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CA Intermediate · Financial Management and Strategic Management · Strategy Implementation and Evaluation

Anand Pharma uses a Balanced Scorecard. It tracks customer retention rate, number of new product launches per year, employee training hours, and return on capital employed. A manager wants to assign the measures to the four perspectives. Which assignment is correct?

Customer retention belongs to the customer perspective, new product launches to internal business process, training hours to learning and growth, and return on capital employed to the financial perspective. Each measure reflects what its perspective monitors, so only this matching is correct.

  1. ACustomer retention: Internal process; new launches: Customer; training hours: Financial; ROCE: Learning and growth
  2. BCustomer retention: Customer; new launches: Internal process; training hours: Learning and growth; ROCE: FinancialCorrect
  3. CCustomer retention: Financial; new launches: Learning and growth; training hours: Internal process; ROCE: Customer
  4. DCustomer retention: Customer; new launches: Learning and growth; training hours: Financial; ROCE: Internal process

Explanation

Retention reflects how customers view the firm, so Customer. Product launches reflect the innovation process, so Internal business process. Training hours build capability, so Learning and growth. ROCE is a profitability measure, so Financial. Other options mismatch at least one measure.

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