Managment Accounting - Essay Example

?Management Accounting Table of Contents Introduction 3 Discussion 4 Conclusion 10 References 11 Bibliography 14 Appendix 15 Business Model of Arts Sector in England 15 Introduction The present business environment is incessantly changing with the advent of globalisation and increased level of business market competition. Business organisations in this modern day context are required to perform their respective business operations in a competitive along with an effective manner for sustainable growth and maintaining greater performance in worldwide market segments. Contextually, management accounting plays a decisive role in managing the financial resources of an organisation. It comprises the techniques through which financial along with non-financial aspects are provided to the management of an organisation, assisting in making better investment decisions and allocation of greater financial resources (Coombs & et. al., 2005; Broadbent & Laughlin, 1998). The current arts sector in England can be apparently observed as quite ineffective in executing its business operations due to various factors that include minimum investments and implementation of outdated technologies. It can be stated in this regard that the business models relating to the arts sector in England should be changed with the intention of increasing the value of arts in every parts of the nation. Correspondingly, the arts sector is required to make effective decisions in relation towards making substantial investments and adopting advanced technologies for sustainable development in this present changing business environment (Fleming & Erskine, 2011). With this concern, this paper intends to critically evaluate in favour and argument against the statement ‘Sound business models are a necessary component in a healthy visual arts ecology and essential for most publicly funded organisations’ within the current arts sector in England. Discussion The statement ‘Sound business models are a necessary component in a healthy visual arts ecology and essential for most publicly funded organisations’ by Susan J. Royce (2011) signifies that the arts sector in England is required to change their business operational procedures and management functions in order to perform various activities effectively. It can be viewed that the business models adopted in the visual arts sector in the nation are relatively inefficient due to inadequate financial support. In this regard, almost every visual arts sector is seemed to be undercapitalized. The arts sector is facing ample challenges to retain a sustainable performance in this competitive business environment. In this context, the major challenges that face by arts sector in England include cultural aspects, free entry strategy and inability in tackling factors that are accountable for under performance. The sector has been facing the aforementioned challenges mainly due to limited investment of funds and inappropriate allocation of financial resources (Royce, 2011). In relation to the arts sector of England, it can be viewed there is a lack of income which is generated from the entry tickets due to the provisions of free entry. Free entry of visitors in relation to this sector is often regarded as a blessing for public, but this practical implication has led towards inadequate public funding. In this respect, these organisations are more inclined towards incompetency and inefficient performance in the present competitive business environment. Consequently, inadequate availability of public funding has restricted the organisations associated with arts sector in allocating funds for development, maintenance and repair. It can be affirmed that the implication of free entry will be effective in attracting a huge number of customers, but will not facilitate the organisations to obtain adequate funds for complying with future requirements and making greater development. Respectively, the organisations, with inadequate revenues will be unable to meet the requirements of the business costs. Moreover, the organisations will not be provided with the opportunity of investing towards providing effective training to the staffs in order to improve their skills. In this regard, it can be comprehended that the provision of free entry of customers in the visual arts sector is posing a greater threat towards obtaining adequate public funding, leading towards ineffective performances at large (Royce, 2011). The arts sector in England is fundamentally based upon certain cultural aspects that include traditional and individualistic viewpoints, developing ambivalence perceptions towards economic considerations. In this respect, the organisations lacking in making effective plans associated with finance will certainly hamper the performance of the arts sector towards executing its operations in a sustainable manner. It can be affirmed that business organisations should comprise certain essential factors and plans in relation to every aspect such as accounting, marketing and employee management among others with the objective of performing their respective operations successfully. It has been apparently observed that the arts organisations in England usually lack efficient business models, due to which its various functions are not managed proficiently. In this context, these organisations are unable to determine their problems in a timely manner, leading towards forming lack of urgency amid the funders to financially support in the development of this sector. Thus, it can be ascertained that the prime factor responsible for ineffective performance of visual arts sector in England is lack of forming an efficient business model. The model might certainly aid in managing and allocating financial resources of the arts organisations for performing various operational functions in an effective manner (Royce, 2011). The aforementioned statement positively signifies that an efficient business model will play an imperative role towards the management and the allocation of financial resources. Moreover, the model will also assist in evaluating the performances of the businesses and communicating valuable information associated with the operational functions. In this respect, the management of visual arts organisations will be facilitated with the opportunity of making effective decisions in order to