Evaluating Company Performance and Decision Making

The assignment evaluates company performance and decision making from various perspectives. It discusses different objectives, goals, and targets that companies have to achieve, which are essential for evaluating their performance. The document references several books and journals on topics such as financial literacy, decision-making frameworks, corporate financial performance, risk-taking behaviors, and online communities. It also mentions the use of Balanced Scorecard (BSC) in measuring company performance.

FINANCIAL
DECISION
MAKING

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
PART B............................................................................................................................................6
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial decision making is crucial decision that is taken by financial manager relating
to the financial mix of an organisation (Fonseca and et. al., 2012). It is related to financial terms
that are helping to every company to take effective decisions. It is helping to maintain optimum
capital structure of the company. In this report selected company Air Ryan air line Plc that are
based on UK and provide low cost transport facilities to the local passenger. In present report
covers two parts that are related to financial decisions. In part A Balanced score card alternative
way of measuring the airline's performance. In part B identification of the issues and
assumptions related to implementation of balanced score card have been discussed.
PART A
Balanced score card
The balanced score card is a strategy performance management tool that can be used by
managers to keep track of the performance activities by the staff with in their control and to
monitor the consequences grow up from these actions. It is mainly used to measuring
performance through management report. The team of management mainly concentration to
bring off the execution of a strategy or operational activities. It is important for Air Ryan airline
because they can used to guide the design the performance reports and control panel. This
ensures that the management reporting focuses on the most important strategic issues and helps
companies monitor the execution of their plan.
Benefits of using balanced score card in airline – There are many benefits of balanced score
card that are providing to airline for accomplish their goals and objectives. It will help to
measure performance of different departments. Benefits are as follows -
Better strategic planning
The balanced score card supply a coercive framework for communicating and building
strategy. It is based on visualised and helping to manager for know relationships between reason
and effect in different strategic objectives.
Improved strategy communication & execution
This strategy is very beneficial to reduce communication barriers. It facilitates to
understanding the strategy and helps to engage staff and external stakeholders in the transfer and
appraisal of the strategy (Lu, Won and Cheng, 2016).
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Better management information
The approach of balanced score card helps organisations to design key information
indicator for their several strategic objectives. This approach help in research in quality
management information regarding to decision making.
Improved performance reporting
The balance score car guide to design of performance reports of each division that are
related to the airline. This assure that the management reporting direction on the most important
strategic issues and helps to plan implementation.
Better process alignment
The balanced score card helping to align airline processes like as budgeting process, risk
management and analytics with the strategic precedence. It will helping to prepare effective
strategy that focused on organisation.
Better organisational alignment
The balanced score card provides to companies to better align with their organisational
structure with the strategic objectives. When execute any plan so company want to all staff
members and functions are helping to achieve goals and objectives.
In Air Ryan airline Plc used to monthly financial reports for measuring performance and
for produce the profitability by airline passengers scheme. In recently, the generals manager has
suggested to balanced score card as alternative way for measuring the airline's performance.
They have four separate divisions such as engineering and maintenance, accounting and finance,
customer services and marketing, human resources. So with the help of this strategic tool
measuring performance of each division (Hajek, Olej and Myskova, 2014). They are as follows -
Engineering and maintenance
This department is one of the largest departments of air Ryan airline. In this department
including tasks like maintaining and assuring technical fittingness of the whole aircraft fleet of
the company as well as maintaining and servicing aircraft components, spare parts and
equipment. In present time in this department airline have 500 employees that bring out different
activities. Along with maintaining the aircraft fleet the department also provides technical
services to other airlines such as local and international level. For providing these services the
engineering department including many departments and subdivisions like as – maintenance
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control centre, base maintenance department, technical service department, technical supplies
department and line maintenance department.
