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The considered report is going to discuss the importance of the strategic objectives for organizational performances, which are predominantly cost, speed, quality, dependability and flexibility. The distinct purpose of this assignment is therefore to delve deeply into an analysis to understand the importance of these individual aspects and their application and relevance upon an organization. For this particular aim of this context, the American enterprise Parker Hannifin has been chosen. Parker Hannifin is renowned for being an American company specializing in control technologies that includes production service of instrument used in aerospace, filtration, hydraulics and process control and gas handling. Additionally, the organization manufactures exclusive technical organs for electromechanical, fluid handling, climate control, pneumatics and shielding service. With more than 58,000 employees at the global stage, Parker Hannifin’s customers are the industrial, mobile markets and the aerospace centres.
The essentiality of strategic objectives for performance management is they cumulatively help an organization in developing the culture of processing high quality performance for the employees and the teams. Hence, it seems that strategic performance objectives act as a tool for upgrading the core competencies of an organization by enhancing the skill of its workforce. According to the suggestion of Slack (2015), business organizations could successfully compete in a global market place if it possesses virtues like, quality, flexibility, cost, speed and dependability. In this respect, it should be mentioned that strategic operation performance management and specifically the strategic performance objectives directly influence the key internal and external stakeholders of an organization (De Waal 2013).
Quality
The term quality in terms of strategic performance for a business organization is indicative of the scale of excellence of the productivity, reliability and the nature of durability. As per Krajewski et al. (2013), quality should be considered as the prime strategic performance objective as it is the chief determinants of a company’s success. On the other hand, the aspect of quality is regarded as conformance, which means the exact and supposed attributes of a product or service (Slack et al. 2013). Certain dimensions of quality in terms of a business organization are durability and reliability of the features, performance, perceived quality, serviceability, Aesthetics and value for cost.
However, in the context of discussing the perspective of quality in respect to the external stakeholders, it can be said that by providing quality service an enterprise successfully retains its one of the most significant external stakeholders – customers. It is because; if a company maintains it promise not to compromise with the quality, it can fruitfully satisfies the customers and if customers once find out that they do not have anything to make complain about, they will prefer to consume the same service again. Therefore, it is understandable that quality ensures increase in the revenue margin along with brand loyalty. On the other side, as stated by Brown et al. (2013), in terms of the internal stakeholders or organizational operations, if an organization gives utmost priority upon maintaining quality it can achieve a flawless operations. In other words, by maintaining quality, an organization can save cost and side by side other key performance objectives such as dependability and speed increases.
Speed
Based on Gerstorf et al. (2013), speed is related with the beginning and ending time of a particular business operation. Considering the aspect’s interaction with the external stakeholder – customers, speed can also be called as the facet responsible for response. It refers to the specific time between the customer request and the final delivery. An apt sense and perfect acquisition of speed brings several benefits for an organization, such as low cost and fast production and easy maintenance of dependability. The performance and impact of this distinct aspect on the internal stakeholders of an organization is dependent on its action on the customers (Batista 2012). An organization can keep their clients happy and make them feel important when the company will be able to response or deliver customer requirements with fast speed. Organizations can even charge higher price for delivering product or service in fast speed. On the other hand, it can be said that most of the time customers prefer to return to those companies, which serves them fast.
Hence, it is understandable that speed is one key determinant for enhancing revenue scale and retaining customers. Nevertheless, it should be considered that the internal influence of speed supports to reduce costs as fast information throughput within an organization provides less chance for damage or loss. At the same time, one of the main internal stakeholders of an organization – employees stay well updated with any new information or management decision with fast delivery of information.
As stated by Parmenter (2015), the term is indicative of the practice of doing things on time. In the business perspective, it can be said that dependability is the practice of delivering products on the allocated time. However, there is no proper way of measuring the outcome acquired through the exercise of dependability in an organization. Nevertheless, the benefits of dependability can be recognized in three particular premises, which are time, money and stability. With a proper maintenance of this performance objective, an organization can save time, reduce cost and obtain stability (Buller and McEvoy 2012). It is essential to keep in consideration in this concern that this individual performance objective is achieved through punctuality, creativity, productivity and complete attention from the internal stakeholders of an organization.