improve different operational activities and make sustainable performances. Thus, management accounting in this context can be an effective tool for the arts sector in better management of both financial and non-financial activities (Jack & et. al., 2013; Turbide & Laurin, 2009). In order to determine the discursive techniques that have been used to support and contradict Royce’s statement, it can be stated that arts management is a process on the basis of which planning, supervising, organising, controlling and staffing activities are performed. The management of the aforementioned activities will certainly facilitate in developing along with presenting the work of the artists successfully towards the public or the audiences (Chong, 2009). In this regard, the visual arts sector can be recognised as the vibrant and the most creative institution, which has been developed in a sustainable manner. The challenges faced by this sector can be mitigated through creating an efficient business model, so that the sector can retain its performance in the present business scenario. It is evident that business models are effectively developed with the objective of having a better understanding about different areas along with segments that include culture, satisfaction of customers, organisational structure, processes and business systems. Moreover, the other four major areas comprise growth factors, internal business operations, financial allocation along with transaction and the perception of the audiences. The mission of visual arts sector in England is typically based upon the aforementioned areas along with segments and in this regard, management accounting plays a decisive role in developing effective business models. It is worth mentioning that the notion of management accounting aids in determining the factors on the basis of which financial resources of the arts sector will be allocated and managed, so that the business operations are conducted in an effecting way. Additionally, it provides valuable information regarding the allocation of financial funds, investment activities, performances of business processes and accomplishment of business objectives. Contextually, visual arts sector with an efficient business model will be facilitated with the opportunity of obtaining adequate information and making appropriate decisions along with strategies (Royce, 2011; Resch, 2011; Teece, 2010). In favouring the above depicted statement, it has been argued that business models are often regarded as indispensable components in a healthy visual arts ecology and also for most of the organisations that are publicly funded. This can be justified with reference to the fact that with the implication of an efficient business model, the publicly funded organisations would be able to accomplish their predetermined business targets successfully through better exchange of information with business partners and investors among others. A sound business model will also assist in providing better customer related services in the form of presentations within the context of healthy visual arts ecology, resulting in attracting more customers. Effective strategies are also required to be formulated with the aim of seeking that interior along with exterior publicly funded buildings that are occupied by arts organisations are maintained in an appropriate manner through repairing leases (Nesta, 2009; Oakes & et. al., 1998). In this similar context, sound business models with the assistance of management accounting will provide active support to the arts organisations in terms of making effective planning and ascertaining the financial resources that will be required to meet the day-to-day operational and other related costs successfully. Consequently, management accounting will provide appropriate information about the funds that are available and required to meet the future repairing and other related costs. It provides certain standards and measures in accordance with which business activities should be coordinated and maintained, ensuring better performance in the long run (Burchell & et. al., 1980) (Royce, 2011; Milne & et. al., 2009, Miller, 2001). However, the statement i.e. business models play an effective role in visual arts sector has been criticised on the ground that business operations should be based on innovative ideas and strategies in order to ensure sustainable performances. In this regard, the statement made by Taylor (2006) ‘Act like a Business? Why Aim so Low?’ signifies that the arts sector should devise plans in order to execute its operations with better financial return and performance. The arts sector bearing incorrect perception about the sentence ‘Act like a Business’, has made its relevant business activities more rigid. In this concern, the arts organisations are unfavourably affected in terms of maintaining effective social affiliation and developing their spiritual aspects. The statement implies that business models should be disregarded and arts organisations must act in a transparent, responsible, responsive and accountable manner. Additionally, business tools are to be formulated by the artists in a healthy visual arts ecology with their creative thinking for better development and functioning of arts sector. The management of arts organisations should develop their respective strategies without external assistance. Moreover, the arts sector should majorly focus on developing an efficient relationship with the society. It can be viewed that the major objectives of arts organisations are to develop an enhanced relationship within community and operate with clear motives. Thus, the arts sector develops effective strategies along with plans on the basis of its own expertise and knowledge. Additionally, the artists will be entrusted with the tasks of developing and managing business tools efficiently (Byrnes, 2013). The changing business environment has challenged the role of management accounting by a certain degree, as presently, business organisations are required to change their respective business processes and models in accordance with the prevailing market scenario. Moreover, changing customer preferences is also another factor which may negatively affect the decisions made with the assistance of management accounting. In this context, arts sector is required to acquire valuable information in