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Management accounting - Essay Example Some managers and staff workers in the organisation are being evaluated using the income statement,balance sheet and the statement of cash flows as benchmarks.Some managers use the balance sheet to determine if all the customers have already paid their dues on timeSome managers would stop sending goods on account to customers who have large over due receivables In addition, some companies use different tools or criteria to determine if the managers have been doing profitably or beautifully. The following paragraphs will explain in detail this introductory.First, the management team has a problem with its working capital. working capital is arrived at by subtracting total current assets from total current liabilities. The total current assets include cash on hand, cash in bank and petty cash funds. The current assets also includes accounts receivable as well as notes receivable. The current assets also includes inventory end generated from current year purchases and beginning of the year inventory count. One problem in this situation is that the management team has a lot of write -offs. This simply means that the company has not been able to collect the receivables from the clients for one reason or another. Write offs are done only if the possibility of collecting the receivables is impossible because of the customers' bankruptcy, transfer to another location so that collection of the account owed by the customer cannot be pursued. The write offs result to a reduction in the accounts receivable. a reduction in the accounts receivable results to a reduction in the current ratio. A reduction in the current ratio indicates that the company is not doing well in terms of the balance sheet presentation for the current year. Likewise, the collection of only fifty percent of the amount collectible shows that the management team has lost fifty percent of its receivables amount. There are two ways to treat this lack of payment by the customer. One way is to record the fifty percent payment as a debit to cash and a credit to accounts receivable. The management then retains the remaining fifty percent uncollected accounts receivable from the disgruntled employee in the current assets section of the balance sheet. This would not result to an increase or decrease in the current assets portion of the balance sheet for the year (Fazzari 1993, 328). This would be a good accounting procedure to follow because it is what is the normal process as stated in the international accounting standards. On the other hand, a conservative approach to this situation would be to record the fifty percent payment from the unsatisfied customers as full payment of the original amount contracted. This would give us a reduction in the accounts receivable. Consequently, this would result to a decrease in the working capital of the management team. This will not give a good impression of the management team. The head of the management team was completely surprised when he or she received the fifty -percent payment. The surprise was due to the management team leader's expectation that the management team would receive the entire one hundred percent of the job done. The management team leader had to console himself or herself that the lack of payment was because the customer was dissatisfied with their job. The customer explained that the management team was not paid the entire management consultancy fee because the management team did not reach its pre -agreed targets. The profit center manager who is also the head of the management team feels that his department should not be dependent another department to save it from financial distress. The profit center manager is tasks to produce his or her department's income statement and balance sheet. Here, the profit center (may also be called a department must not ask for dole -outs or free rides from the other departments within the
McDonalds Essay Our assignment is to carry out investigations into two companies from two different sectors; these sectors are the private sector and the public/voluntary sector. The private sector are all about making profit rather than providing a service. The public/voluntary sector on the other hand want to concentrate on providing a good and efficient service for their customers such as the NHS, they provide a medical service for residents of this country, of course this isnâ€™t to make a profit because their service is free, whereas companies in the private sector just want to make money to then develop further and release more products which they hope will make even more profit. The company from the private sector I have chosen is McDonalds. The company I have chosen from the public sector is Oxfam. About The Companies: McDonalds were founded in 1940 Richard and Maurice McDonald and Ray Kroc, they started off as one fast food branch on East street California, and over the last 70 years have rapidly become the most profitable and biggest fast food company in the world, competing against other fast food such as KFC, Burger King, Subway and Pizza Hut. No matter what these rivals threw at them they always have come right back with something new and better which is why McDonaldâ€™s have stayed at the top of the fast food chain. Oxfam are a non-profitable company, they are the UKâ€™s largest charity which prides itself in helping 