(PDF) Activity-based management system

Dissertation

TABLE OF CONTENTS
CHAPTER 1 : INTRODUCTION..................................................................................................3
Background of the study ............................................................................................................3
Information about company........................................................................................................5
Rationale for selecting specific topic for investigation...............................................................5
Significance of research .............................................................................................................6
Scope of dissertation...................................................................................................................6
Aims and objectives ...................................................................................................................6
Research questions......................................................................................................................7
CHAPTER 2 : LITERATURE REVIEW........................................................................................7
Introduction ................................................................................................................................7
Themes .......................................................................................................................................7
CHAPTER 3 METHODOLOGY..................................................................................................17
CHAPTER 4 : RESULTS .............................................................................................................28
Theme : Output of the activity based management system in accounting . ..................................49
CHAPTER 5 : DISCUSSION........................................................................................................52
CHAPTER 6 CONCLUSION........................................................................................................54
Recommendation...........................................................................................................................55
REFERENCES..............................................................................................................................58

CHAPTER 1 : INTRODUCTION.

Background of the study
Accounting is considered to be as one of crucial business activity which is very much
essential to be performed for smooth function of business. Financial growth of firm is completely
based on them management practice. A successful company is that which has ability to improve
quality as well as reduce costs. Finance manager in an organisation generally utilises the two
approaches of management for managing the expenditures these are activity based as well as
traditional method of management. In relation to the traditional method of management. All the
expenditure is assigned indirect expenses to goods on the basis of estimated overhead rate.
Activity based management is considered to be as an appropriate technique which can be applied
in an enterprise for reducing the costs. It will also help an organisation in increasing profit
margin. Activity based management can be referred to as discipline which mainly emphasises
on administration of different business activities as the route for enhancing the value received by
clients as well as profit earned by organisation by delivering value. It is the management
technique which has great significance as specific method assists manager in assigning the
expenses to different business activities which are performed within an organization. In addition
to this, activity based management also assist management in determining the price at which
goods or services are required to be sold to customers. The activity based management mainly
emphasizes on responsibilities for tasks rather than costs. It also focuses on maximisation of
system wide performance instead of individual performance. The activity based management is
important as it helps in increasing efficiency of different business operations. Activity based
management technique include different tasks these are activity analysis, performance
measurement etc. Activity based management system mainly involves identification of activities
which are performed within an enterprise, it also includes computation of cost associated with
each activity and determination of cost of each business activity. The accounting system allows
an enterprise to control its activities in proper manner. Specific cost management accounting has
proven to be useful in context of reducing wastage. It has been proven to be beneficial in terms
of bringing improvement in quality of procedures as well as shortening lead time as well as
launching new goods in short period. The activity based management system is can be applied to
all types of organisation. Management in an enterprise can be assessed on the basis of cost
benefit analysis.

Both traditional and activity based management determines the overhead costs related to
the production of goods as well as then assigns those expenditures to goods on the basis of cost
driver rate. Traditional as well as activity based management are different in terms of accuracy
and complexity of two management techniques.
Activity based management is more complex than traditional management method. But
the activity based management produced more accurate outcome as compared to traditional
management practice. Activity based management is much more important as it provides more
precise breakdown of indirect expenditure. In organisational context, the activity based
management plays very much crucial role in development of long term business strategies as
well as plans in order to gain competitive cost advantage. The activities based management
technique mainly emphasises on allocation of overhead costs to goods. It supports management
in identifying the suitable ways for reducing the costs. Activity based management also assist
manager in identification of those business operations which are adding unnecessary costs to
firm. It is the management which is important as helps in making important business decisions.
Activity based management is very much crucial as it assists an organization in developing a
path for analysing as well as justifying enhancement in manufacturing cycle time. Activity based
costing is considered to be as strategic tools which helps in planning and costing of different
business activities. It is the activity based management system in accounting which assist in
bringing improvement in the business procedures. In addition to this, an activity based
management system also aid in preventing the wastage of resources. Activity based management
system in accounting can also be considered to be as tool which can be helpful in relation to the
controlling the expenditures at activity level. It is the system in accounting which mainly
emphasises on different procedures or business activities that are performed for generating goods
or services. Strategic activity based management includes identification of the products or
services to be produced for selling to customers. Documentation is considered to be as crucial
part of activity based management system in accounting. The documentation in Activity based
management system includes the following such as business procedure relationship map, list of
min business activities, detail about the benchmarking procedure, requirement of resources for
implementation of system etc. Idea of management in an organisation behind utilising the
activity based management system in accounting is to analyse all the activities related to
business. Activity based management system in accounts mainly focuses on analysing the cause