order to make effective decisions and strategies aligning with the notion of management accounting (Lambert & Sponem, 2009). In this regard, it can be comprehended from the above discussion that the two statements depict contradictory viewpoints in relation to the aspect that business models act as effective tools for better sustainable performance. Moreover, the two statements are seemed to present opposing viewpoints about the role of management accounting as the statement of Royce (2011) revealed that management accounting is an important tool of managing funds and making valuable decisions in relation to investments among others. While on the other hand, the statement by Taylor (2006) implies that the business processes and operations should be clear and concise. In this regard, the idea of management accounting is often identified to be a complex process, and thus it should be disregarded for making better growth of the arts sector (Ioana-Diana, 2013; Doyle, n.d.). Conclusion From the above discussion, it can be affirmed that the present business scenario is incessantly changing due to gaining momentum of globalisation and prevalence of extreme business market competition. In this changing business market conditions, organisations are required to develop appropriate strategies and plans in order to maintain sustainable growth and performance. The arts sector in England is surrounded with certain threats that include operational inefficiency and ineffective allocation of financial resources within the context of competitive business environment. In this regard, this sector should adopt efficient business models with the objectives of performing in a sustainable way. Management accounting is often viewed to be an important business tool which helps organisations in making better decisions and suitably maintaining financial resources at large. Specially mentioning, the statement of Royce (2011) can be identified to hold positive viewpoints about the formation of efficient business models for better management of the arts sector. On the other hand, Taylor (2006) holds opposing viewpoints about the need of forming effective business models, as this might increase the complexity of business operations and procedures by a certain degree. References Broadbent, J. & Laughlin, R., 1998. Resisting the ``New Public Management.'' Accounting Auditing & Accountability Journal, Vol. 11, No. 4, pp. 403-435. Byrnes, W., 2013. Management and the Arts, 3rd ed. CRC Press. Burchell, S. & et. al., 1980. The Roles of Accounting in Organizations and Society. Accounting, Organizations and Society, Vol. 5, No. 1, pp. 5-21. Chong, D., 2009. Arts Management. Routledge. Coombs, H. & et. al., 2005. Management Accounting. Principles and Applications. [Online] Available at: http://196.29.172.66:8080/jspui/bitstream/123456789/1524/1/Management_Accounting.pdf [Accessed November 02, 2013]. Doyle, G., No Date. An Institutional Framework Analysis of Management Accounting Innovations: A Comparison of For-Profit and Not-For-Profit Health Care Settings. Working Paper. [Online] Available at: http://www.smurfitschool.ie/academicsampresearch/workingpapers/WP_08_03.pdf [Accessed November 02, 2013]. Fleming, T. & Erskine, A., 2011. Supporting Growth in the Arts Economy. Art Council. [Online] Available at: http://www.artscouncil.org.uk/media/uploads/pdf/creative_economy_final210711.pdf [Accessed November 02, 2013]. Ioana-Diana, B., 2013. The Role of Managerial Accounting in the Management Process. Lucrari. [Online] Available at: http://fse.tibiscus.ro/anale/Lucrari2013/Lucrari_vol_XIX_2013_011.pdf [Accessed November 02, 2013]. Jack, L. & et. al., 2013. The Routledge Companion to Accounting Communication. Routledge. Lambert, C. & Sponem, S., 2009. Roles, Authority and Involvement of the Management Accounting Function: A Multiple Case-Study Perspective. Introduction, pp. 1-52. Milne, M. J. & et. al., 2009. Words Not Actions! The Ideological Role of Sustainable Development Reporting. Accounting, Auditing & Accountability Journal, Vol. 22, No. 8, pp. 1211-1257. Miller, P., 2001. Governing by Numbers: Why Calculative Practices Matter. Social Research, Vol. 68, No. 2, pp. 379-396. Nesta, 2009. Innovation in Arts and Cultural Organisations Hasan Bakhshi and David Throsby. NESTA Interim Research Report. [Online] Available at: http://www.nesta.org.uk/library/documents/Innovation-in-arts-and-cultural-interim.pdf [Accessed November 02, 2013]. Oakes, L. S. & et. al., 1998. Business Planning as Pedagogy: Language and Control in a Changing Institutional Field. Administrative Science Quarterly, Vol. 43, pp. 257-292. Resch, M. B. F., 2011. Management of Art Galleries - Business Models. Dissertation. [Online] Available at: http://www1.unisg.ch/www/edis.nsf/SysLkpByIdentifier/3927/$FILE/dis3927.pdf [Accessed November 02, 2013]. Royce, S. J., 2011. Business Models in the Visual Arts: An Investigation of Organisational Business Models for the Turning Point Network and Arts Council England. Turning Point Network. [Online] Available at: http://www.artscouncil.org.uk/media/uploads/pdf/Final_business_models.pdf [Accessed November 02, 2013]. Teece, D. J., 2010. Business Models, Business Strategy and Innovation. Long Range Planning, Vol. 43, pp. 172-194. Turbide, J. & Laurin, C., 2009. Performance Measurement in the Arts Sector: The Case of the Performing Arts. International Journal of Arts Management, Vol. 11, No. 2, pp. 56-70. Bibliography American Assembly, 2002. Art, Technology and Intellectual Property. The American Assembly. Bolton, M. & Cooper, C., 2012. Capital Matters. How to Build Financial Resilience in the UK’s Arts and Cultural Sector. [Online] Available at: http://evpa.eu.com/wp-content/uploads/2012/07/46810131-Capital-Matters-final.pdf [Accessed November 02, 2013]. Casadesus-Masanell, C. & Ricart, J. E., 2009. From Strategy to Business Models and to Tactics. Working Paper 10-036, pp. 1-43. Huelsbeck, D. P. & et. al., 2011. On Testing Business Models. Digital Measures. [Online] Available at: https://msbfile03.usc.edu/digitalmeasures/sandino/intellcont/MS%209288-%20On%20Testing%20Business%20Models-%20Fourth%20Round%20Revised%20Affiliation-1.pdf [Accessed November 02, 2013]. Powell, W. W. & Steinberg, R., 2006. The Nonprofit Sector: A Research Handbook. Yale University Press. Appendix Business Model of Arts Sector in England Source: (Royce, 2011). Read More