Role of Control Systems in Managing Performance

This article discusses the role of control systems in managing performance in organizations, with a focus on Saudia Airlines. It provides an overview of the current output assessment method used by the company and evaluates its effectiveness in withstanding external shocks. The article also offers recommendations to strengthen the established framework.

BUSINESS
ACCOUNTING AND
FINANCE

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
1. Background outlines regarding chosen organization i.e Saudia, along with its success
factors of long term strategy...................................................................................................3
Strategy execution............................................................................................................................5
2. Role of control systems in managing the performance......................................................5
3. A description of the current output assessment method used in the company and a review of
how effectively it can withstand external shocks...................................................................7
4. An evidentiary-driven assessment of the new method focused on the above and
recommendations to strengthen the established framework...................................................8
Conclusion.....................................................................................................................................11
REEFRENCES..............................................................................................................................12

INTRODUCTION
Business reporting is one of the key mechanisms over a particular time-span to track overall
financial practices. Finance is key path to all modes of enterprises and all modes of operations.
Trustworthy and consistent accounting processes plays a key role in improving fiscal outcomes
and guiding the enterprise to achieve predefined goals (Loughran and McDonald, 2016). Saudia,
also called as Saudi Arabian Airlines is picked to properly comprehend the utility of business
reporting and importance of its different aspects. The project-report study provides relevant
details on key business strategy of chosen corporation, the roles and functionality of performance
measurement method and overall performance. Moreover, several suggestions recommendations
are discussed in further part of study report to strengthen company's performance.
MAIN BODY
1. Background outlines regarding chosen organization i.e Saudia, along with its success factors
of long term strategy.
Overview of company:
Saudi Arabia, often recognized as Saudi Arabian Airlines, is Saudi Arabia's key national
carrier airline headquartered in Jeddah. At King Abdulaziz International Airport in Jeddah,
this airline's main operating base is established. The secondary centres are King Khalid
International Airport situated at Riyadh and the King Fahd International Airport at Dammam. In
terms of overall revenue, this airline is third biggest in the entire Middle East, following
Emirates and Qatar Airways. This offers daily domestic and international airlines to more than
85 locations in the Near East, Africa, Asia, Europe and North America. It operates domestics and
international chartered flights, mainly during Ramadan and Hajj seasons. Saudia
is substantial member of Arab Air Carriers as well as joined SkyTeam airline collaboration on
29th May 2012.
Business strategy: Business strategy is detailed plan, in simplistic terms, regarding how
a corporation is determining out to accomplish its objectives. A corporate plan includes a set of
core concepts detailing how a corporation is going to accomplish those goals. This will clarify,
for instance, how to work with your rivals, look at consumer requirements and priorities, and
analyse their organization's long-run growth and status of performance. In this regard Saudia’s
managing personnel have implemented following described strategies, as follows:

Cost leadership strategy:
Cost leadership relates to developing a strategic edge in corporate management by providing
the cheapest operational costs in the sector. Cost leadership is also informed by performance,
complexity, scale, reach and collective (learning curve) experiences of organizations. Cost
leadership strategy intends to maximize manufacturing size, excellently-defined scope, and many
other advantages (e.g., quality services approach), generating highly standardized services using
modern technology (Wood, 2016). Enterprises prefer to sustain rates at a sensible level, because
more customers can take benefits of airlines services. This strategy also been utilized in the
respective airline corporation to maintain and control flights and carrier costs at such an optimal
level that more travellers can take benefits and fulfil their travel wishes.
 The niche carrier strategy (“focus strategy): A focus or sometimes called as
niche strategy framework is designed to accommodate the specifications of a particular
customer base or niche of buyers. Air transport niches in general are described as either
service provider-related, internationally focused or confined towards cost benefits. As in
this regard, Saudia Airline is intending to gain a competitive advantage by effectively
fulfilling the identified category's requirements and concentrating its assets and
procedures. Given that there are multiple approaches to function in niche and respective
airlines that focus exclusively on one specific strategy, the airline's niche strategy
would not be appropriate towards generality and thus may be descriptive. Saudia Airline
also implements this tactic by emphasizing on each classification of customer segments
and making pricing appropriately such that each particular group or segment of
traveller/visitor can obtain the best facilities or services during travel. The quality leadership strategy: Airline companies which pursue a quality leadership
model typically build a strong international channel centred on critical threshold in a
centre or leading role in particular region/area. The key strategies drive the development
of platform, including operational level, duration, and intensity. SaudiGulf Airlines that
embrace a quality leadership strategy commonly concentrate on a consistent branding
with a focus on service quality. This aid for airline corporation to improve
and maintain unique overall service quality, which further supports the development of a
global brand reputation in a global competitive market.

