But despite all the advantages, the SPP has a significant drawback. Like any management technology, it must be adapted to the existing external conditions. You cannot simply transfer a system developed for an American oil company to a Chinese export/import company: it will not work correctly due to cultural differences between the countries and industry specifics.
There are examples of companies in various countries trying to copy the BPS from American companies operating in the same industry. But they failed to implement the system in practice, since external conditions and internal management methods had noticeable differences. As a result, these companies had to change their views on performance management and adapt the balanced scorecard to their realities.
A number of other companies encountered difficulties when collecting data on internal processes, since a form for recording them had not been developed.
A more serious problem ios database was that the BSC could be used incorrectly. These errors probably led to the scandal that arose with online stores. Management based on the balanced scorecard assumes a departure from traditional accounting data. But sometimes there is a bias in the other direction: managers, investors and financial analysts do not pay attention to financial performance indicators at all and are only engaged in increasing intangible resources and taking care of customers.
Something similar happened on the Amazon.com website. This site was an international advertising platform for online businesses. The goal of sellers was to increase profits. The actions taken to retain customers and satisfy their needs (such as long-distance shipping) resulted in a loss of income with each transaction. This business philosophy, which later turned out to be unacceptable, was adopted by other online stores. An example is adMart from Hong Kong.
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Components of the balanced scorecard
What does the BSC consist of? All elements of the balanced scorecard are divided into four main groups related to finance, clients, processes and personnel development. Below we will consider each group and its components.
Financial group of BSC indicators
Consists of the following elements:
profit;
net cash flow (NCF);
product profitability;
cost price of production;
return on capital.