ASA CollegeBUSINESS BUS

1) How is financial accounting different from management accounting?

2.How do companies add value, and what are the dimensions of performance that customers expect of companies?

3.How do managers make decisions to implement strategy? (think back to the 5-step decision making process).

Answers:

1.How is financial accounting different from management accounting?

- SYSTEMS: Financial accounting is only concerned with making profits and not with the general functioning of the company. In contrast, management accounting looks for bottleneck activities and examines various ways to increase profits by eliminating bottleneck problems.

- REPORTING FOCUS: Financial accounting focuses on preparing annual financial statements that are shared with internal and external stakeholders and the public. Management accounting focuses on operational reports that are shared within an organization.

- AGGREGATION: Financial accounting analyzes the entire business, while management accounting reports in more detail. Management accounting focuses on detailed reports such as revenue by product, product line, customer, and geographic region.

- EFFICIENCY: The profitability and efficiency of a company is shown by the financial accounting. Management accounting reports what is causing a problem and how it can be rectified.

- TIMING: Financial statements expire at the end of a fiscal period, while management reports can be generated more frequently to provide managers with relevant information that they can act on immediately.

- PROVEN INFORMATION: Considerable accuracy is required to show that the financial records are correct. Financial accounting relies on this precise data for reporting, while management accounting is often an estimate that contradicts proven facts.

- STANDARDS: If the managerial accounting is done for self-consumption, there are no standards for the collection of this information, on the other hand, the financial accounting has to follow different accounting standards.

- TIME PERIOD: Financial accounting looks into the past to review financial results that have already been achieved, so it is historically oriented. Management accounting looks ahead to the future.

- VALUATION: Financial accounting is concerned with knowing the fair value of a company's assets and liabilities, while management accounting is only concerned with the value these elements have on a company's productivity.

2.How do companies add value, and what are the dimensions of performance that customers expect of companies?

Adding value

- The Faster The Better: The first way to add value is to simply increase the rate at which you are delivering the value people are willing to pay for. Successful people know that everyone is impatient. A person who until today did not know that they wanted your product or service wanted it yesterday. People see a direct correlation between the speed and the value of your offer. A person who can do it for you quickly is considered a better, more competent person who offers a higher level of quality than a person who does it slowly or whenever they do.

- Offer Better Quality: The second key to wealth creation is offering better quality than your competitors for the same price. And remember, quality is what the customer says. The best way to define Total quality management is: "Discover what the customer wants and get it faster than your competitors. Quality doesn't just mean longer durability or excellent design. Quality primarily relates to the benefits, to the use that the customer needs in order to market the product or service. Need or the benefit that the customer is looking for, which defines quality for him.

- Add Value: The third way to get rich is by looking for ways to add value to everything you do, remember that these factors of the product or service will become the basic minimum or expected norm in the marketplace when all offer the same thing. If you want to stand out as a person or as a producer, you have to "add" what you do so that your customer perceives you and your offer as superior to that of your competitors. You can add value to a product or service by improving the packaging or design. You can add value by simplifying how it is used. Apple changed the entire world of computers by making it easy for the layman to use. Simplicity has become a great source of value for Apple. and for countless other companies that have followed the same path.

- Increase Convenience: The fourth way to increase wealth is to increase the convenience of buying and using your product or service. Fast food outlets by the thousands are a simple example of how much more people are willing to pay for convenience than they have to cross by car to town or to a large mall or grocery store.

- Improve Customer Service: A fifth way to create value and increase wealth is to improve customer service. People are mostly emotional. You are strongly influenced by the warmth, friendliness, playfulness and helpfulness of the customer service staff. Many companies use customer service as their primary source of competitiveness as well as advantage in a rapidly changing market.

Important Dimensions

- Result and Output: The acceptable and measurable dimension of performance is the result and the product. It describes the terms of the inputs, which included the raw material, working conditions, process skills and talent of the employees in the final form of the product or service. All services must be planned in a scientific and systematic way so that the desired result or production can be achieved

- Input: This dimension deals with the activities that the employee must perform. Performance can be achieved when the nature of the inputs can be properly managed, as performance depends on three groups of factors: capacity, motivation, and organizational support. The third factor is lower, the performance must be poor. 

Employee performance = employee competence + employee motivation + organizational support

- Time: Time is a precious and very important dimension of performance. In today's world, performance management is limited to time, otherwise the organization cannot survive in the future circumstances that apply at this moment. Therefore, time can become a goal.

