The Growth of Samsung Company - Essay Example

?Introduction to the company From a small export business in Tague, Korea, Samsung has grown to become one of the largest multi-billionaire corporations in the world. Samsung electronics was established in 1969 in Suwon (South Korea). The products offered by the company are electronic and electrical appliances which include television, refrigerator, air conditioners, washing machines, calculators, semi conductors and digital media. Today Samsung products are recognized in terms of quality and unique technology all around the world. In 2007, the company exceeded the $100 billion mark in terms of annual sales for the first time in the history. This is the reason why Samsung is in the list of one of the top three companies in the electronics industry where only two other companies are Siemens and Hewlett Packard that have posted larger revenues. Samsung today owes much of its success to its value innovation program. With new technologies coming in the market speed and mobility is essential for remaining in the market and also to pioneering in new markets. With 42 research facilities around the world and 42 thousand people are working daily in these research facilities, Samsung is serious about understanding what the consumers need is long before considering the technologies required to deliver them for the fulfillment of that need. Samsung is aware of the fact that success is temporary in the field of electronics and there should always be a goal displacement policy going around. The company is always setting new targets, working hard and focusing on ways to achieve those goals. Though Samsung is achieving continuously and rapidly by sheer policy, hard work and competence the list of achievement is way to long some important and recent achievements are given below: In 2005 Samsung surpassed Japanese rival company Sony, for the first time to become the world twentieth largest and most popular consumer brand as per” Interband”. In 2006 Samsung comes second in the electronics industry as per “business week”. In 2007 another important achievement was made by Samsung mobiles, over throwing Motorola for the first time and as they became the second largest mobile phone maker in the world. In 2011 Samsung electronics sold its Hard disk drive (HDD) commercial operation to Seagate Technology for approximately $ 1.4 billion. And most recently in the first quarter of 2012 Samsung beats rival company Nokia in selling the highest number of mobiles 93.5 million as compared with 82.7 million. Samsung has expanded from a small company to the largest company in Korea and the second largest company in the world in terms of electronic divisions which is somehow the most successful around the world. Management accounting: Management accounting deals with providing accounting information to the managers within organizations to help them taking decision in business that will allow them to be better equipped in their management and control functions. This technique or process focuses on effective and efficient use of organizational resources in order to support or assist managers to take decision in their task of enhancing both customer value and shareholder value. Distinguishing between Management accounting and financial accounting In contrast to financial accounting information, management accounting information is different in number of ways. Some are enlisted below. Management accounting deals with perception of forward looking; on the other hand financial accounting is historical and is based on the historical data. Models are based in terms of abstractions or possibilities in order to support decision making generally, whereas models are case based. Management accounting deals with the designs that are intended for use by managers within the organization; on the other hand financial accounting deals with shareholders, creditors and public regulators. Management accounting is usually confidential, whereas financial accounting is for public or is publicly reported. Management accounting usually uses financial and non financial data from many sources, on the other hand financial data is mostly taken or drawn from organization’s transaction based core form Internal managers and employees are users of information in management accounting, whereas external shareholders ,creditors banks , stock exchange ,trade agencies ,government agencies are users of information. Role of management accounting: Management accounting has a dual reporting relationship. The first role is as a strategic partner and provider of financial and operational information in terms of decision based. Moreover management accountants are responsible for the management of business team and at the same time having to report relationship and responsibilities to the corporations finance department. Following are some of the main role that management accounting has to full fill: Financial reporting: This role indicates that the company has a good understanding of their financial health. They work at the beginning of the accounting cycle, recording the financial transactions as they occur. Financial reporting is one of the main roles of management accounting. Budgets: It is the duty of management accounting to make budget for almost all the departments and then make a combine budget for them all together. Companies use budget in order to see either they have not crossed the limit. Or in other words the company ensures that they do not spend more money on a project or business operations than in necessary to generate profits. Forecasting: Forecasting is the prime role of management accountant. Management accountant will conduct a market survey and determine the current standings of the company in the business cycle and also to look for potential in new consumer markets and to effectively forecast about the given project overall. Internal controls: Most private accounting departments create and implement the internal controls needed to protect the company’s financial information. Management support: Another role that a management accountant has to look forward is to carry management support. Mostly this support is giving after evaluating the company’s investment decision. Key techniques of management accounting: Following are some of the key techniques or methodologies that are in practice by the management accountants. Activity based costing (ABC) Grenzplankostenrechnung (GPK) Resource consumption accounting (RCA) Recommended techniques for samsung Different management accounting techniques are present that can facilitate the management in making important decisions. One of the most successful techniques is the activity based costing and it is the technique that has been recommended for the management of Samsung. Activity based costing Activity based costing technique is the technique that has been used by the management to analyse the cost to benefit ratio from different activities of the organisation. Activity based costing is a technique that signifies different activities of the organisation and then costs of all these activities are assigned in accordance with the actual consumption and then compared with their revenues to identify the profitability of the activity. Therefore, the managers are able to better analyse the cost and revenue from each of the activity in which the company is involved and make decisions accordingly. One of the important reasons to recommend ABC is that it would facilitate the management in making decisions. For instance, as this would identify the cost and benefits from different activities and if an activity is not profitable for the company then it can be eliminated. So, the management can eliminate products or services that are unprofitable as the consolidated financial statements are not able to highlight and distinguish between the profitable activities and unprofitable activities therefore activity based costing can meet this purpose. Another important reason to use ABC is that it has been widely used and accepted as it is one of the most successful management accounting techniques. Techniques not recommended There are other management accounting techniques as well like Grenzplankostenrechnung (GPK), Resource Consumption Accounting (RCA), and throughput accounting however these techniques are not recommended for Samsung. Grenzplankostenrechnung (GPK) Grenzplankostenrechnung (GPK) is an accounting technique that is used widely in Germany (Sharman, 3) though it is not used as commonly in other parts of the world or in companies other than belonging from Germany. Although, Germans claim that this technique is more comprehensive than the techniques adapted by firms in the US particularly because of the reason that GPK involves planning and controlling as well. However as the concept is not widely used in other parts of the world and management of Samsung is not aware about this technique therefore because of these reasons it is not recommend for Samsung. Resource Consumption Accounting (RCA) Resource Consumption Accounting is one of the recently evolved and innovative management accounting techniques that also supports decision making. However as the technique is still emerging and therefore implementing it at Samsung could be a critical decision. Strengths and weaknesses of the analysis The strength of the analysis is that extensive research has been conducted to identify the most important management accounting techniques and how beneficial the management accounting is for organisations around the world. Also the firm identified for this report is Samsung and activity based costing can be implemented at Samsung in reality as it can be beneficial for the company therefore this is another strength of the analysis. However there are certain weaknesses as well. One of the weaknesses of the analysis is that data for the firms that have been successful or unsuccessful after implementing these techniques have not been discussed. Another weakness is that the organisational culture of Samsung is not discussed as that could influence the decision of implementing ABC technique. Works Cited Sharman, Paul. “Bring On German Cost Accounting." Strategic Finance (Dec. 2003): 2–9. Read More