Clients' Need for Strategic Management Information - Case Study Example

ASSESSMENT OF CLIENT’S NEED AND SOLUTION of Introduction This essay takes into account a school manager of a school by the name Jades International School (not the real name) as the chief client in this description. The school is set in Australia and it is run as a business entity. This report was compiled after interviewing the manager to assess and develop information that would be helpful in providing the solution that would be needed for effective accounting management and accounting systems. This involved a systematic process for determining and addressing needs between the currents set conditions and ways to achieve them as intended. The discrepancy between the current situation and the expected goals of the organization were appropriately identified. In this particular situation, the assessment need was to correct current performance deviation and correct the deficiency. In fact, this was to act as a planning process intended to improve education performance and training. This would also act as an appropriate way of identify interventions and solutions to the problems that would accrue from such disparities. This would also help in gathering sufficient data and develop effective product that would address the needs and wants of the stake holders. Market In a discussion held with the manager, the school market has been faced with problems of demographics, stiff competition due to differences in demand and the type of education offered and few numbers of students who opt to go to other schools or the prematurely terminate their education. There are also influences from external forces which come in two basic forms .The first constitute the broad factors of the society which include economic and demographic trends which affect the directions and realities of higher education. The second is based on requirements that are specific for funding sources and they include: government agencies and other factors that may control expenditure of fund and other activities. Context Analysis As far as this is concerned, the environment in which this business operates is conducive. Through SWOT analysis the business has secured a good competitive advantage. The school has gained an insight of its strengths and weaknesses and it has also identified the opportunities and threats posed by the market within which they operate. The main goal of this analysis is to analyze the organization environment in order to come up with a clear strategy of or action plan for the business. In regard to SWOT analysis it was found that the organization was facing threats from neighbouring schools that had registered better performance this had resulted to many parents taking their children to other schools. On the other hand, the discussion revealed that though the institution was the best in terms of structure, the feeding programme was highly neglected and this was termed as weakness. Still, it became clear that opportunities were available but unexploited due to lack of fund. The Business Vision ` This learning institution is governed and motivated by its strong vision. It has been a school of excellence and that has been offering professional quality education in a wide range if interdisciplinary areas. The institution has been working towards its vision through: Creation of quality and socially relevant professional education in a broad area. Facilitation of autonomous research and knowledge dissemination. Professional response to manmade disaster through participation in relief and human rehabilitation activities. Strategic Information Having fully assessed the organization, it was possible to compile useful information borrowed from integration of both management accounting and accounting systems. The above information was relevant and provided a basis of Information that was required to evaluate performance and provide a solution that would make the organization to move forward. Budget It would act as an effective quantitative statement for a defined period of time with planned revenues, expenses, assets, liabilties and cash flows. It would help an organization to estimate its expenditure against the speculated income. It helps the organization in bench marking, monitoring progress it also influences employee behavior that assist in attainability of goals. It also turns manager’s perspective forward and assists in planning. ABC Analysis This acts as an inventory categorization method by dividing items into three. A are the most valuable items and they include goods whose annual consumption value is highest this should account for 10% to 20% of total inventory items, but their annual consumption value ranges between 70% to 80%. B items are inter- class items while C items have the lowest consumption value. This helps the manager to identify the inventory hot spots and separate them with others especially those that are not profitable. Balanced Score Cards Balanced score sheets illustrate the management process which involves the following steps: translating the vision, communicating and linking, business planning and feedback and learning. Thus score cards enable managers to modify strategies and reflect on real time learning. Literature Review Development, Presentation and Maintenance of Budget This paper seeks to present review and analysis of the development maintenance and presentation of budget. The is a lot of published research available on budget preparation an similarly many research articles on budget preparation have suggested ways of proper maintenance of budget to ensure smooth running of organizations. In this respect, the focus of this budget is on better way to ensure prudent use of finance in the organization. Therefore creating a budget would be the first step in reducing misuse of finance in this organization. This would enable the organization to estimate income and control expenses. The actual process includes: Determination and development of the business goals. Good business goals are realistic, measurable and time bound. Specific goals should be clearly defined for instance the business should clearly state the profit it wants to make, but it should not talk of making money. This should be measurable at the end to ascertain that the goals have been achieved (Shah, 2007). Secondly, the existing financial business documents should be reviewed. This is done by using expenses from the budget history to estimate the costs of development by using applicable financial documents. This is followed by definition of cost categories included in the development of plan. Some examples may include insurance, raw materials, payroll, taxes and cost of goods sold. The next step involves filling the budget in each class of expenses with the estimates that are based on financial documents that a business organization will have analyzed. Any unique cost that would be associated with business is accounted for .Finally, the whole work is checked against numbers for similar departments within an organization this indicates whether the budget was overestimated or under estimated (Brian Sam-Bodden, 2004). Types of Budget to Prepare In order to have the most appropriate managerial accounting approach for this business, several types of managerial budgets may be used concurrently. The first type of budget to use would be that master budget. This is a type of budget that involves a detailed projection of how the business manager would conduct all the aspects of business over a fiscal year. This budget helps in setting of performance