92 countries all over the world who are trying to fight extreme poverty including Ghana, Cambodia and the Democratic Republic of Congo. Oxfam rely on donations by the public which is why the advertising campaigns have become stronger and more persuasive as the demand for help and support in countries around the world has rocketed they have needed more and more donations to support families in serious poverty, people who donâ€™t even have access to running clean water. Ansoff Matrix The Ansoff Matrix is a marketing technique that all companies in the private sector use, without using the structure of the Ansoff Matrix a company like McDonalds would not be able to survive or expand their brand to a different market. If a company uses its existing products to sell to its existing markets this is called Market Penetration. If a company takes its existing products to a brand new market, to a new country for example, this is called Market Development. If a company decides they are going to release new products to their existing market, like the Big Tasty at McDonalds, this is called Product Development. But if a company wants to try something completely different by taking new products to a new market this is called Diversification. Growth Strategies: Oxfam The image of a pie chart below shows how every Â£1 donated to Oxfam goes to different parts of the charity, 7p of every Â£1 is invested into the company to generate future revenue. 36p goes towards the emergency response system to give aid to countries that need the help immediately, such as the victims of the Pakistan earthquake in the summer of 2010. Oxfam provide water and sanitation facilities for 2,000 families living in the camp. 40p goes towards development work in LEDC countries and other worldwide projects in countries such as Tanzania where they have set up a local jewellery business and a primary school. 7p goes towards campaigning for change, another 7p goes towards fundraising costs and the final 10p goes towards the support and running costs for transport etc. Survival Strategies: Oxfam Because of the recent recession the rate of unemployment has rocketed in the UK, Oxfam offer a wide range of voluntary work that of course doesnâ€™t offer pay for their labour but by doing voluntary work it counts as work experience and this looks great on a CV so people will want to apply so in the future they get a better chance in their future job interviews etc. Also the 7p of every Â£1 donated to Oxfam is invested into the company to generate future revenue in the charity. Advertising: Oxfam The main advertising campaign used by Oxfam is putting on television adverts that are shown all over the country on channels such as ITV1, C4 and FIVE. These adverts normally show families in LEDCâ€™s like Kenya for example, that are in extreme poverty with barely and food or clean water, so they are struggling to survive, they show this normally at a time when families in the UK are sitting at home eating their family meal, so when they see this family with no food whatsoever they begin to have sympathy for them, and seeing that for just Â£3 a month they could sponsor this charity so the family they can see on their television could eat a satisfactory meal or at least food to survive. Relationship Marketing: Oxfam One way Oxfam have used relationship marketing is great customer service, all Oxfam employees and volunteers go through a various amount of training courses before they qualify to work at a branch or travel around the world to give aid to people in poverty. This is good because if someone walks into an Oxfam branch to maybe give some of their belongings to the shop so they can sell them or if they go and sign up to sponsor them they will be greeted with a smile and a happy tone, which makes the customer feel comfortable straight away, and of course if someone feels comfortable in a place where they are receiving a service they will want will to come back again to support this cause further because they trust them. Growth Strategies: McDonalds McDonalds use a wide range of growth strategies, one of these are Franchises. A Franchise is where a company (McDonalds) sell a branch of their business to someone and give them the right to sell their products, but of course because it is still a McDonaldâ€™s branch it will still draw in more customers as more McDonaldâ€™s Franchises pop up around the world, because eventually there will be more McDonaldâ€™s branches to the square mile than ever before, which will increase the popularity of McDonaldâ€™s compared to its rival fast food outlets. Another growth strategy is introducing new products such as the McFlurry, the McFlurry has been sold for 14 years at McDonalds, throughout the 14 years they continuously release new flavours of the product an example of this is the McFlurry Flake, which has been released this year. This is a growth strategy as the company improving its flavour range so demand for the product will rise and therefore McDonalds will earn more profit. Survival Strategies: McDonalds One survival strategy that McDonaldâ€™s currently use is the 99p Saver Menu. The 99p Saver Menu is a special offer that McDonaldâ€™s promote in majority of their advertising campaigns, it consists of a selection of products which they have reduced the price to 99p such as the cheeseburger, the mayo chicken and the classic McFlurry, the menu also have other desserts such as