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1. What do you intend to do in your project?

2. Details about the chosen organisation and the current practices available there

Background of Etihad Airways

Performance measurement system can be considered to be information system that are essentially utilized for evaluation of both individual as well as organizational performance[1]. Nowadays, management of firms use important non-financial measures along with key financial measures within a particular performance measurement systems in order to offer managers with suitable information regarding the overall situation of the corporation[2]. Fascinatingly, researchers also remain engaged in the process of studying performance measurement scheme, particularly performance measurement structures as well as performance measurement system.

The main purpose of the present study is to critically analyse use and implementation of a variety of financial and non-financial performance measures identified in performance measurement systems literature with special reference to the operations of the corporation Etihad Airways. The current study intends to analytically examine the benefits and disadvantages of financial as well as non-financial measures of performance, importance of significant management accounting information in competitive markets and selection and implementation of right set of performance measures. Moving further, the current study also intends to expound in detail the difficulties that might be encountered in the process of implementation of suggested techniques of performance measurement.

Etihad Airways, a flag carrier and the second major airline of the UAE, headquartered in Khalifa City, Abu Dhabi commenced operations during the year 2003[3]. Besides the primary business function of passenger transportation, the company Etihad also necessarily runs Etihad Holidays as well as Etihad Cargo. Etihad Airways that is a national carrier of the UAE as mentioned by corporation’s slogan

The aviation sector in UAE can be regarded as one of the main industries that help in the process of driving the economy of the entire nation. Essentially, airline industry in UAE helps in staying afloat and huge investment is necessarily infused into the burgeoning aviation industry that can ultimately assist the nation to stay afloat during the period of global financial crisis[4]. UAE has plans to develop transport and infrastructure for communication and intends to invest around AED500bn over the next 10 years. Reports reveal that the passenger traffic growth rate is anticipated to increase at the rate of 10% every year. The rate at which the market is growing is very important as this helps in determining the sales growth rate and the rate of profits of the organizations operating in the aviation industry. Emirates has 42%, Etihad Airways has 12%, Air Arabia has 6%, Qatar Airways possess 3%, Air India Express has 2% and others have 35% of the total market share. 

Significance of Performance Measurement Systems

The management information system can help the management of Etihad Airways in acquiring financial as well as cost records[6]. However, the validity of the information depends upon the accuracy the specific records. In addition to this, management accounting information that includes financial analysis as well as interpretation of financial accounts and statements depends on the potential of the analysts. Again, the business organization can acquire benefits from the amassed management accounting information in case if the accountants are well versed and have detailed knowledge on all the related subjects. Furthermore, this management accounting information only delivers data and does not necessarily provide any particular course of action. This information is essentially based on the scientific process of decision making[7]. However, the administration of the airline company have the tendency to prefer intuitive decision making rather than scientific decision making. In this connection, it can be said that the management accounting information is only a scientific tool, their execution as well as follow up activities are necessarily the prerogative of the administration of Etihad.

The management accounting information can assist corporations in lowering the overall functional expenses of the business[8]. The administration of the corporation Etihad Airways can employ specific accounting information for reviewing the overall cost of specific economic resources as well as different business operations. Besides this, budgets are regarded as an important part of management accounting information and the use of the same can help in providing the management a financial roadmap and enhance the process of arriving at business decision making. Furthermore, management of Etihad Airways can make use of the management accounting information for enhancement of financial returns of the firm by preparation of financial forecasts related to demand of consumers, enumeration of the effects changes in prices and many others.

The employment of financial measurements indicates towards use of diverse monetary units for enumeration of condition of an entity or else performance[9]. The management of Etihad Airways can enumerate financial condition of the firm Etihad Airways from the financial declarations such as the balance sheet statement, income statement as well as cash flow statement along with different budget reports.

Non-financial measures refer to the enumeration of overall condition or else performance that are essentially non-monetary. Essentially, this can be distinguished and categorised as objective measures as well as subjective measures[10]. Thus, the management of the airline corporation Etihad Airways can employ the objective measures that includes data on namely share of the market of Etihad Airways, speed of production as well as product failure. In addition to this, management of the firm can employ the subjective measures that includes the evaluation of the overall quality of the services or else products offered by the firm and many others.

Financial and Non-Financial Performance Measures in Etihad Airways

The main purpose of the balance scorecard is to achieve a vision of the firm and a manner to enhance the potential of the firm to alter and get better[11]. The management of Etihad Airways can make use of the balance scorecard for stressing the requirement for training as well as development of the culture of the corporation and employees of the firm.

The leaders in airline firm “Etihad Airways” can take into the customer perspective as a appropriate indicator since the discontent of the customers can influence the customers to switch to other alternatives. Again, analytical evaluation of the financial information can aid the managers of the firm in accurately gauging the performance of the organization. Particularly, the leaders of the firm can take into consideration both the timing as well as accuracy of the financing data together with the managing as well as processing the data. In addition to this, the metrics of the business process perspective of Etihad Airways founded on particular perspective can allow managers of the firm to comprehend the performance as well as functional efficiency of the business. Finally, the procedure of learning have the need of specialised mentors that can assist in improvement of the entire learning procedure. Nevertheless, the managers of Etihad Airways can employ metrics for managing them in focussing the funds for training where it can be of greatest help.  

