The Aspects of Calculating Value Added for the Business Industry - Essay Example

?Describe the methods used to calculate value added. How does value added contribute towards understanding the connections between the business and its product markets? Value is added when a business gains positives from the resources that it has within its fore. This value could either be for the internal publics within the business or the ones who exist outside it. The bottom line remains embedded in the fact that value is added over a period of time which makes the entire exercise of understanding the connections between business and its product markets a significant one. Since value makes the business propositions necessary to understand, it is imperative that emphasis on deriving value is always given the priority to achieve significant results. It will set the ball rolling in the right direction and ask of the stakeholders to believe in the premise of delivering value for the sake of the business and product markets. This paper studies the basis of value and how it is deemed as a very vital ingredient of any organization in this day and age. It also touches upon the aspects of calculating value added for the business industry and the manner under which distinctive actions and behaviors come about. This is so needed because it resolves the ambiguities involved with the connections that exist between the business and their product markets in different locations of the world. How value is added remains a very pivotal topic that one needs to comprehend. What this suggests is the fact that value should always be seen as an element which is being given the fundamental basis by the organizational middle management as well as top tier. This is so done to make sure that the priorities are set on a solid footing and that there are no areas where a missing link exists. To calculate the real basis of value, one needs to focus on the gap that comes about when there is a problem related with making a profit within the business and product market contexts. If this gap is big enough, the value shall always be desperately required so that success can be envisioned for the sake of these market realms. However, if the gap is a small one, value can always be deemed as an incremental entity, happening every now and then to bring about a significant change on the whole. Any business that exists in essence does its best to create value for everyone. Now how this value is deciphered by different entities is another point that must be understood. This value is for the overall comprehension of the people who are either the stakeholders of its different processes or the ones who will produce results. Value is an inherently positive factor which will bring in the goodwill of the people and give the company the mileage that it direly requires. What is most significant under such settings is an adherence towards doing things for the sake of the people for whom the business is in existence in the first place. It will set the basis for achieving a number of tasks and objectives, all under the discipline of value creation and strategic success. When value is derived from determinants of success, there is more reason why stakeholders should expect the fruits of labor coming in for the sake of the organization. This is apparent in the case of many organizations today that are making giant efforts to reach out to the people who can bring in value for the sake of all the stakeholders. These employees are most desired because they know the art of managing value and essentially the mannerisms which are related with its creation. A value-added accounting framework would serve the cause of the entire industry, irrespective of the takers. This value creation only allows the businesses to compete within an international context and look at the strategic perspective more than anything else. It gives a precise rundown on some of the most pivotal tasks and actions which can be completed to bring about success within the relevant and related methodologies. Company performance is dependent on how this value is carried forward and how its success means greater profits that shall come in for the financial stakeholders. Giant companies like Intel, Nigerian Oil, Microsoft, Shell and others are classic examples of how a value-added accounting framework has enhanced the cause of the business regimes in the long run. These companies have benefited a great deal due to the inputs of the value-added accounting regimes which were made use of in the yesteryears. The stakeholders suggest how well the value premise is made. This means that value is something that has a great amount of say within the undertakings of the stakeholders. Since they are the ones who actually provide the relevant basis for running the business, it is only natural to give them the importance that they richly deserve. Value is an important element of any business but when this value is not given the due significance that it must receive, then there is a problem that needs to be solved. First of all, there is the realization that value stands a chance for making the business succeed in the long run. Secondly, this value creation and its propagation leads to completion of many other tasks and entities. Now if this value is not given the chance to come about in a natural fashion, some artificial basis is instigated. There is a dire need to comprehend that value creation can be produced in such a manner that there is a proper calculation available for it. If this calculation happens in a periodic basis, value creation is deemed as a successful element of understanding the business domains and undertakings. Value creation would always bring in the benefits for the sake of these stakeholders and these stakeholders should thus pave the way for creating value through their respective inputs, analyses and undertakings. Within the economic realms, it is of paramount essence to know how value shall be the basis for knowing how businesses would grow and develop over a period of time. If this value is dependent on the inputs of the financial factors, then the economic tangent will only be aided through this value that has been created. On the other hand, when value is not given the importance in terms of these inputs, then this would mean there are missing links present within the business realms, which need to be analyzed once again to reap further success (Haslam, Neale and Johal, 2000). This success is hugely dependent on how well the economic top heads within an organization pursue the cause of value creation and its propagation at a later stage. If this value creation is not given the go-ahead by the people in relevant positions, then there could be a number of problems for the business in general and its stakeholders in meticulous. When business organizations stop giving the premise of value its due significance than there is anarchy within the related levels. It adds up to the pressure and can easily shake the consumer confidence due to a number of reasons, best known to the top management entities present within an organizational environment. These businesses have actually forgotten the notion of a change which is for the betterment of their own selves. Emphasis is paid towards tasks which do not have much significance yet value is kept at the backburner which stands in the wake of creating many more problems for all and sundry. It is about time that the top management gurus and decision makers at the helm of these organizations understand their due role and commit to a global good for the business entities so that much sanity can be seen within the related ranks (Cox, 1979). When the top management settings do just that there are immense bounties for the business which can easily be made use of by the financial and economic sectors that are widespread within such companies. It would only be natural to think of these acts from a strategic viewpoint because then the focus shifts directly towards doing things which are more important and have a set priority attached with their own selves. Hence business and product markets can immensely benefit from the premise of value creation and value addition from a long term perspective. It can set the foundation stone for achieving many new avenues and goals which a business would have envisaged right from its outset. At other times, some businesses do not even know how financial value-added frameworks reign in success and financial professionals tell them how to do it. Sometimes it seems like a very arduous task yet it can be attained in a quantifiable manner if proper endeavors and efforts are put in by the people who matter the most within such discussions. All said and done, value creation and value addition are inherently powerful notions which must be aired within board meetings and financial understandings which are reached upon at an organizational level from time to time. Bibliography Cox, B., 1979. Value Added: an appreciation for the accountant concerned with industry. Heinemann, London Haslam, C. Neale, A. and Johal, S., 2000. Economics in a Business Context, 3rd edition. Business Press (a division of Thomson Learning) Read More