Relevance of Management Accounting in Today's Society Research Paper

Relevance of Management Accounting in Today's Society - Research Paper Example Other departments such as production, quality, technical, marketing, engineering, purchasing etc had little information about the accounting procedures and information. However, the development of scientific management techniques in the corporate world stressed the importance of spreading accounting information to the entire departments of an organization to improve the efficiency of the organization. Earlier financial accounting, cost accounting etc were some of the renowned terms in the corporate world; however, at present apart from these accounting systems, management accounting is also gaining prominence. What is Management accounting? Management accounting combines accounting, finance and management with the leading edge techniques needed to drive successful businesses. It advises managers about the financial implications of projects, explains the financial consequences of business decisions, formulates business strategy, monitor spending and financial control, conduct internal business audits and explain the impact of the competitive landscape (What is Management accounting?) Man, material, machine and money are the major resources of an organization which should be managed properly to raise the productivity and efficiency of an organization. All these resources were earlier managed by concerned employees and department managers alone. For example, production workers and managers were responsible only for the production management whereas purchasing manager and employees were responsible only for the materials management. In other words, all the managers and employees were bothered about their assigned duties alone earlier. They never thought about the consequences of their activities. For example, earlier production people often stopped their production activities even for silly problems of the machineries since they were unaware of the impacts of such stoppage of production to the organization. Even an hour long production loss may cause substantial damages to the organization. After the development of scientific management principles in the 1990â€℠¢s and the subsequent development of management accounting, production workers also started to get the exact information about the losses incurred by the organization even for an hour long delay in production. In other words, the production workers started to realize the depth of problems caused to the company due to their deliberate production delaying activities. The above awareness force production employees to avoid such unnecessary delay or stoppage in production thus the company would be benefitted immensely from that. Not only the production department, all the other departments can also improve their efficiency and productivity if they get accounting information. â€Å"Management accounting systems were made in conjunction with scientific management movement† (Johnson, 1991, p.10) and moreover, it succeeded in revealing the importance of sharing accounting information to other departments in order to make the employees aware of the consequences of their activities and to improve the productivity of the organization. According to Johnson (1991), â€Å"management accounting system serves as a two way communication link between the senior and subordinate managers†(Johnson, 1991, p.4). It is impossible for the top managers to take decisions based on the data available to them alone. Data may not guide the manager always in the right direction. Feedbacks from the top and bottom are necessary for the managers to take sound decisions. Employees often twist the information before passing it to the top management,

Tesco Essay Example | Topics and Well Written Essays - 1250 words

Tesco - Essay Example Analysis of the company’s operating exposure 6 6. Management of operating exposure 7 7. Summary and conclusion 8 Appendices 11 1. The company Telco is a general merchandising and multinational grocery store in United Kingdom with its headquarters situated at Cheshunt. In the retailing section Telco plc ranks third in the word after Wal-Mart and Carrefour while it is second largest company in terms of profitability after Wal-Mart (Reuters, 2011). The company was founded by Jack Cohen in 1919.The company over the years has expanded geographically. The company is listed under the London Stock Exchange constituting of FTSE 100 index. Telco plc market capitalisation rate was around ?27.8 billion as on 15th September, 2012 (London South East, 2012). The main aim of the company is to provide its consumers with the best quality products at attainable rates, which make the company a success over the long period of time. The company operating in various countries like UK, US, Asia, Mala ysia, Thailand and Republic of Ireland, etc. have to confront the different market rate fluctuations. Thus this can be sorted through the study made below (Appendix: 1). 2. The macroeconomic situation United States alike the other advanced economies of the country has come through a lot of improvements from the economic perspectives. The financial markets have been stable since a past few years which got reflected through the continuous rally of corporate bonds and equities. This was achieved through the narrowing of the spreads of the corporate bonds and fall in the interest rates of inter-bank. Most of the lead indicators of the economic activity are showing signs of recovery-though the recovery of the economy is likely to take place at a modest pace. The slow recovery of the economy is the price that US is ready to pay to come to a balanced economy. Consumers entering the downturn with relatively high debt levels and low savings are pacing out the consumption of growth. However, a remarkable recovery is mainly due to the stable consumer spending and the revival of demand at the consumer level (Deloitte, 2009, p.5). 3. Porter’s five factor framework for competition It is mainly the analysis based on which the strategy of the company is incorporated before establishing a company in a new country or city. It was developed by Michael E. Porter to understand the unattractive forces of the market which may pose trouble in the establishment of a company. 3.1 Bargaining power of Buyers Apart from Wal-mart and Marshals the country of Canada lacks prospective large retailers. This gives Tesco a wide chance in establishing its business in Canada, as the population of the Canada has an earning capacity of $22,000 to $ $42,000 on an approximation (Statistics Canada, 2012). 3.2 Bargaining power of suppliers Most of the suppliers of Tesco being loyal to its company Tesco never had to face dilemma in terms of production of the related goods. Still Tesco comprising o f many suppliers their bargaining capacity is more when compared to Tesco as a buyer. In Canada the main three super markets are Wal-mart, Zellers and Giant Tigers. However, the threat faced from the suppliers is comparatively low as there is often a tendency for the large supermarkets to dictate the price paid to the suppliers of the product. If the suppliers do not agree with the price quoted by Tesco then it lies with very less options. Thus Tesco have a huge advantage in comparison to the local shops of Canada. 3.3 Competitive Rivalry Tesco can face competition on a larger scale from companies like Wal-mart, Zeller and Giant Tiger due to their business model strategy which is mainly based on the providing schemes of discounting on the overall products of the company. Thus to fight competition with the