The generic strategy maps essentially involves different strategy maps along with description of manner the balance scorecard as well as the strategy can fit[12]. The generic strategy can be revised and can be utilized for establishment of linkage between the balance scorecard as well as strategy in the firm Etihad Airways. The financial perspective includes improvement of shareholder value by implementation of revenue growth strategy and productivity strategy. The management of Etihad Airways can develop revenues and enhance return on asset for improvement of financial condition of the firm. On the other hand, improvement of structure of cost and utilization of asset can lead to productivity strategy. Again, customer value perspective includes assessment of price, quality, time, functionality, service, relationship and brand[13]. The market share, reputation and the marketing expenses can be considered to be key aspects of the customer perspectives for Etihad Airways. This too involves internal perspective that involves building franchise, enhancement of customer value, achievement of operational excellence and become a good corporate citizen. In addition to this, learning and growth perspective includes strategy competencies, strategic technologies and climate for activities[14]. 

The Balance Scorecard in Etihad Airways

Tableau de Board is an assimilated performance measurement system that concentrates on operational control particularly in the short term[16]. This system stresses on the significance of operational as well as non-financial measures of performance and de-emphasizes different financial performance metrics. This system can be used particularly in the context of vision and mission of each and every unit of the Tableau de Board business that in turn establishes objectives from which the business unit recognizes the key success factors (KSF). This KSF gets translated into quantitative key performance indicators (KPI). 

The Tableau de Board can be implemented by providing each department or else unit manager with a certain periodic overview of performance, inform the subsequent level of management regarding the performance of the unit, direct each unit to position as per the context of the overall strategy of the corporation and contribute towards process of structuring agenda of management[17]. Finally, implementation process involves directing managerial focus as well as discussions.

The management of Etihad might possibly encounter several difficulties in the process of implementation of performance measurement techniques. Particularly the challenges faced in the process of implementation of performance measurement system are mainly owing to poorly defined indicators, lack of effective data collection as well as reporting, lack of formal structure for reviewing and absence of proper methodology for enhancement of process[18]. In addition to this, the management of Etihad might face certain other difficulties while introduction of the changes, essentially, these are not always viewed as a positive factor and can be considered to be difficult when it takes into account performance factors. Thus, managers implementing the suggested techniques might encounter cynicism among the workforce at the time of introduction of new idea. Besides this, the corporations might face resistance inspired by a particular desire to shield the turf. 

Conclusion

The above mentioned study helps in understanding gaining an overview regarding the Performance measurement system with special reference to the operations of Etihad Airways. The present report explicates in detail the financial as well as non-financial measures that can used by the management of Etihad Airways for proper measurement of the performance of the company, identification of the gaps in performance, that in turn can help in translating apposite strategies for bridging the gap into action. The current study also explicates illustratively the suggested techniques for proper measurement of performance and recognizes the difficulties that might be faced whilst implementation of the same in the organization. 

References

Boscia, M.W. and McAfee, R.B., 2014. Using the balance scorecard approach: A group exercise. Developments in Business Simulation and Experiential Learning, 35.

Dewangan, V. and Godse, M., 2014. Towards a holistic enterprise innovation performance measurement system. Technovation, 34(9), pp.536-545.

Etihadairways.com, 2017. [online] Available at: https://resources.etihadairways.com [Accessed 15 Apr. 2017].

Garengo, P. and Sharma, M.K., 2014. Performance measurement system contingency factors: a cross analysis of Italian and Indian SMEs. Production Planning & Control, 25(3), pp.220-240.

Keong Choong, K., 2013. Understanding the features of performance measurement system: a literature review. Measuring Business Excellence, 17(4), pp.102-121.

Kleindienst, B., 2014. Performance Measurement System. WerWasWo. Forschung@ MUL. Leoben: Universitätsverband der Montanuniversität Leoben., S, 132.

Kruis, A.M. and Widener, S.K., 2014. Managerial Influence in Performance Measurement System Design: A Recipe for Failure?. Behavioral Research in Accounting, 26(2), pp.1-34.

Melnyk, S.A., Bititci, U., Platts, K., Tobias, J. and Andersen, B., 2014. Is performance measurement and management fit for the future?. Management Accounting Research, 25(2), pp.173-186.

Mohamed, R., 2016. Strategic performance measurement system design and organisational capabilities. Asia-Pacific Management Accounting Journal, 4(1).

Nørreklit, H. and Mitchell, F., 2014. Contemporary issues on the balance scorecard. Journal of Accounting & Organizational Change.

Simons, R., 2013. Performance Measurement and Control Systems for Implementing Strategy Text and Cases: Pearson New International Edition. Pearson Higher Ed.

Wieland, U., Fischer, M., Pfitzner, M. and Hilbert, A., 2015. Process performance measurement system–towards a customer-oriented solution. Business Process Management Journal, 21(2), pp.312-331. 

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My Assignment Help. (2021). Analysis Of Financial And Non-Financial Performance Measures In The Operations Of Etihad Airways Essay.. Retrieved from https://myassignmenthelp.com/free-samples/acct640-management-control-systems/particularly-performance.html.

"Analysis Of Financial And Non-Financial Performance Measures In The Operations Of Etihad Airways Essay.." My Assignment Help, 2021, https://myassignmenthelp.com/free-samples/acct640-management-control-systems/particularly-performance.html.

My Assignment Help (2021) Analysis Of Financial And Non-Financial Performance Measures In The Operations Of Etihad Airways Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/acct640-management-control-systems/particularly-performance.html
[Accessed 28 March 2024].

My Assignment Help. 'Analysis Of Financial And Non-Financial Performance Measures In The Operations Of Etihad Airways Essay.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/acct640-management-control-systems/particularly-performance.html> accessed 28 March 2024.

My Assignment Help. Analysis Of Financial And Non-Financial Performance Measures In The Operations Of Etihad Airways Essay. [Internet]. My Assignment Help. 2021 [cited 28 March 2024]. Available from: https://myassignmenthelp.com/free-samples/acct640-management-control-systems/particularly-performance.html.

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