However, it is chiefly perceived that the perspective of dependability is related with the external prospect of a company. It produces irritation among the customers or distributors when a business enterprise fails to meet the deadline for providing service. Most important to consider, that dependability is the key to decide whether suppliers of a particular organization have renewed their contracts or not. Therefore, again it is understandable that the ultimate function of this performance objective is related with increasing the number of customers (Gunasekaran et al. 2015). Nonetheless, for the internal environment of a company, dependability reduces production cost and enables fast delivery by saving time and obtaining stability to grow fruitfully.
Flexibility
Flexibility as one of the fundamental strategic performance objectives refers to an organization’s capability to make changes in operations at the right time. According to Oke (2013), flexibility can be categorized into service, mix, volume and delivery flexibility. In this respect, it is significant to denote that all these categories of flexibility are associated with one particular element that is product. That is why it can be said that an organization should have the flexibility to make changes in the time, volume, service procedure and variability of a product or service. On the part of its external benefits, with the objective of flexibility, an organization successfully provides customer specific customized service, which is a strong and relevant tactic for welcoming more customers (Demeter 2014). Precisely, service flexibility helps to procure new ideas whereas volume or delivery flexibility assists to make required adjustment in the output level and to make handle any unexpected change in the service procedure.
However, as per the internal affects of flexibility, the object is related with dependability, as flexibility is the rudimentary criterion that maintains dependability by saving time and money.
Cost
Cost is that objective which varies according to the size, purpose, and culture and target market of individual companies. Furthermore, one of the most potential attributes of cost is the cost advantage through which an organization easily finds appropriate cost for manufacturing goods and at the same time procure returns on the invested capital. However, the aspect is determined by the 4Vs, which are volume, visibility, variation and variety (Bargerstock and Shi 2016). On the other side, as argued by Parmenter (2015), the other four strategic objects of organizational performance influence this individual performance objective. It is because, concerning the internal purpose of cost in an organization, operation cost can be saved by aptly managing all the four strategic objectives. Therefore, it can be said that with a properly controlled operation cost an enterprise become able to deliver their products in a minimum price, which is considered as the most relevant way of attracting customers.
After giving an eye upon the characteristic features of five individual strategic performance objectives and considering Parker Hannifin’s prolonged success, it can be assumed that the enterprise is strongly yet aptly handling each of these objectives. For the company, all of the strategic objectives are determined under their win strategy. According to the company’s win strategy, quality is raised by the high engagement of the existing team members of Parker Hannifin for the acquisition of exceptional performance. It is essential to mark that Parker Hannifin’s productive quality is related with sustainability and profitability. To support their customers for achieving the desired result with their provided service, the company has increased its quality of service by providing custom kit, VMI (Vendor-managed inventory) along with providing an international network full of professional experts (Gardner 2015).
On the other hand, to raise the volume of quality, the company has managed to obtain more than 50,000 trained and experienced employees around the world. Therefore, it is understandable that the value of quality for Parker Hannifin is related to the productive power and experience of their employees.
On the part of flexibility, the company considers the customized service provision with highest amount of priority. Keeping in mind about the service flexibility, the enterprise has has started concentrating over retaining customers by giving premium experience. Probably the most interesting fact that the entire new win strategy of the company has been made keeping in mind about the objective of flexibility (Pallotta et al. 2015). Additionally, it has to be said that the sole purpose of their win strategy has been to enhance another chief performance objective, which is quality. On the other hand, the reason to give utmost priority to flexibility has been the company’s sudden decrease in sales that has been $12.7 billion, which is reportedly near about 4% less than the previous year. According to the Fortune magazine, Parker Hannifin has shown excellent power of will to change the whole scenario by bringing innovation to their technology in form of service or goods flexibility (Gardner 2015). Furthermore, keeping in mind about the mix flexibility and taking concern about the increasing rate of IT expenses, the company has brought the aspect of virtualization to meet with different customer expectation. Hence, it can be said that the predominant form of flexibility for the company is currently their introduction and utilization of the win strategy.
