Performance Frameworks

Traditional performance measures are mostly financial: profit, return on investment, sales growth. They look backwards and can push managers to cut costs or training now to look good this year. Frameworks fix this by adding other measures.

The balanced scorecard, from Kaplan and Norton, gives a small set of measures across four perspectives. Each perspective answers one question.

Financial: How do we look to shareholders? Examples: profit, ROI, cash flow, revenue growth.
Customer: How do customers see us? Examples: market share, customer satisfaction, complaints, repeat orders, customer-reported delivery reliability.
Internal business process: What must we excel at? Examples: cycle time, defect rate, internal on-time dispatch rate, productivity.
Innovation and learning: Can we keep improving and create value? Examples: new products launched, staff training hours, time to market, staff turnover.

The measures should come from the firm's strategy and should be balanced. Good results in the non-financial areas are expected to drive future financial results.

The building block model (Fitzgerald and Moon) is mainly for service businesses. It has three parts. Dimensions are what is measured. Two are results: competitiveness and financial performance. Four are determinants: quality of service, flexibility, resource utilisation and innovation. Results show how well the strategy has worked. Determinants drive future results. Standards are the targets, and they should be owned, achievable and fair. Rewards motivate staff to hit the targets and should be clear, motivating and controllable.

Benchmarking compares your performance or processes with a best-practice standard to find gaps and improve. It can be internal (other units in the group), competitor, functional (similar function in another industry) or strategic. Its limits: it can be costly, competitors rarely share data, and copying others may only match them, not beat them.

Key formulas to remember

Balanced scorecard perspectives: Financial + Customer + Internal business process + Innovation and learning; Learn the four names and the question each one asks. Kaplan and Norton's original wording.
Building block model: three parts: Dimensions + Standards + Rewards; Six dimensions: competitiveness, financial performance, quality, flexibility, resource utilisation, innovation. Standards should be ownership, achievability and equity (fairness).
Types of benchmarking: Internal, competitor, functional (generic), strategic; Match the type to who you compare with.

How to solve Balanced Scorecard and Other Performance Frameworks questions

Use this method for any question on scorecards, building blocks or benchmarking.

1Identify which framework the question tests: scorecard, building block model or benchmarking.
2Read the business type. Services point to the building block model; a firm with a stated strategy points to the scorecard.
3For a measure, ask what it actually tracks: money, customers, internal processes, or learning and growth.
4Place it in the matching perspective or dimension. Check the measure is clear and quantifiable.
5Link it to a strategic goal. Ask what the measure drives or protects.
6For advantages or disadvantages, give both a point and a short reason.
7Check the answer type: single choice, select the stated number, or number entry. Answer exactly as asked.

Quickest way: Perspective key words

When to use it: When a multiple choice question asks which perspective a measure belongs to.

Money or shareholder return: financial.
Customer opinion, share or retention: customer.
Speed, quality, waste or efficiency inside the firm: internal business process.
New products, training or staff skills: innovation and learning.
If two seem possible, pick the one the measure most directly tracks.

Common mistakes in Balanced Scorecard and Other Performance Frameworks

Placing a delivery or quality measure in a perspective without checking how it is defined, such as always putting on-time delivery under customer or always under internal process.
Customers feel the result, so students assume every delivery measure is a customer measure. Others assume it is always internal because the firm controls it.
Fix: Placement depends on what is measured and on the strategy. Delivery performance as the customer sees it, for example customer-reported delivery reliability, belongs under customer. Internal measures such as cycle time or defect rate belong under internal business process. Follow how the question defines the measure.
Saying the balanced scorecard has no financial measures.
Students remember it as a non-financial tool.
Fix: Financial is one of the four perspectives. The scorecard balances financial with non-financial.
Mixing up innovation and learning with internal process.
Both sound like internal activity.
Fix: Innovation and learning covers future capability: training, new products, skills. Internal process covers current operations.
Applying the building block model to a manufacturer only.
Students link all frameworks to products.
Fix: It was designed for service businesses. Remember the three parts: dimensions, standards, rewards.
Claiming benchmarking guarantees better performance.
Students overstate its benefits.
Fix: It shows gaps and ideas, but it costs time and money, comparable data may be unavailable, and it may only match others.

Worked examples

Example 1

A bus company tracks: (1) percentage of buses leaving on time, (2) hours of driver training per year, (3) passenger satisfaction score, (4) operating profit margin. Match each to a balanced scorecard perspective.

Show the solution

(1) On-time departures measure how well internal operations run, so internal business process.
(2) Training hours build staff skills for the future, so innovation and learning.
(3) A satisfaction score shows how customers see the firm, so customer.
(4) Operating profit margin measures money return, so financial.

Answer: (1) Internal business process; (2) Innovation and learning; (3) Customer; (4) Financial.

Example 2

A consultancy firm wants to use the building block model. Identify the three parts of the building block model and give two example dimensions with a measure for each.

Show the solution

The three parts are dimensions, standards and rewards.
Dimensions are what is measured. Competitiveness could be measured by sales growth or market share.
Quality of service could be measured by complaints per 100 clients.
Standards are the targets and should be achievable, owned by staff and fair. Rewards motivate staff to meet them.

Answer: Dimensions, standards and rewards. Example dimensions: competitiveness (sales growth) and quality of service (complaints per 100 clients).

Exam tips

Learn the four perspectives by name and by the question each one asks. Most objective test questions are matching tasks.
Read the measure carefully. Decide what it tracks before choosing a perspective.
For advantages and disadvantages, remember the scorecard gives a balanced, strategy-linked view but can have too many measures, conflicting goals and no single overall result.
In multiple response questions, select exactly the number stated.
Link frameworks to business type: building block for services, benchmarking to compare with others.

Practice questions from Performance measurement - overview

Balanced Scorecard and Other Performance Frameworks in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Balanced Scorecard and Other Performance Frameworks: frequently asked questions

What are the four perspectives of the balanced scorecard?

They are financial, customer, internal business process, and innovation and learning. Each has its own goals and measures taken from the strategy. Together they give a balanced view of performance.

What are the advantages and disadvantages of the balanced scorecard?

Advantages: it links measures to strategy, looks beyond profit and looks forward. Disadvantages: it can be complex, may carry too many measures that conflict, and does not give one overall figure. It also takes time and cost to set up.

What is benchmarking in management accounting?

Benchmarking compares your performance or processes with best practice, inside or outside your industry, to find gaps and improve. Types include internal, competitor, functional and strategic. It can be costly and the data may be hard to get.

Is the building block model examined with the balanced scorecard?

It can be. Know it as a framework for service businesses with dimensions, standards and rewards. Expect basic recall questions rather than long calculations.