Strategy execution
Some of the crucial considerations which are related to the above mention strategies are
listed underneath in the context of Saudia Airlines
 Create a realistic strategy plan which is related to the aim.
 Making sure that the right persons make the choices
 Deploying a system to control risk that can effectively leads to higher results.
 Invest in the right asset which gives higher results for Saudia Airlines
 Enhancing Corporate Atmosphere so that each staff member perform job with best.
 Introduction of surveillance system which maintain record for about total operations of
airline.
 Ensure that the staff members give their success contributions in attaining the desired
goals of company.
2. Role of control systems in managing the performance.
The success or efficiency measurement and management framework is a tool for
enterprises to evaluate total production or satisfied services provided to in specific time period.
Various techniques and approaches such as benchmarking, the KPI evaluation etc. been used for
better outcomes within the same. The following helpful method is used in the case of the
Saudia airline and is defined below:
 Specific performance assessment: It is an essential and practical purpose of the
performance measurement and management processes. This refers to actual performance
estimation by referring to standard outputs (Duxbury, Gainor and Trifts, 2016). This
approach is used by managers in the sense of Saudia Airline and helps them to calculate
the actual results. In fact, this increased assistance in evaluating the poor facilities and
poorer operational efficiency and supplying them with time to implement adjustments or
improvements to the whole system for better outcomes.
 Encourages improvements to be produced: Additionally, through this approach, it
becomes simpler for companies to determine the types of interventions necessary to boost
actual performance and produce the desired outcomes. SaudiGulf Airline's project team
takes proactive measures to track the performance and make necessary adjustments that
do not affect flight activity but produce higher competitive outcomes.

 Enhances overall productivity: This encourages organizations to improve their
profitability. If businesses realize their actual result they will be taking sufficient
proactive action to improve and increase performance in for the next time. The
management of the specific airlines introduce various styles of systems to boost the
actual results and increase the brand value in order to maintain a prominent place in the
dynamic aviation industry.
 Helps to inspire people: In fact, the performance appraisal system helps empower the
employees working in various roles within the organization. That is how every worker's
real performance is assessed using a number of effectiveness measurement tools and
procedures. In this basis, management should select which workers in the organization
with excellent results and prepare accordingly for poor output to promote better business
profitability. This approach helps workers to be motivated to work effectively and
accomplish the company production on the deadlines issued. As for Saudia Airlines, the
management staffs offer the consumer sufficient rewards to their employees for their
excellent quality work, having these workers still able to serve customers at any time
adding to growth of the company.
Link with strategy and success factors
There is also an integral relation between the strategic and output variables. This is because it
allows it far simpler for managers to execute strategies effectively as per the correct
consideration and accomplish the key target in a limited time frame (Smith and Urquhart, 2018).
This is why evaluation systems are important in the current time for any category of enterprise.
Basically it is often mentioned that in the absence of success indicators, Airline Company will
often face difficulty in executing various types of policies. Numerous strategies were planned in
the sense of Saudia Airline in line with valuable success indicators that specifically benefit that
sector. Similarly, businesses choose to grow business in many other nations then managers may
assess the appropriate competition and create an efficient team centred on analysing current
worker results. It would allow Saudia airline to better plan and handle research to launch carrier
operations as soon as possible for consumer benefits and through generating revenue.

3. A description of the current output assessment method used in the company and a review of
how effectively it can withstand external shocks.
There are different types of performance measurement systems in the present market era
applied by businesses as per their size and intent. Different kinds of network control structures
refer to Saudia Airline, among which some are elaborated underneath:
 Key performance metrics: This is a vital mechanism for progress evaluation,
representing both financial and non-financial factors. The firm’s profitability,
expenses, costs etc. are evaluated using such financial aspects for a respective year. In
addition, the level of depression among workers and their coordination with
supervisors etc. is calculated with the support of non-financial component.
Saudia Airline manager implements this system of performance evaluation to
determine their progress by taking into consideration both financial and non-financial
resources. As they use to determine the revenue generation by using financial metrics
and with non-financial elements they use to check weather staff is behaving
pleasantly with customers. Furthermore, they should take appropriate steps to
minimize the amount of spending and include numerous motivating factors such as
office vacations, vacations with spouses for excellent performers in the business that
tend to improve the efficiency of the staff.
 360-degree feedback: This is a common performance measurement approach that is
commonly associated with progress monitoring in companies (Cheng and Tong,
2016). This approach gives a detailed analysis of the entities overall performance.
This is comprised of local, international firms, executives, managers, distributors and
many others parties related to company. In each of the organization's executives, the
comments depend on feedback from 360-degree tests. Managers use this form of
assessing progress around the Saudia Airlines to determine their plans and programs
from every perspective.
 Balance scorecard: This is defined as a method of quality assurance mechanism that
analyses the company's performance efficiently. In addition, this can be viewed as a
matrix of outcomes used to identify, develop and track various forms of procedures
and effects (Arquero, Hassall and Joyce, 2017). This technique was not limited to one