Nevertheless, previously the theoretical approach regarding the strategic performance objectives in this paper has shown that speed is one category that is required to accomplish three of the performance objectives - quality, flexibility and dependability. According to the new win strategy and the existing organizational framework of Parker Hannifin, the company has never ignored the potentiality of speed. The company prefers to believe that speed is a major part of quality and considering this point of view, the authority has been relentlessly optimizing new technologies and service manufacturing provisions to produce and thereafter provide products on time. It has been understood that the speed reduce cost regarding production and foster the delivery process (Pallotta et al. 2015). The enterprises’ implementation of VMware virtualization is possibly the relevant example of the fact that the company gives enough amount of significance on the aspect of speed. It is because; in form of speed the company has been utilizing the technologies like VMware virtualization for obtaining faster and more efficient performance from the internal stakeholders.
Nonetheless, it is interesting to denote that the aspect of technical advancement has been recognized as one of the prime facets of speed and flexibility. In this context, it is presumable that the plan for employee engagement along with implementation of the win strategy would be driven to enhance the quality of the products. It means that there will be scope for cost advantage due to maintain the aspect of dependability. However, it should be contemplated that the company has considered different demands of different customer groups and is implementing new strategies and technologies to satisfy different customers with customized products (Slack et al. 2013). Therefore, it should be said that in form of dependability the company is using their using innovation strategy to meet different customer expectation on time. Therefore four of the above discussed strategic performance aspects are found to be beneficial for the external stakeholder – customer at the initial phase. However, the entire scenario will be examined thoroughly it could be understood that the implementation of new technologies and new service provisions have been procured to make the internal operation easier.
On the other hand, according to the analyzed theoretical illustration regarding cost, operation cost can be maintained and reduced only when a company would manage to acquire high flexibility, speed, and dependability following premium quality. Considering the truth that Parker Hannifin gives importance on each of the objectives and the way they are being carried out, it can be said that the authority is running successful in saving their operation cost. Hence, for the company, aspect of cost is meant for their operational cost.
After identifying and discussing individual premises and the attributes of strategic performance objectives, the importance of each of the performance objectives are recognized to be –
Parker Hannifin is considered to one of the leading enterprises for motion technologies and their hard-earned praise is supposedly the result of the quality product they provide. Therefore, the significance of quality in terms of performance objectives is, without this particular aspect the company could not achieve customer loyalty. The high engagement of employees and implementation of several technologies in terms of quality indicates that the company is well aware of this fact.
Being a global enterprise Parker Hannifin encounters different customer and their different requirements regarding their products. Therefore, the company finds it essential to make frequent modifications upon their production tactics, which can be identified as customization. Therefore, flexibility in operation is important for the enterprise to adjust the internal activities with the required modification. Thus, the win strategy in form of achieving flexibility is found to be apt.
The information above shows that Parker Hannifin desire to deliver fast service to the clients by making the internal operations swifter; it is understandable that speed and product on time are essential for the company (Gardner 2015). That is why Parker Hannifin’s decision to implement VMware virtualization and provide customized service shows that the importance of speed is to satisfy customers along with to minimize operational complexity.
Considering the importance of the speed in Parker Hannifin, it is definite that the objective of dependability is significant for accomplishing the objective of speed. It is because without the objective of dependability the company could not reach to their aim of making a swift operation. However, the importance of cost for the enterprise is seems to be related with their intention to make low cost production. In this case, cost advantage has proved important for the company.
After considering all these aspects, it can be said that for Parker Hannifin, the objective of flexibility has proved to be the most significant one. Such an assumption is made based on the identification of the company’s implementation of Win strategy. The entire strategy has been made to modify the operational and production activity, which means that in terms of performance objectives, flexibility is found to have given highest amount of priority.
The above report indicates that among all the five strategic performance objectives, flexibility is recognized to be the most important one as the company is always considerate about bringing required change in their operations. However, the report has signified that Parker Hannifin is implementing several technologies to foster the operational activities. In terms of weakness, the company is investing too much capital to implement those. That is why it is understandable that increasing cost of implementation may found to be a minus point for the company. Therefore, it can be recommended that the enterprise should first apply VMware virtualization on a minimum number of customers and then should proceed with utilizing it for the global purpose (Rummler and Brache 2012).
However, the recommendation for improving the operation cost may find issues regarding two factors. One is the company may not find too many investors to adjust the cost of technical implementation and the other one is the company may not able to implement it on a small zone. It is because; declaration of the win strategy has been made on a international level and as a result now most of the international customer of Hannifin is expecting to get the facility of the new technical models.
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