the Apple Pie and donuts. This is a survival strategy because they want to increase sales, the want the demand of products to go up so they will earn more profit and the customers believe they are getting a good deal so they will buy food from the 99p Saver Menu again. Another survival strategy is the way that throughout the course of the year they rotate their menus, such as the introduction of different twists on the classic McFlurry, such as the Flake McFlurry and the Chocolate Fudge Brownie McFlurry, by doing this they are bringing new products into the market which will grab the eye of customers, if they see that a new McFlurry has been released they will more than likely want to try it to see what it is like, and of course if they like it they will want to buy it again and want to try the next one that comes out when the menu rotates once more. Eventually by doing this there will be a higher demand for the McFlurry so there will be a rise in sales and their profits will also increase. Another survival strategy currently enforced at McDonaldâ€™s is the removal of less profitable products, like the Angus Burger for example, this was released in 2006, for a short while there was a high demand for this product because it was new and exciting, but after a couple of months, less people bought the Angus Burger, which meant the demand for this product decreased, and so did McDonaldâ€™s profits. McDonaldâ€™s realised they had made a mistake with the Angus Burger so they removed it off their menuâ€™s and stopped selling the product to prevent further loss in sales and a bigger decrease in profit. Advertising: McDonalds Because McDonaldâ€™s is a worldwide company they have advertising campaigns set up all around the globe, all year round. The advertising technique that most people will be able to relate to is their memorable â€œMâ€ logo and their catchy slogan â€œIâ€™m lovinâ€™ itâ€ because this advertising technique is so simple this makes it exceptionally effective because people remember it, if they are driving along and see a sign with the â€œMâ€ on it they will know that there is a McDonaldâ€™s nearby, and if they are abroad where there are many McDonald franchises more people will want to eat there because they know they can get good fast food from a place they are used to eating at back home. Another advertising technique McDonalds used this year in particular is that alongside Coca Cola they were the main sponsors for the London 2012 Olympic Games, they have been a proud supporter of the Olympic movement for nearly 40 years, and this year have called themselves the â€œOfficial Restaurant Of The Olympic Gamesâ€. McDonalds commitment to the Olympic Movement began in 1968 when the company airlifted hamburgers to U.S. athletes competing in Grenoble, France. They first became an Official Sponsor of the 1976 Olympic Games in Montreal, and in 1984, McDonalds and their franchisees provided the funds to build the Olympic Swimming Stadium in Los Angeles. In 1998 they became a worldwide sponsor at the Nagano Olympic Winter Games and continued that commitment through the London 2012 Olympic Games. Relationship Marketing: McDonaldâ€™s At McDonaldâ€™s there are many perks than can be experienced just by sitting in their restaurant, free Wi-Fi is one of these, and modern comfortable seating is another, if someone would like to sit back comfortably and continue their work into their lunch break while eating a nice Big Mac meal then they can, internet access is installed into most McDonaldâ€™s franchises. Another way McDonalds use relationship marketing is the Happy Meal, with statistics showing that the amount of children and teenagers becoming clinically obese there is no wonder why this option on the menu is so popular, it is basically a small kidâ€™s size meal, it comes in a nice card box with puzzles and colouring sides on it which to a child is attractive enough, but all year round they also include a toy inside the happy meal box, usually related with what is big at that specific time, like a new childrenâ€™s movie being released for example, the toys in a Happy Meal will more than likely be characters from that movie, this is a great use of relationship marketing. Comparison: Both Companies In this task I have had to explore into the marketing techniques of one company in the private sector and one company in the public/voluntary sector, to see how effective their growth strategies, survival strategies, their advertising techniques and the way they use relationship marketing in store and in other parts of the company. After looking at both of their growth strategies I have noticed no similarities with the way they use them with the points I have stated due to the fact that McDonaldâ€™s use the Ansoff Matrix a lot in their growth strategies and Oxfam do not, they prefer to promote the fact that 84% of your money goes directly to giving aid to poverty stricken countries, 9% goes towards support costs such as transport and the remaining 7% is invested into the company to generate future revenue. After looking at the other aspects of the company I have discovered that although Oxfam has a very strong marketing technique with highly trained employees with their great customer service, and their flawless advertising campaign, nothing can compare to the strength of the McDonaldâ€™s empireâ€™s marketing techniques.
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