- Focus: Performance also has a dimension of focus, for example in terms of sales, profit and new areas. Focus means paying attention not only to one's own activities, but must also pay attention to related activities.

- Quality: 'Quality is not a destination, but a journey'. Quality refers to getting things right the first time rather than making and correcting mistakes in order to achieve full customer satisfaction. It means that quality meets customer requirements, not goodness. The higher quality is customer satisfaction. It is the responsibility of each individual employee as well as management to establish a quality standard that offers appropriate customer satisfaction at an affordable cost. Quality is the central dimension of performance management.

3.How do managers make decisions to implement strategy? (think back to the 5-step decision making process).

- Set Clear Goals and Define Key Variables: The first step in the process is simple: you need to identify the goals that you want the new strategy to achieve. Without a clear picture of what you want to achieve, it can be difficult to come up with a plan to achieve it. A common mistake when setting goals already whether it's personal growth, professional development, or business affairs, it's about setting goals that are impossible to achieve. Remember, goals must be achievable. Setting unrealistic goals can leave you and your team feeling overwhelmed, uninspired, drained, and potentially burned out. To avoid unintentionally low morale, review the results and accomplishments, both successes and failures, of previous change initiatives to see what is realistic given your time frame and resources. Use this past experience to define what success looks like. Another important aspect of goal setting is considering the variables that can prevent your team from achieving them and creating contingency plans. The more successful the implementation is likely to be, the more successful you are.

- Determine Roles, Responsibilities, and Relationships: Once you've established the goals you're working towards and the variables that might get in your way, you need to create a roadmap to meet those goals, set expectations on your team, and clearly communicate your implementation plan so that there aren't any Confusion. At this stage, it can be helpful to document all available resources, including the employees, teams, and departments involved, to get a clear picture of what each resource is responsible for, and to establish a communication process that everyone should implement. Strategic Planning requires strong relationships and as a manager you are responsible for telling people not only how they interact with each other and how often, but who the decision makers are, who is responsible for what and what to do when a problem arises unexpectedly .

- Delegate the Work: Once you know what needs to be done to ensure success, determine who should do what and when. Consult your original schedule and target list, and delegate tasks to the appropriate team members. You should explain the big picture to your team so they understand the vision for the company and make sure everyone knows their specific responsibilities. Also, set deadlines to avoid overwhelming people. Remember, your job as a manager is to achieve goals and keep your team engaged. So try to avoid micromanaging.

- Execute the Plan, Monitor Progress and Performance, and Provide Continued Support: Next, you need to put the plan into action. One of the hardest skills a leader has to learn is how to effectively lead and support employees. While you will likely focus on delegation most of the time, it is important to make yourself available to answer questions from your staff or to address challenges and obstacles they may face. Check with your team regularly about their progress and listen to their feedback. Status reports and logs to provide updates, reset due dates and milestones, and ensure all teams are aligned.

- Take Corrective Action (Adjust or Revise, as Necessary): Implementation is an iterative process, so the work doesn't stop once you believe you have achieved your goal. Processes can change in the middle and unforeseen problems or challenges arise the nature of the project itself changes. It is more important to be vigilant, flexible, and ready to change or readjust plans while implementation is monitored than blindly sticking to your original goals. To adjust? If so, how? Do we have to start over? The answers to these questions can be invaluable.

- Get Closure on the Project, and Agreement on the Output: All team members need to agree on what the end product will look like based on the goals set at the beginning. When you've successfully implemented your strategy, reach out to every team member and department to make sure they have everything they need to close work and feel that your job is done. You need to report to your management team, so gather information, details and results from your employees so that you can get an accurate picture for leadership.

- Conduct a Retrospective or Review of How the Process Went: When your strategy is fully implemented, look back at the process and evaluate how things went. Ask yourself questions like: Did we achieve our goals? But because? What steps are required to achieve these goals? What obstacles or challenges were to be expected in the course of the project? How can we avoid these challenges in the future? In general, what lessons can we learn from the process? While failure is never the goal, failed or flawed strategy implementation can be a valuable learning experience for a company, provided it takes time to understand what went wrong and why.

The difference between financial accounting and management accounting is that financial accounting is the collection of accounting data for the preparation of annual financial statements, while management accounting is the internal processing for the settlement of business transactions.

Reference

https://www.freshbooks.com/hub/accounting/financial-accounting-vs-managerial-accounting

https://online.hbs.edu/blog/post/strategy-implementation-for-managers

https://www.entrepreneur.com/article/282961

https://www.yourarticlelibrary.com/hrm/performance-management/performance-management/99696