of the various costs involved in performing specific business activity. It is the activity based
management system in accounting which helps manager in determining the requirement for
bringing the changes in the cost structure. The specific accounting management system is
basically utilised in a target costing program. It basically targets the costing procedure which has
been developed for new as well as existing goods for facilitating the life cycle cost management.
The dissertation will have focus on analysing the importance of activity based
management over traditional management technique. It will include the detail information about
the various methods which has been used for performing the investigation on specific topic.
Dissertation also emphasizes on analysing the view of different authors as well as scholars about
topic.
Information about company
Glaxo Smith Kline (GSK) PLC is a British global pharmaceutical organisation which has
headquarter in London. Firm is the Sixth largest pharmaceutical organisation in the world. The
products or services offered by business entity include vaccines, oral health care, over the
counter medicines as well as nutritional goods. An enterprise has team of 98462 talented and
highly skilled workers. During the year 2018, an organisation has earned revenue on 30.821
billion pounds. An organisation has an effective accounting system. Earlier business entity
utilises the traditional accounting system but to continuous error in the recording of business
transaction theretofore, management in Glaxo Smith Kline (GSK) PLC has decided to implement
the new activity based management system.
Rationale for selecting specific topic for investigation
The specific theme has been chosen for performing the investigation for analysing the
importance of activity based management in manufacturing sector. The other reason is that
researcher has interest in management field. In addition to this, by performing the study on
specific topic researcher intends to develop the understanding about the way activity based
management is useful over traditional technique of management. Other rationale for choosing
particular topic for investigation is to explore the way activity based management is beneficial in

reducing the expenditure as well as allocation of costs for increasing the efficiency as well as
profit margin.
Significance of research
Study in topic importance of activity based management over traditional method is
crucial as it will assist Glaxo Smith Kline (GSK) PLC in monitoring as well as controlling costs.
In addition to this, the information gathered during the investigation will assist management in
addressing the advantages as well as disadvantages of both management technique. It will assist
manager in identifying the best technique which can be applied fort tracking as well as managing
overheads.
Scope of dissertation
The scope of research on topic significance of activity based management over traditional
management is limited as in present investigation complete focus is on only two management
technique. In addition to this, only few activities such as data collection, analysis and
interpretation has been performed by researcher. The statement of management accounts is to
solve the various issues faced by an enterprise related to the management of activities as well as
costs.
Aims and objectives
Aim of research : To analyse the significance of Activity based management over traditional
technique of management in UK manufacturing Industry – A investigation on Glaxo Smith Kline
(GSK) PLC.
Objective of investigation :
 To explore the trends of activity based management existing in UK manufacturing
industry.
 To gain the knowledge about the importance of Activity based management
 To analyse the value of activity based management technique in Glaxo Smith Kline
(GSK) PLC in relation to improvement in overall business performance.
 To suggest the ways through with Glaxo Smith Kline (GSK) PLC could increase in
dependency on activity based management technique for improving production of goods.

Research questions
 What are recent trends of activity based management is prevailing in UK manufacturing
industry ?
 What is the value of activity based management technique for Glaxo Smith Kline (GSK)
?
 What is the main significance of activity based management method ?
 Which is a main way through with Glaxo Smith Kline (GSK) PLC could increase in
dependency on activity based management technique for improving production of
goods ?
CHAPTER 2 : LITERATURE REVIEW
Introduction
Literature review can be defined as comprehensive summary of existing investigation
conducted by different researchers. In context of present study, the information which has been
written in literature review has been gathered from secondary sources such as using magazines,
newspaper, internet, Accessing to account books as well as website of organisation. Literature
review section in the dissertation has great significance as it assists researcher in reaching to the
conclusion. The main aim of literature review section in the dissertation is to create new
argument. In relation to the present study, the literature review part will have focus on analysing
the perception of different authors about the significance of activity based management over
traditional management technique.
Themes
Theme : Trends of activity based management prevailing in UK manufacturing industry.
According to the opinion of Shahzadi, Toor and Haq, 2018. , activity based costing can
be defined as management technique which is utilized for determining the true costs. However,
it has been argued by other authors that activity based management is basically a technique
utilize by manager in an organisation for identification as well as evaluation of different business
activities. As per view of Moschidis, Chatzipetrou and Tsiotras 2018 , activity based
management can be referred to as systematized, combined approach which describes the decision
of management that utilize activity based costing information for providing the high level of
satisfaction to clients. The author also stated that activity based management mainly involves

different aspects these are product mix as well as pricing decisions. According to the opinion of
Walliman, 2017, activity based management system in accounting can be defined as cost
administration execution of activity based costing. The author has also stated that activity based
management system is accounting is basically an administrative approach which mainly focus on
managing the different business activities in an effective as well as efficient manner to bring
improvement in the quality of goods or services offered by an organization to its customers.
Activity based management also supports the other types of managerial decisions such as
related to bringing improvement in business procedure as well as application of specific strategy
for reducing costs. However, it has been argued by other authors that activity based management
is basically utilization of activity based costing information for administrative purpose or for
making strategic as well operational decisions.
According to the opinion of Allain and Laurin, 2018. , activity based management can
be considered to be as an information system which has broad objectives such as bringing
improvement in decision-making by rendering the accurate cost related information.
During last few years there has been great improvement in the way activity based
management technique has been utilized by different organizations in UK manufacturing
industry. According to the opinion of Hiebl, 2018. the activity based management technique is
utilized by managers in an enterprise for deploying the non value work. However, it has been
argued by other authors that activity based management method is implemented by manager in a
firm for bringing improvement in business procedure as well as operations. As per the
investigation performed by researcher Hiebl, 2018. , results of which represents that activity
based management technique is deployed for setting the priorities of tasks in order to bring
improvement. However, it has been argued by other authors that activity based management
technique is utilized by manager for making important business decisions such as related to
production of new goods or services. According to the opinion of Abdel-Kader, Dugdale and
Taylor, 2018 the specific management technique is used for determining the capacities of
different business activities to help firm in accomplishment of desired business goals. However,
it has been argued by other authors as well as researchers that many of firms in manufacturing
industry utilize activities based management system for re pricing good or services to be sold.
According to the opinion of Peljhan and Marc, 2018., in context of management
accounting practices, many of enterprises in manufacturing industry are shifting from managing