Objectives Potentials Goals Targets Measures
Financial
perspectives
Reduce to cost of
different
equipments of air
craft
Maintain efficiency
of equipments and
parts of aircraft
Maintain cost
below 25% of
equipments
Financial
techniques, cash
flow
Customer
perspectives
Have a high
average of
customer rating
Achieve to target
objectives set
according to
situation
In particular year
30% customers
travellers by
Ryan airline
Customers data,
charts and tables
Internal
process
perspectives
Provide to
different choices
of engineering
channels
Prepare techniques
for maintenance
and engineering
department
75% applying
strategies in
systematic way
Budgeting
process and IRR
method
Learning and
growth
perspectives
Have a skilled of
maintenance
Offering training
and development to
engineering and
maintenance
department
Improve 35%
efficiency of
maintenance
Develop a
partnership to
provide courses
online
Accounting and Finance
In airline industry accounting and finance department play crucial role because all
department are based on accounting and finance department. There is mainly need to apply
balanced score card for evaluate performance because other performance are based on it. It is
provided statical data and management report of airline to show performance. It is
Objectives Potentials Goals Targets Measures
Financial
perspectives
Increasing revenues
and selling
Improve policy of
data maintain and
Check out
financial
 Revenue
growth rate
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present in
effective way
information every
week
 Return on
capital
employed
 Profitability
from
customers
Customer
perspectives
Provide all
cancellation charges
on time
Increasing
customers
numbers and
prepare all lists
related to all
customers
Increasing
number of
customers about
25% compare to
last year
(Skjærseth and
Wettestad, 2016).
 Market share
of customers
 Customer
retention rate
 Customer
acquisition
(number and
quality)
Internal
process
perspectives
Identify those
concepts and
principle that are
needed to know
Make strong
process of
accounting and
achieve to
objectives
All objective are
covered after
implementation
of strategy
 Profitability
from new
product
 R&D
efficiency
time to
market)
 Percentage of
resources of
existing
products
Learning
and growth
perspectives
Identify all rules
and guidelines of
accounting
Maintain all data
in systematic way
who are travelling
in flights
Prepare list of all
concepts and
principles to
attract financial
sectors for
 Employee
retention
 Innovative
culture
survey
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approved loan surveys
 Strategic skill
coverage
ratio by
competency
category
Human resource
In airline industry human resource department have significant role that are responsible
for checking backgrounds of job nominee, hiring airline staff and flight crews, processing
benefits and other paperwork, interfacing with insurance companies (Archuleta and Grable,
2012) . The airline attracts, evaluates, rewards and promote career development of employees on
the basis of merit, professionalism, personal achievement and joint participation in the
strengthening.
Objectives Potentials Goals Targets Measures
Financial
perspectives
Establish good
relation with
finance and
provide salaries,
reward on time
Maintain all
financial
information with
human resource
All information
provides to
management in
every 2 weeks.
Strategic
planning, budgets
Customer
perspectives
Hiring efficient
people who have
knowledge
Provide all
facilities they are
needed
Every week hiring
new candidate to
apply new ideas.
Growth rate,
strategy rate and
market share of
customers
Internal
process
perspectives
Make strong
internal process
for recognise
strategy
Trained 100% to
every team
Minimum 50
employees trained
in training session
Strategic skill and
coverage ratio
Learning and
growth
Makes rules and
guidelines to
Increase the value Learning skills
improve about 75%
Profitability from
each departments
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perspectives apply on every
employees
of learning skills employees and
Customer service and marketing
For effective marketing and customer services need to better planning by airlines that are
giving better result in future. In competitive time marketing department every airlines offering
similar products and services that are attract to customers. Airline have gotten creative with their
marketing strategies to create activity and attract customer attention (Burg, 2014). In present
scenario airlines applying different strategies for customer services and marketing such as social
media, offering special packages and loyalty programs. Airlines connect with customers with the
help of social media and establish good relation with customers to provide services. Mostly in
social medial they are using twitter for promotion and attract to customer.
Objectives Potentials Goals Targets measures
Financial
perspectives
Make efficient in
financial sector
Provide effective
packages to
customers,
increase earning
capacity
Sale out maximum
packages of
holidays to
customers
Key performance
indicators in
financial part
helping to
measure data
Customer
perspectives
Increasing number
of customers in
airline
Customer
satisfaction is
important agenda
Approximate 50%
Feedbacks coming
in positive way
Daily report
details
Internal
process
perspectives
Make effective
strategy for
internal process
Establish effective
relations with
customers
40% customers are
interrelated with
company
Relationship
between
management and
customers
Learning and
growth
perspectives
Strong growth
maintain in
customer numbers
Continue
increasing
customer growth
rate
25% increasing
growth rate
Ratio analysis,
strategic plan and
growth rate
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PART B
The balanced score card is a powerful management framework that defines the objectives
and targets of the airlines for major stakeholders. It was designing as a tool that measures
performance according to framework that added strategic non financial performance measures
and executives a more balanced view of airlines performance. When implement balanced score
card in airline that time many challenges are grow up (Charness and Gneezy, 2012) . It is
implement in metrics system which adjust activities with the strategy and vision of the airline in
a way that adoptive action. There faces challenges by airlines are as follows -
Balanced score card principles
The balanced score cards principles are different when it apply on airlines so it is not easy
to apply in industry. In starting it creates many problems and these principles are related top the
specific departments like learning and growth perspectives, in this segment relate to employees
their training and development (Vasarhelyi, Chan and Krahel, 2012). In business process
perspectives in this including internal business process which permit to managers to
acknowledge the business is running in well way or not. In customer phase understand needs and
wants of the customers and in financial phase implement financial strategy that are helping to
improve revenues and identify accurate funding data.
