Activity Based Costing By Stern Stewart & Co. (ABC) Model
During the last decades, performance measurement has developed tremendously (Neely & Bourne, Why measurement initiatives fail, 2000). Faster and more severe changes in the business environment are considered the main drivers behind this reformation in performance measurement and decision makers have realized that conventional measures are not able to provide a holistic view on an organi-zation’s performance (Anderson & McAdam, 2004).
With the beginning of the 1980s traditional accounting based performance measurement systems have been increasingly criticized for various reasons such as short-sidedness (Garvin & Hayes, 1982), en-couraging local optimization (Hall, 1983), lacking strategic and external focus (Kaplan & Norton, 1992). Acknowledging …show more content…
Both the EVA model, developed by Stern Stewart & Co., and the ABC model adjust for a common accounting error by explicitly comprising all related cost in order to better reflect the ‘true value’. The EVA model takes into account all capital cost, including cost of equity (Pettit, 2000), and the ABC model recognizes all activities that are necessary to support the production and delivery as product cost (Cooper & Kaplan, …show more content…
The Balanced Scorecard (BSC) model proposed by Kaplan and Norton (1992) has received the largest attention during the last twenty years and has proven to be a successful model in various industries (Taticchi et al., 2012). The BSC provides a holistic view of the organization based on a balanced set of measures from four im-portant perspectives: financial, customer, internal business and innovation and growth. The model is particularly useful for decision makers since it provides “top managers a fast but comprehensive view of the business” (Letza, 1996). Kaplan and Norton explicitly emphasize the importance of identifying the value/ performance drivers and highlight the need of linking the performance measurement to corporate and organizational strategy and its goals (Kaplan & Norton, 1996). The model is widely acknowledged (e.g. by Neely et al., 2001; Atkinson & Brown, 2001) for its ability to integrate differ-ent performance types (financial and non-financial, internal and external) and to display a multi-perspective view of an
With the beginning of the 1980s traditional accounting based performance measurement systems have been increasingly criticized for various reasons such as short-sidedness (Garvin & Hayes, 1982), en-couraging local optimization (Hall, 1983), lacking strategic and external focus (Kaplan & Norton, 1992). Acknowledging …show more content…
Both the EVA model, developed by Stern Stewart & Co., and the ABC model adjust for a common accounting error by explicitly comprising all related cost in order to better reflect the ‘true value’. The EVA model takes into account all capital cost, including cost of equity (Pettit, 2000), and the ABC model recognizes all activities that are necessary to support the production and delivery as product cost (Cooper & Kaplan, …show more content…
The Balanced Scorecard (BSC) model proposed by Kaplan and Norton (1992) has received the largest attention during the last twenty years and has proven to be a successful model in various industries (Taticchi et al., 2012). The BSC provides a holistic view of the organization based on a balanced set of measures from four im-portant perspectives: financial, customer, internal business and innovation and growth. The model is particularly useful for decision makers since it provides “top managers a fast but comprehensive view of the business” (Letza, 1996). Kaplan and Norton explicitly emphasize the importance of identifying the value/ performance drivers and highlight the need of linking the performance measurement to corporate and organizational strategy and its goals (Kaplan & Norton, 1996). The model is widely acknowledged (e.g. by Neely et al., 2001; Atkinson & Brown, 2001) for its ability to integrate differ-ent performance types (financial and non-financial, internal and external) and to display a multi-perspective view of an