Question

Non-Financial Performance Indicators – A discussion question to test your knowledge of NFPIs, the research and theory behind it and how it may be of use for investors to “predict” the future. Give some thought here to what NFPIs an airline may use. (750 words)

Answer 1

The use of financial indicators can be highly dangerous for the company in the long run because it is just quantitative measure which Just provide the figures and facts but it does not provide with analytical data which could be used in in qualitative measurement of various factors, so incorporation of non financial performance indicator are equally important into a business in order to get a fair idea about the performance of the whole segment of the business and it is just not limited to the financial aspect of the business.

Non financial performance indicators are all such performance indicators which are not financial and quantitative in nature and which reflects the qualitative aspects of business and which can provide an idea about the sustainability of survival of the business in the long run.

This type of indicators generally enhances the overall viewpoint of the management in the long run to incorporate such practices into the business which will benefit additionally and provide a competitive edge with its competitor in the long run.

This indicators include-

A) management of human resources-human resources are very important component of a company because they are the one who helps in generating the highest amount of profit for the company so the management of human resources are very important because qualitative factors accounts for betterment of the human resources by providing them trainings and rewards in non monetary nature.

B)product quality is also very important because it is not about the volume which is helpful in generating higher amount of profits, the quality of the product also provides a competitive edge regarding to the pricing strategy

C)brand awareness is also important in order to have a competitive edge against its competitors as the brand is highly influential.

An airline can have various non performance financial indicator-

A)adequate management of it staffs and pilots which will be adequate management of its overall human capital

B) adherence to the rules and regulations will be helpful in the long run

C) providing with additional quality services which will be helpful to the customers.