Lack of efficiency data collection and reporting
There is lack of efficient data collection and reporting when implement balanced scored
card. In this starry tool performance are shows in matrices matter if there is data collected in
wrong way so it is shows wrong matrices. These matrices can not present right performance of
the airline and not identify right results. So there is need to collect right data some times these
data are changes on daily basis. On daily basis need to mark these data and prepare report after
that it is implement and show the performance (Aouni, Colapinto and La Torre, 2014).
Example - There are type of multinational organisation are using balance scorecard
approach with in organisational context. Volkswagen is one of the automotive organisation using
balance score card approach. The group utilizes the methodology guide to adjust money related
and venture assets to the technique, and to propel its in excess of 20,000 workers by imparting
the procedure in different ways and introducing prize and acknowledgement programs. It
additionally sets up new projects to adjust the broad systems of providers and merchants to the
technique. Another supervisory crew at VW do Brazil creates and conveys a technique delineate
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Balanced Scorecard to achieve a turnaround and social change following eight back to back long
stretches of budgetary misfortunes and piece of the pie decays. Be that as it may, after a sharp
decrease in deals activated by the worldwide money related emergency of 2008, the official
group faces a difficulty: would it be a good idea for it to reduce creation levels and subsidizing
for key activities until the point when deals recoup, or would it be a good idea for it to keep on
contributing for what's to come?
Lack of formal review structure
Balanced Scorecard work best when they are viewed frequently enough to make a
differences. If in airlines metric value changes on daily basis as well as variables with in the
control of management. In broadly, review of metrics recognise that share responsibility for
processes result. These metrics are defined as automated and deployed and also defined with
manual data collection if necessary. For the success of metrics program that is important
behaviour according to changes.
Poorly explain metrics
Balanced score cards presents in metrics that will be relevant clear according to airline.
There are described data for easy to understand to making ideal decision and it will defined the
way of measurement of collected data (Drexler, Fischer and Schoar, 2014) . After analysis
getting that their performance and implement data are not matching with them, they are different
from each other. A systems that has untidy or inconsistently defined metrics will be assailable to
disapproval by people who want to neglect accountability for results (Zhu and et. al., 2012) .
Example – In Durham city applying balanced score card but they need to strategy
execution for participation in each department of city. According to departments select strategies
to implement according to perspectives so prepare strategic plans, identify objectives and
measure to getting city's goals. For measure performance there is putting premium so there is
needed a system for managing performance data. It is not only to follow the progress but also it
helping to communicate and maintain alignment. All the leaders that are related to the different
departments they need to talk with citizens to implement clear points for helping Durham for
address needs. Durham has taken budget reports are related to each departments
No process improvement methodology
Some time when applying balanced score card so methodology process are not working
properly. So in airline not coming any improvement that are identify after evaluate of processes.
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There is identified of problems are related to the performances and that is identify through
efficient and effective method. These problems are solute when reduce gap between performance
and development. If the airline does not have standard methodologies and tool kits for addressing
process problems the amount of effort required approach to solving new performance gap. After
all this, there can be no adjustment and performance will continue to decay (Smith, 2014) .
Example – Pacific gas & electric they are implement balanced score card and they are
not follow guidelines according to their rules. In this they are not process improvement to
methodologies that are shows negative effect of the organisation. They are not only apply but
also not follow in each section so result will come in that are not following rules. This company
makes many mistakes that re recognise in report and they are recognise problems in
implementation. in this recognise there is no process improvement methodologies. When
company see effect that is not good so the decide to what problems are coming on
implementation time and try to reduce it after it implement in proper way and getting that they
are doing many mistakes. They are follow all rules in this and again implement in effective
manner that are shows good effect.
Complicating the initial implementation
There is high attitude to get losses in the details and technicalities lot of confusion
around the initial approach. The best correction of this phase the approach by starting with the
implementation of balanced score card and follow the guidelines. Many times organisations are
not follow their guidelines that will be effect in wrong manner because it make complicating this
process. For best implementation there is follow to four perspectives that are describe objectives,
goals, indication and targets related to each departments.