aspect as it has various measurements and can be useful for any form of company.
This considers different kinds of viewpoints listed below:
1. Financial outlook: It is one of the most financial centred outlooks of the performance
evaluation scorecard (Nawaz and Haniffa, 2017). It compares the business
performance of an organisation with traditional objectives. Within this context,
competitiveness, taxation, savings and several others are also included. This is easier
for Saudia Airline's financial managers to learn about current performance levels and
take proactive action from that perspective.
2. Customer point of view: This opinion contributes to knowing the quality of
customer support. Organizations continue to hold an eye on customer ratings so they
can be loyal to them. Throughout the Saudia Airlines, executives use this experience
to think about the level of market satisfaction and to make additional changes to
which are easily fulfil the customer demands.
3. Perspective of internal operating methods: In this performance scorecard
framework, the internal aspect of program management is focused around
implementing adjustments when appropriate. Techniques and policies are checked in
the sense of the particular airline organization, to see how they are going to
accomplish targets.
4. Knowledge and vision for development: This applies to a focus on the business
sector as a whole. To this regard, technical advancements play a significant part. The
reasoning is that the firms should be conscious of the emerging business trends. The
management managers are able to learn about new trends in their company in the
current situation surrounding Saudia Airline. This helps advance functionality to be
introduced to their offerings and makes passengers more comfortable while traveling
with Saudia flights.
4. An evidentiary-driven assessment of the new method focused on the above and
recommendations to strengthen the established framework.
Three types of performance measurement instruments are used in Saudia Airline such
as balance control panel, 360 degree input system and key output indicators. All these are
essential for the growth of company and serve a part of measure in market development. Such
approaches therefore have several problems that are described below:

Key performance measure
 Reduction in productivity: This method of production evaluation decreases the quality
of workers. That is, management does not understand the long-term essence of the
performance appraisal and as a result employees are motivated only for a brief time to
work effectively.
 Short-term focus: This approach relies mainly on short-term performance measures
(Davies and Tikoo, 2019). Centred on increasing long-term dependency on this approach
is troublesome for managers.
Balance scorecard
• Limited attention on international investors and customers: however this approach
does not always bring foreign investors and competitors into account. It is because related
information to the internal shareholders is supplied from multiple points of view.
Throughout this outside stakeholder cannot have sufficient knowledge for important
decision taking.
• Absence of risk management: This performance appraisal approach cannot be useful for
companies to determine risk factors in a fair way. Because of this, creditors cannot take
long-term steps that rely on the information that this tool provides.
360 Degree feedback
Time consuming and expensive approach: The drawback of this process is that it takes so
long to measure the performance correctly through all aspects of a market. Like in the above-
mentioned sector, this issue is faced by the stakeholders related to unsustainable high time usage.
As a consequence, in search of fast and useful outcomes, they may make a decision to turn to
another alternative. This approach is one of the main disadvantages as it ignores the favourable
feedback from the real performance of a business (Arnold, 2018). Under this only negative
aspects of the outcomes of a business company are covered, whereas the rest are not concerned
with Saudia Airlines operation.
Recommendations for improving current program used by Saudia Airlines:
The above performance strategies have some disadvantages which need to be overcome as
rapidly and effectively as possible. Here are a few guidelines which are as follows:
• Develop an effective framework for analysing results: One of the key approaches
to improve current performance measurement systems (Beekes, Zhan and Zhang,

2016). Saudia Airlines must establish an objective method of performance
evaluation. This can be done according to company result and size.

• Appreciate and promote exceptional excellence: Leaders in companies are
required to support those workers whose performance is excellent and outstanding.
Given that, workers will be more motivated and can doing full-efficiency job. In
Saudia Airlines this strategy may be applied to boost the existing performance
evaluation method.
Evaluation on success of the aforementioned company's internal management system:
In an interview agreement with the stakeholders it was established that SaudiGulf
Airlines new management structure is secure and reliable. It's because crucial details on
monetary and non-financial issues can be gained through supporting these stakeholders (Shahid,
2016). Here, it is necessary to realize that the performance assessment instruments are not always
efficient. Many of them to customers are not that effective and helpful. Likewise 360-degree
feedback system is not that useful for stakeholder as it just includes only details regarding the
internal dimension.
Recommendation to finance departments to improve the effectiveness of their performance
measurement software:
• The accounting team of the respective company should include comprehensive
information on the firm's financial reports using certain progress evaluation instruments
such that consumers will understand the real production.
• In addition, the investment department of SaudiGulf Airlines must give managers input
so they can better allocate the working capital (Ahadiat and Martin, 2016).
• It is also an essential way of growing the efficiency of the approaches currently in use.
Making their managers take regular feedback from various sources and try to prepare
strategies accordingly is essential for Saudia airline.
Conclusion
In conclusion, it is stated that business accounting and finance is an effective e method to
control and manage the funds and financial and non-financial instrument of a company in
profitable manner. Each and every aspect of business is needed to be control and managed in a
meaningful manner so that obstacles can be determined and proper measure can be made in order
to increase the performance. By implementing various kind of key performance indicators
manger can easily determine the weak performances of worker and operation and make sound
full decision to increase overall performance.

REEFRENCES
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Online
About Saudia Airlines. 2020. [Online] Available Through:
< https://www.saudia.com/experience/about-us/saudia-history>.