In view of the growing competition, the increased change in customers’ wants and the potential of new communication and information technologies, more and more companies are faced with the need to permanently adjust and further develop their processes, products and offer. To be able to exist in the market, a company must be in a position to recognise future developments early and include them in the strategy. A company should therefore use
management instruments which make it able to adjust strategies quickly and communicate them transparently in the whole company.
There is increasing criticism of the classical controlling instruments. It is argued that controlling is supposed to provide management relevant data for the management which do not only include financial historical information as so far, but also include future related non-monetary figures. Against this background the Balanced Scorecard (BSC) is becoming more important. It extends the previous focus on finance issues to assess the performance of a company with a range of other aspects and ratios. The customer
perspective, the internal process perspective and the learning and development perspective are supposed to be considered equally next to the financial perspective in the BSC.
The targets of this thesis are split into a main target and a sub target. The main target of this paper is split again into two parts:
The first part of the main target is to show and to explain the relevant theoretical framework of the BSC, in particular to strategic controlling. The second part of the main target is to analyse the BSC as a strategic management system and to give an overview about this strategic controlling tool as it is seen in academic literature. The sub target of this paper is to provide a link between theory and practice by applying the theory to a current example taken from the insurance industry. The result is a recommendation for a BSC as a strategic controlling instrument for that specific insurance company. With this specific BSC for an insurance company comes also a tool for a well structured evaluation of the chances and risks involved with its application.
Table of Contents
1. Introduction
1.1 The problem
1.2 The goal
1.3 Structure of the analysis
2. Controlling
2.1 Definition of controlling
2.2 Goals and duties of controlling
2.3 The controlling system
2.4 Strategic versus operative controlling
2.5 Selected performance measurement systems
3. BSC as a management system
3.1 Accruement and development of the BSC
3.2 Structure and goals of a BSC
3.3 Perspectives of the BSC
3.3.1 The financial perspective
3.3.2 The customer perspective
3.3.3 The internal-business-process perspective
3.3.4 The learning and growth perspective
3.3.5 Other perspectives
3.4 Requirements and implementation process of a BSC
3.5 Chances and risks of a BSC
3.5.1 Chances of a BSC
3.5.2 Risks of a BSC
4. The BSC as a management system in the ABC1 Versicherungs AG
4.1 The insurance industry
4.2 The company
4.3 Controlling in the ABC1 Versicherungs AG
4.4 BSC as a strategic controlling instrument in the ABC1 Versicherungs AG
4.4.1 Perspectives of the company’s BSC
4.4.2 Implementation of the BSC in the company
4.4.3 Chances and risks of using the BSC in the company
4.5 Critical comments
5. Summary
6. List of literature
Objectives and Research Focus
This thesis explores the application of the Balanced Scorecard (BSC) as a strategic controlling instrument, specifically tailoring the concept to the insurance industry. The core research question addresses how an insurance company can effectively implement a BSC to overcome the limitations of traditional, past-oriented financial controlling systems and better integrate strategy into operational actions.
- Theoretical foundation of the Balanced Scorecard as a management system.
- Differentiation between strategic and operative controlling.
- Evaluation of performance measurement systems and their specific criteria.
- Analysis of the insurance industry's competitive landscape and controlling needs.
- Development of a recommended BSC model for the ABC1 Versicherungs AG, including risk management.
Excerpt from the Book
1.1 The problem
In view of the growing competition, the increased change in customers’ wants and the potential of new communication and information technologies, more and more companies are faced with the need to permanently adjust and further develop their processes, products and offer.
To be able to exist in the market, a company must be in a position to recognise future developments early and include them in the strategy. A company should therefore use management instruments which make it able to adjust strategies quickly and communicate them transparently in the whole company.
There is increasing criticism of the classical controlling instruments. It is argued that controlling is supposed to provide management relevant data for the management which do not only include financial historical information as so far, but also include future related non-monetary figures. Against this background the Balanced Scorecard (BSC) is becoming more important. It extends the previous focus on finance issues to assess the performance of a company with a range of other aspects and ratios. The customer perspective, the internal process perspective and the learning and development perspective are supposed to be considered equally next to the financial perspective in the BSC.
Summary of Chapters
1. Introduction: Outlines the problem of traditional controlling instruments in competitive markets and introduces the Balanced Scorecard as a solution.
2. Controlling: Provides a comprehensive definition, discusses goals and duties, and differentiates between strategic and operative controlling.
3. BSC as a management system: Details the accruement, structure, and perspectives of the Balanced Scorecard, including its requirements and inherent chances and risks.
4. The BSC as a management system in the ABC1 Versicherungs AG: Applies the theoretical BSC framework to a specific insurance company, including a market analysis, implementation strategy, and critical commentary.
5. Summary: Recapitulates the thesis findings and confirms the effectiveness of the BSC as a strategic controlling instrument.
6. List of literature: Compiles all academic and practical sources used throughout the thesis.
Key Words
Balanced Scorecard, Strategic Controlling, Operative Controlling, Performance Measurement, Insurance Industry, Management Systems, Strategy Implementation, Financial Perspective, Customer Perspective, Internal Process Perspective, Learning and Growth, Risk Management, Return on Equity, Performance Indicators, Competitive Advantage.
Frequently Asked Questions
What is the primary focus of this thesis?
The thesis focuses on analyzing the Balanced Scorecard (BSC) as a strategic controlling and steering instrument to overcome the limitations of traditional, finance-focused management tools in a competitive market environment.
What are the core research areas of the work?
The work covers controlling definitions, the distinction between strategic and operative controlling, performance measurement concepts, and the specific application of the BSC within the insurance industry.
What is the main objective of the thesis?
The main objective is to provide a theoretical framework for the BSC and to offer a practical recommendation for its implementation within a specific insurance company, the ABC1 Versicherungs AG.
Which scientific methodology is applied?
The thesis utilizes a literature-based theoretical analysis combined with a case study approach, applying BSC principles to the practical environment of the insurance sector.
What does the main part of the analysis cover?
The main part analyzes the BSC's perspectives (financial, customer, internal processes, learning and growth), the requirements for implementation, and an evaluation of chances and risks, culminating in a company-specific application.
Which keywords best characterize this work?
Key terms include Balanced Scorecard, Strategic Controlling, Performance Measurement, Insurance Industry, and Strategy Implementation.
How is risk management integrated into the proposed BSC?
In the recommendation for the ABC1 Versicherungs AG, risk management is proposed to be integrated directly into the specific BSC perspectives to ensure that risk responsibility is clearly defined.
Why is an additional perspective suggested for the insurance company?
An "external communication" perspective is recommended to specifically address the needs of stakeholders like the BaFin and rating agencies, which is crucial for insurance companies but not explicitly covered in the standard four-perspective model.
- Quote paper
- Alexander Merl (Author), 2007, Analysis of the Balanced Scorecard as a strategic controlling instrument with an example from the insurance industry, Munich, GRIN Verlag, https://www.grin.com/document/78851
