Balanced Scorecard Implementation at Philips
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Case Details:
Case Code : BSTR270
Case Length : 18 Pages
Period : 1995-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Philips
Themes: Growth Strategy |
Balanced Scorecard
Industry : Consumer Electronics
Countries : Netherlands
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"Our aim for adopting the balanced scorecard solution is to consistently communicate strategy deep down into Philips' 80 businesses and support more than 10,000 managers with tools to turn strategy into action by sharing knowledge, aligning actions, monitoring progress and learning."1
- Peter Geelen of Philips Corporate Control, Responsible for the Balanced Scorecard Project, in 2001.
"The balanced scorecard serves not only as the starting point for identifying those areas where breakthroughs in performance are most needed, but also as an instrument for tracking progress."
- Annual Report, Philips Electronics NV, 2001.
Introduction
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After a dismal financial performance during the 1990s, Netherlands based Royal Philips NV (Philips) embarked on a restructuring exercise, to turn the company around. The efforts continued till the late 1990s, as even during the mid-1990s, the company reported losses. Due to high manufacturing costs, the products could not be priced competitively. This led to the company initiating job cuts, selling unprofitable businesses and closing down several manufacturing facilities. Rapid changes in the external business environment and growing competition due to Asian manufacturers made Philips realize the need to transform into a flexible organization and shift focus from high-volume business to high-value business.
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In order to bring in the desired change, Philips embarked on an improvement program, in all its divisions and departments across the world, encompassing all the employees. The program, called Business Excellence through Speed and Teamwork (BEST), described a set of methods and tools through which Philips aimed to improve business and financial performance.
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BEST was a company-wide initiative aimed at achieving excellence in every aspect of business at Philips. Philips used several tools and approaches as a part of BEST.
Some of these were Philips Business Excellence Model (PBE), Process Survey Tools (PST) and Balanced Scorecard.
The Balanced Scorecard was used to communicate the strategy across Philips' divisions that had more than 120,000 employees spread across 150 countries in the world.
The Balanced Scorecard enabled the employees understand the existing policies, and plans for the future. The initiative to implement Balanced Scorecard came from the top management. |
Balanced Scorecard Implementation at Philips
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