Essay: Management Accounting the Purpose of This Memo

Pages: 5 (1609 words)  ·  Style: Harvard  ·  Bibliography Sources: 5  ·  Level: Master's  ·  Topic: Business - Management  ·  Buy for $19.77

Management Accounting

The purpose of this memo is to explain and flesh out the benefits of management accounting. However, it needs to be done carefully and properly lest the benefits be fleeting to none rather than numerous and immeasurable. This memo will not get into the actual accounting statements of the firm but the high-level benefits of the same will be mentioned in exquisite detail. Management accounting can greatly benefit Singha Beer if done correctly and with a proper amount of forethought (Singha Beer, 2013).

Named after a mystical lion, Singha Beer is sold in stores that cater to Hindu and Thai tastes. The bottles of Singha Beer also bear a symbol on the neck of each bottle, referred to as the Garuda, that references Thai royalty. That logo is displayed with permission. Such permission was given in the 1930's. At one point, Singha Beer was produced in Gemany, in addition to Thailand, but that has since ceased to be the case and production only occurs in Thailand now. Singha Beer, despite its Thai-only bottling operation, has a very established footprint in Europe including in England. They also sell a lot in Asia, of course. They have a total of eight plants. They sponsor a Formula One team as well as a Premier soccer team (Singha Beer, 2013).

Singha Beer is the top beer distributor in Thailand. However, they are experiencing competition from Beer Chang, which is owned and operated by ThaiBev. Singha is sold in 3.5% and 5.0% alcohol content iterations. There is also a light version of Singha that is referred to as Singha Light. The aforementioned German plant was the source of a special variation called Singha Gold but that flavor was sunset when the German operation was closed down (Singha Beer, 2013).

Singha has also branched out into other sectors of the drinking market. One example is its Singha Drinking Water and they also have "lifestyle drinks" known as B-Ing Lifestyle Drinks. They also offer a soda water that can be used as a drink mixer. Finally, in addition to the beers above, they also have a variant called "Leo" that is designed to be a fuller-flavor beer than its normal offerings. Singha has won a number of awards including a plaudit from the International Taste & Quality Institute in 2008 and some taste awards in 2000 and 2002 (Singha Beer, 2013).

Financial accounting is all well and good but managerial accounting, even though it does not involve metrics and figures that are legally required to be reported, can reveal performance numbers and progress that financial accounting would never reveal but would benefit the airline in clear and tangible ways nonetheless. Management accounting would allow Singha Beer to make financial and accounting decisions that are more informed and based on real and tangible data rather than just best-case scenarios and the like (Money-Zine.com, 2013).

However, there is a potential weakness or series of weaknesses that can be encountered and learned about with management accounting and that it can absolutely be done wrong and with preconceived notions and assumptions and this can lead to horrible business decisions being made. It is important to make sure that the data and the associated analysis is complete and that there are no presumed or assumed answers going into any analysis unless it is fully understood that they can and should be tossed aside if they happen to be proven wrong during the course of short-term or long-term fiscal analysis (Money-Zine.com, 2013).

Pros for Management Accounting

Processes are just one thing that can be improved, if not greatly improved, through the use of management accounting. Much a laboratory experiment, but with much less formality, a "before" and "after" analysis can be done with process changes to see if the prescribed and theoretical changes actually yield the benefits that were expected or perhaps were not expected. In any event, management accounting can be used to perfect and create new processes over time but, as noted above, it is important that no predetermined motives and assumptions are allowed to cloud or even sway the results as this will lead to faulty business decisions being made as a result, potentially (Holtzman, 2013).

A similar but yet very different scenario where management accounting can and should be used is with product offering analysis. This can pertain to new products or existing ones and it is very strongly related to the process improvement framework mentioned above. Current product offerings can be assess but there can also be an analysis of how long it will take for a new or recently introduced product to become profitable, given that major amounts of investment and capital are needed to get a new product profitable. It can be figured out, of course, when the product will realize its profitability and/or break-even point (if it ever occurs) (Holtzman, 2013).

The analysis of the individual products, new or not, can then be melded together which allows for a proper product offering mix that allows for the clients to best be served whilst at the same time maximizing profit for the firm overall. Profit alone should not be the only focus because that is not the only dimension that matters but it should certainly be the main dimension or at least one of them. Social/cultural concerns as well as overall efficacy and coverage in product offerings is also important, obviously (Holtzman, 2013).

The next topic up for discussion is how management accounting controls the planning, motivating, controlling and organizing of a firm's operations. Managerial accounting, on its face, affects internal operations more than external-facing operations and appearances but the interlinking between the two is strong and prevalent to anyone paying attention to the overall dynamic and dimensions to both financial and managerial accounting (Zee-Pedia.com, 2013).

The planning dimension is pretty self-explanatory and dovetails with what is mentioned above as it pertains to the checking and changing of processes as well as the updating of the product mix including how the products do (or do not) mesh together and what products are simply not profitable and in what situations (if not all) that happens to be the case. The motivating dimension comes in when discussing things such as getting internal and external stakeholders on board with a decision or series of decisions that are executed, in whole or in part, based on managerial accounting metrics and outcomes (Zee-Pedia.com, 2013).

Stakeholders include basically anybody that is impacted by a decision and can included Thai Airlines stockholders, Thai executives, customers, society in general who keeps an eye on the actions/inactions of Thai Airlines, the media, the government (which overlaps a lot with the ownership) and so forth. A problem with having such a disparate array of stakeholders is that they can pull the financial and accounting "nose" of a firm in different directions and they can urge the firm to do many different things, not all of which are common-sense and/or linked to the ongoing good operations of a firm and its future profitability (Tutor2U.net, 2013).

The organizing dimension is also facilitated and otherwise enabled by the managerial accounting tactics and dynamics because it can be used as evidence and backup for what is being done and why. Managerial accounting data, in and of itself, cannot be used in a vacuum but it is absolutely a piece to the puzzle that cannot be left out or otherwise ignored. All major financial moves have to be based on real-world financial data and this is especially true if it seems to one or more groups of the stakeholders that the actions are under-informed or even ill-informed (Tutor2U.net, 2013).

It is vital that managerial accounting (as well as other initiatives) are used to unify the disparate groups and justify what is being done and for what reasons. Even with… [END OF PREVIEW]

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