objectives. This would be the most suitable for use in this business given that it is a large organization (Haka & Krishnan, 2005). The second most important budget would be the operational budget. This is a type budget that involves estimation of revenues and expenditures encountered in day to day business of the organization. If this type of budget is prepared annually, then it should be broken down further into smaller manageable periods such as a monthly or weekly. The third type of budget would be financial budget which outlines how a business receives and spends money. This is based on any given corporate scale including revenues from the main business as well as costs and income from the capital expenditures. Meaningfulness to Client The above named budgets would help the client in planning of actual operations by making the manager to consider how the future business situations might change and the most appropriate measures to take in case of any eventuality in the business. This further helps the managers to be in a position to consider problems before they occur (Diamond, 2002). More so, it helps the manager to coordinate the activities of the organization by making them examine the relationships between departments and their own operations. On the same note, it helps a business organization in controlling of resources to ascertain if they are well allocated and enough to cater for the requirements of the laid down business objectives. Still, budget would act as a very useful tool for the manager to communicate plans to the subordinates and staff members. This way, it would act as a guide to achieving objectives of a business. Also budget motivates the managers to help them strive to achieve budget goals which act as determinant of how far the organization has progressed within a specified period of time. Other essentials of budget to an organization include accountability where the managers work towards the confines that are dictated by the budget parameters. On the same note, managers are able to evaluate performance by making a comparison between the set standards and the targeted goals. In summary, the budget acts as a tool of providing forecast of revenues and expenditures of a business organization. This enables the business manager to come up with a model of financial business performance and eventually, proper implementation of strategies, plans and events is effected. This information would enable the client to have good maintenance strategies of this highly simplified budget (Natalia, Markus, & Jan-Florian, 2009). Maintenance of the Budget Following the information which was well communicated in this report, it would be easy to maintain a budget. The most immediate step taken to enable managers to maintain their budgets is to ensure that assumptions made during budgetally allocations are documented. This documentation enables those concerned during budget formation to answer important questions in future if need arises. This acts as a resource for the original budget (Ping-chen & Yi-kuei, 2012). Secondly, the maintence costs should be established. These would act as a way of managing unpredictable cash sometimes which has valleys and peaks and sometime it could be constant. In order for this to be fully effective, the business should put into consideration four major factors that would contribute to maintenance. They include labor, tools, materials, resources and contracted services. The last measure that should be taken is to sell the budget this involves making known to the staff members within the business organization to convince them of its legitimacy. This is also useful in that more meaningful budgets can be created in future and all the people involved will build trust in the management. References Brian Sam-Bodden, C. M. (2004). Enterprise Java Development on a Budget. Wesley: Apress. Diamond, J. (2002). Budget System Reform in Transitional Economies. Russia: International Monetary Fund. Haka, S., & Krishnan, R. (2005). Budget Type and Performance. Australian Accounting Review, 15(35), 3. Natalia, N., Markus, R., & Jan-Florian, S. (2009). Client–consultant interaction. Scandinavian Journal of Management, 25(3), 289. Ping-chen, C., & Yi-kuei, L. (2012). Approximate and accurate maintenance of budget. International journal of production economics, 139(2), 543. Shah, A. (2007). Local Budgeting (illustrated ed.). Capetown: World Bank Publications. Methodology Development of Strategic Information Having clearly shown the scope of budget preparation, presentation and maintenance, there are applicable strategies based on relevant information that would be helpful to the client by turning them into action as summarized. In this report, it is evident that the central problem faced by the client is lack of perfection in mapping out the future. This can easily be contained by employing the following strategic information: To start with, budget development should be linked to corporate strategy. If these two are linked, both the manager and the staff will be in a position to understand the laid down strategic goals. This eventually leads to better performance which is based n god coordination of tactics and greater support of goals. For this to be possible, the top management must maintain a good relationship with the staff members to so that it becomes easier to set challenging strategies that are worth achieving. This strategy ensures that the budget is not revised hence no loss of resources. Secondly, procedures should be designed such tat they allocate resources strategically. This is because competition for resources is inevitable among business organizations. This is achieved through coordinating the review of capital budget and operation. Finally it assesses the degree of risk involved in completing plans of action. Thirdly the business organization should link cost management efforts to budgeting. This is achieved through use of activity based costing (ABC). This helps in identifying the real cost of selling, buying, producing and delivering of goods and services. Also it should be ensured those only budgets that accommodate change are used. This would help the business to respond quickly to threats with greater precision and resources can be used efficiently taking advantage of the most seemingly promising opportunities. Finally the budget prepared should not be complex. This streamlining allows the management to collect information on budget and communicate the final expectation in less time. Type of Data (Monthly Accounts, Auction Sale Dates, Draft Budget and Feedback) The type of data obtained to facilitate this report was obtained from the target market, consumers, government related agencies and support industry. The data was availed through monthly accounts of the business. This is a requirement as per the policy which directs timely review of transactions for each and every account. This in essence ensures that financial information given reflects the actual activity undertaken by the business. Review should be done on monthly basis except those that involve specific transactions related to scholarship costs. This compliance is critical t the account reviewer who must work within the guidelines of the purpose of the account. The other way was through stock draft budget and feedback. These were useful in helping to identify any deviations within the monthly results. This would also help o determine the variance by getting the difference between the actual figure and budgeted figure. This would in return justify the right level of spending. Read More