You are required to select a Manufacturing/Service Sector Company and then write a report to evaluate the roles of managerial accounting in its business operation, by using their latest financial statements (annual reports), company website information, and relevant research materials if necessary. The prescribed textbook for this unit should also be utilized.
Introduction to the Company
The main purpose of this assessment is to analyze the financial statements of Blackmores ltd which is engaged in production and supply of medial supplements and other similar products. Blackmores ltd is engaged in production and supply of medical supplements in Australian economy and the company was established in 1930 by Maurice Blackmore. The company is regarded to be one of the leading business in medical sector in Australia.
As per the visions of the management of the company, the company wants to expand in new territories and one of the main objective of the business to expand and capture the markets of Asia. The management of the company is engaged in sustainable practice and ensures that the environment resources are protected at all costs. The management considers the values of the business at the heart of the organization and follows PIRLS values which stands for Passion, Integrity, Respect, Leadership and Social Responsibility. The mission of the business is to maintain sustainable practices in business organization in order to promote sustainable practices in a business along with providing the best health care solutions to the customers (Blackmores Limited. 2018). The focus of the management is to maintain sustainable practices along with protection the environment. The business has focused on reducing the emissions of greenhouse gases in the business and also reduction in waste generation of the business.
As per the annual report of the company for the year 2017, the business is considered to be ranked one in Bioceutical products and also in health product brand in Australia. The net profit after tax of the business which is shown in the annual report of the business is shown to be $ 58 million for the year 2017. The annual report for the year 2017 also shows that the overall sales of the business has increased significantly across the areas in which the company operates. The sales in Australia and New Zealand has improved significantly while the business has also earned decent revenues from Asia which is due to the opening of the trade routes in China.
The main products which is offered by the business are medical and health supplements and other Bioceutical products as per the requirements of the customers. Blackmore ltd is known to provide the health supplements, minerals and vitamin capsules using natural ingredients. Some of the products which are offered by the management of the company are Isowhey, Bioceuticals, Blackmores, Pure animal wellbeing, Fusion Health and Oriental Botanicals. As per the annual report of the business for the year, the key performance information which is outlined in the annual report of the business are increase in the overall volume of sales and profits which is generated by the business during the year.
Value Chain of the Company
Value chain analysis related to analysis of all the activities which are undertaken by the business in order to make the product which is produced in the business to reach the market and to the final consumers. The value chain analysis for Blackmores ltd is shown in below discussion segregating the primary and secondary activities of the business.
- Inbound Logistics: The inbound logistics of the business refers to the activities of the business in which material are procured by the management which will be used in the production of the main products of the business (Golicic and Smith 2013). As per the annual reports, the company obtains important ingredients which are used to make the products from natural sources such a plants and herbal sources for producing health supplements.
- Operations: The operations of the business are widespread as shown in the annual report of the business as the operations are spread across 17 countries. The annual report shows that the company draws significant amount of sales revenue from Australia and New Zealand, Asia and China.
- Outbound Logistics: The outbound logistics of the business of Blackmores ltd suggest the final products which is sold by the business during the period. The products of the business are supplied to various food and health supplement stores, medical facilities, hospitals and even directly to the customers as well (Montgomery and Oladapo 2014).
- Marketing and Sales: The marketing and sales of the business are also a primary focus of the management of the company. The management of the company uses its subsidiaries for the purpose of marketing the principle products of the business (Jung 2014). In addition to this, the management also incurs a significant portion of funds in marketing and selling expenses as shown in the annual report of the business.
- Services: The services which are undertaken by the management of the company are focused towards the welfare of the people and the practices of the management is developed in such a way such that the management is able to respond to the needs of the society.
- Infrastructure: The infrastructure of the business refers to all those activities which are undertaken by the business for the purpose of keeping the business operational. The infrastructure includes finance requirements, transport facilities and other support activities of a business.
- Human Resource Management: The human resources of the business represent the employees who are working for the business. The company has a good track record for retaining skilled employees of the business and also attract skilled recruits for the business.
- Technological Advancements: The technological advancement of business forms part of the core activities of the business. The management has a research and development unit which is engaged in preparing new formulas for health supplements.
Management Accounting Functions
The significant management functions which are performed by the management of Blackmores ltd includes planning, controlling and decision-making process of the business. The three processes are discussed below in details:
- Planning: The function of planning is very crucial in any business organization in which anticipated revenue and expenses of the business are forecasted by the business. The management of Blackmores ltd plans for any new operations which the management plans to undertaken and also for the revenue and expenses which the management expects from the operations (Fainstein and DeFilippis 2015). As per the annual report of Blackmores ltd for 2017, the management has a planned approach when it comes to expanding a business operation in foreign countries like Korea and other parts of Asia. As identified in the annual report of the company, the business faces supply constraints for which the management has adopted the approach of proper resource planning with the help of budgeting techniques (Eldredge et al.2016).
- Controlling: The controlling function of the business refers to the activities which are undertaken by a business for the purpose of ensuring that all the activities which are undertaken by the business are as per planned. The senior executives of Blackmores ltd are given the responsibility to control the activities of the business. The management of the company puts emphasis on controlling activities of the business in every aspect of the business. As shown in the annual reports of the company, the management is trying to lower the costs of by the business by applying appropriate control practices in the business and thereby improve the profitability of the business. The management of the company can apply control procedure with the help of setting an appropriate budget for maintaining the costs of the business.