Too much internal focus
One major criticism of the balanced score card that it was always focusing on internal
matter. It is big problem that was grow up in the airline because it is connect to different external
factors that are time to time affect them so need to interconnect to internal and external factors
that are manage to activities. There is need to know which factors are need to identify and
according to situation they are need to modify (Biermanand Smidt, 2012) .
Example – In SBS group only focusing in internal groups that are not good to according
to balanced score card when it is implement that time they are not focusing properly. In the result
come that they are failure to establish in proper manner to success. When it is
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From experience balanced score card is the amazing power to achieve strategy and business
alignment and to build high performing organizations. When it is implement in any organisation
that time see the there guidelines and every perspectives are clear if that is not clear so this tool
not working properly (Cash balanced card approach. 2018). And there is grow up problems
regarding to implementation but for this need to understand rules of strategic tool. With the help
of this identify those growth rate that are need to increases. There are recognise many mistakes
that are need to remove and implement again after that getting that it is good systematic tool that
are helping to evaluate performance and they are focusing on internal and external factors in
company.
CONCLUSION
As per the above discussion it is concluded that balanced score card is systematic tool
that are applying in airline to evaluate the performance of four division that are specially
describe in this airline. The score card has four perspective that are using to measuring
performance of each departments. In financial perspective major financial tools and goal that are
related to each department and elaborate financial growth. In learning and growth phase identify
those techniques and tool that are helping to improve conditions. In customer phase providing
services according to customer interest and wants. There is also see rating of increasing
customers and in last internal perspective measure internal process that are affect to
methodologies for bring out to different aspects. After implementation balanced scored card
there is comping many issues that are solving and follow according to guidelines. In the
conclusion general manager have to adopt balanced score card because it is describe all
objectives, potential goals and targets of the company in different perspectives that have to be
know for evaluate the performance.
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REFERENCES
Books and journal
Fonseca, R. and et. al., 2012. What explains the gender gap in financial literacy? The role of
household decision making. Journal of Consumer Affairs. 46(1). pp.90-106.
Lu, Q., Won, J. and Cheng, J. C., 2016. A financial decision making framework for construction
projects based on 5D Building Information Modeling (BIM). International Journal of
Project Management. 34(1). pp.3-21.
Hajek, P., Olej, V. and Myskova, R., 2014. Forecasting corporate financial performance using
sentiment in annual reports for stakeholders’ decision-making. Technological and
Economic Development of Economy. 20(4). pp.721-738.
Skjærseth, J. B. and Wettestad, J., 2016. EU emissions trading: initiation, decision-making and
implementation. Routledge.
Archuleta, K. L. and Grable, J. E., 2012. Does it matter who makes the financial decisions? An
exploratory study of married couples’ financial decision-making and relationship
satisfaction. Financial Planning Review. 5(4). pp.1-15.
Burg, S. L., 2014. Conflict and cohesion in Socialist Yugoslavia: political decision making since
1966 (Vol. 510). Princeton University Press.
Charness, G. and Gneezy, U., 2012. Strong evidence for gender differences in risk taking.
Journal of Economic Behavior & Organization. 83(1). pp.50-58.
Aouni, B., Colapinto, C. and La Torre, D., 2014. Financial portfolio management through the
goal programming model: Current state-of-the-art. European Journal of Operational
Research. 234(2). pp.536-545.
Zhu, R., Dholakia, U. M., Chen, X. and Algesheimer, R., 2012. Does online community
participation foster risky financial behavior?. Journal of Marketing Research. 49(3).
pp.394-407.
Smith, W. K., 2014. Dynamic decision making: A model of senior leaders managing strategic
paradoxes. Academy of Management Journal. 57(6), pp.1592-1623.
Bierman Jr, H. and Smidt, S., 2012. The capital budgeting decision: economic analysis of
investment projects. Routledge.
Drexler, A., Fischer, G. and Schoar, A., 2014. Keeping it simple: Financial literacy and rules of
thumb. American Economic Journal: Applied Economics. 6(2). pp.1-31.
Vasarhelyi, M. A., Chan, D. Y. and Krahel, J. P., 2012. Consequences of XBRL standardization
on financial statement data. Journal of Information Systems. 26(1). pp.155-167.
Online
Issues of balance score card. 2018. [Online]. Available through:
<http://www.bpminstitute.org/resources/articles/problems-implementing-balanced-
scorecard>
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