- Decision-Making Process:The decisions are taken by the senior executives and the directors of the business. Normally the policy of the business is to take important decisions in the annual general meetings of the business. As shown in the annual report of the company for the year 2017, the management wants to focus on expanding the business and capturing the markets in Asia which is a decision passed by the board of directors of the business (Pettigrew 2014). In addition to this, important decisions of the management such as what are the new products which are to be launched by the business, the dividends which are to be offered by the business, the funds which are to be required by the business are all major decisions which are to be approved by the board of directors of the company.
Management Tools Utilized by Business
There are certain significant processes and functions which are undertaken by the management of the company in day to day management of the business. Moreover, for the purpose of effective management of the business, significant accounting information tools are also used by the business some of which are discussed below:
- Budgeting: The management of the company uses budgeting in the planning and controlling process of the business. Budgeting activities requires management to prepare statements which is then used by the management to forecast the expenses and revenue which the business can expect during the year (Kelly and Rivenbark 2014). The business of Blackmores requires the board of directors to apply budgeting process in order to anticipate sales on the basis of which production and distribution decisions are undertaken by the management (Baiocchi and Ganuza 2014). As specified budgets are also used in the business for setting the targets of each departments in pursuance of the goals and objectives of the business.
- Balanced Scorecard: A balanced scorecard is a performance measurement tool which considers the performance of a business in terms of four perspectives which are financial perspective, user’s perspective, internal perspective and learning and growth perspective (Busco and Quattrone 2015). The management of the company uses balanced scorecard in order to classify the indicators of success for a business relating to different areas. The balanced scorecard also provides means to the business to follow policies which are different from the policies which are followed by the competitors of the business.
- Ratio Analysis: The application of ratios analysis is used by the management of the company for judging the performance of the business in terms of previous year’s performance and also with industry average. The annual reports of the company for the year 2017 shows that the business has shown significant ratios such as Earning per Shares (EPS), Market price per share, Dividend per share and NPAT which are considered by the investors (Delen, Kuzey and Uyar 2013). These ratios effective show trend analysis as to whether there is growth in the business or a decline in the business. Such are provided alongside financial statements in order to more value of the annual reports which is presented by the management of the company.
Recommended Management Tools
The other management tool which can be used by the management of Blackmores ltd in order to make the business structure more flexible and appropriate are suggested below:
- Standard Costing: As per the annual report of the business, the management wants to deal with the problems of supply constraints and also increasing costs of the business. This costing technique allows a business to set a standard cost which is to be compared with actual results of the business. Any difference between the standard set and the actual results are known as variances. The variances are to be investigated and the corrective actions can be taken. The method is appropriate to be used alongside budgeting and it will definitely improve the controlling practices of the business. Moreover, the standard costing techniques also helps businesses to anticipate a standard for a particular item which thereby means ensures that effective measurement for the same is done.
- Benchmarking:As per the analysis of the market conditions, it can be established that Blackmores ltd comes in 2nd place in case of a medical supplement producing company on the basis of estimates of last five years. The management can improve the business process by adopting benchmarking practices as per which the management studies the policies of its competitors and tend to apply the same in the business after making some improvements. This will help the business to meet with competitive pressures and also improve the business structure.
The analysis which is shown in the above paragraphs clearly indicates that the policies and business structure of Blackmores Ltd is appropriate which is the main reason as to which the company is performing effectively in a business. The above discussion analysis the planning, controlling and decision-making functions which are carried out by the top-level management and the relevance of the same in the operations of the business. The recommendation which is shown in the above paragraphs if adopted by the management of Blackmores ltd, more improvements can be expected from the business.
Baiocchi, G. and Ganuza, E., 2014. Participatory budgeting as if emancipation mattered. Politics & Society, 42(1), pp.29-50.
Blackmores Limited. 2018. - AnnualReports.com. [online] Available at: https://www.annualreports.com/Company/Blackmores-Limited [Accessed 11 Sep. 2018].
Busco, C. and Quattrone, P., 2015. Exploring how the Balanced Scorecard engages and unfolds: Articulating the visual power of accounting inscriptions. Contemporary Accounting Research, 32(3), pp.1236-1262.
Delen, D., Kuzey, C. and Uyar, A., 2013. Measuring firm performance using financial ratios: A decision tree approach. Expert Systems with Applications, 40(10), pp.3970-3983.
Eldredge, L.K.B., Markham, C.M., Ruiter, R.A., Kok, G. and Parcel, G.S., 2016. Planning health promotion programs: an intervention mapping approach. John Wiley & Sons.
Fainstein, S.S. and DeFilippis, J. eds., 2015. Readings in planning theory. John Wiley & Sons.
Golicic, S.L. and Smith, C.D., 2013. A meta?analysis of environmentally sustainable supply chain management practices and firm performance. Journal of supply chain management, 49(2), pp.78-95.
Jung, S.C., 2014. The analysis of strategic management of samsung electronics company through the generic value chain model. International Journal of Software Engineering and Its Applications, 8(12), pp.133-142.
Kelly, J.M. and Rivenbark, W.C., 2014. Performance budgeting for state and local government. Routledge.
Montgomery, E.G. and Oladapo, V., 2014. Talent management vulnerability in global healthcare value chains: A general systems theory perspective. Journal of Business Studies Quarterly, 5(4), p.173.
Pettigrew, A.M., 2014. The politics of organizational decision-making. Routledge.