vertically to horizontally. The author has also stated that management accounting practice has
moved from function orientation to procedure oriented. However, it has been argued by other
authors that with the passage of time as well as during last few years, activity based management
technique has been used by managers in an organization for preparing budget. As per the view
of Oldman and Tomkins, 2018, earlier activity based management was utilized particularly by
industrial enterprises. But now it can be utilized for all types of organization. It has been argued
by some authors that changes in the traditional management practices provides management
with guidance about implementation of best practices. However it has been argued by other
authors that many of the companies in manufacturing sector are utilize single indirect as well as
shared expenditure pool which allocates resource expenditure on the costs based on individual
cost factor that further violates cost accounting principle. The author has also stated that the
outcome of such activity is shift in commodity driven differentiation to service driven
differentiation which can assist an gaining competitive advantage. According to the opinion of
Hague, 2018., in relation to the activity based accounting, the latest trend in the manufacturing
sector is that there is increase in role of management accounting with the enterprise performance
management. Both management accounting and enterprise performance management assist n
organisation in increasing profit. As per opinion of Kaplan and Atkinson, 2015, in context of
manufacturing sector in UK there has been great shift in the predictive accounting. According to
the investigation conducted by author (Labro, 2019) result of which reveals that there is increase
in gap between management accounting as well as wants of managers as well as workers. The
researcher has also stated that there has been great deviation because of continuous changes in
needs of mangers. Earlier managers in an enterprise need to keep themselves aware about
limited information but with the passage of time managers in a company requires to have
complete detail information about the estimation costs or other expenditure which might occurs
in the future.
According to the Monroy, Nasiri and Peláez, 2014, activity based management is one of
the best method of evaluating and identifying activities that the company perform, using activity
based costing to re engineering initiatives or carry out the value chain analysis in order to
improve operational and strategic decision in firm effectively. Activity based management in
accounting is very beneficial as it help to manage overall functions. In simple words it is the cost
accounting term which allow management to use past performance activity and cost as the

benchmark to control or adjust recent activities as well as current organization goals. With the
help of this technique management can be able to eliminate unnecessary activities and able to
reduce extra costing activities.
Theme: Significance of activity based management over traditional technique.
As per the perception of Tsai and Jhong, 2019. , activity based management technique
has great importance as it provides an ease in administration of different business activities as the
path of increasing the value received by clients. However, it has been argued by other authors
that activity based management can be defined as technique of internal assessment which assist
management in identification of business operations within an enterprise which is adding the
costs to company has adverse effect on its profitability. According to the opinion of Bedford,
and Speklé, 2018. , activity based management technique has great significance over traditional
method as it assist manger in identification of different business opportunities. However, it has
been argued by other authors that activities based management technique is very much
important as it supports business excellence by providing information for facilitating long term
strategic decisions related to product mix as well as sourcing. According to the opinion of Bell,
Bryman and Harley, 2018, activity based management is very much crucial as enables designer
of the goods to develop the understanding about effect of different designs on cost as well as
flexibility. The author have also stated that activity based management supports manager in
determining the need of modification in the products. As per the thinking of Allain and Laurin,
2018, activity based management is very much essential as it helps in bringing improvement in
business procedure by enabling manager to gain insight into the performance of different
business procedure. However , it has been argued by other authors as well as investigators that
management information system are now being utilized by the firms in manufacturing sector for
tracking as well as providing information related to horizontal aspects of business. The author
state that it is the activity based management technique which assist manager in filling gap by
providing information related to cost as well as business operations.
As per the view of Shahzadi, Toor and Haq, 2018. , Activity based management has great
importance as it establishes relationship between different overheads expenditures as well as
various business activities so that the costs of products, services or customer segments can be
calculated more accurately. However, it has been argued by other authors that activity based

management assist in minimizing the costs of production by positively influencing as well as
supporting continuous improvement. According to the perception of Allain and Laurin, 2018. ,
activity based management has great importance as it provides enterprise an ease in controlling
its business activities in systematic manner. However, it has been argued by other authors that
activity based management has great significance as it supports business excellence by providing
formal management system which compels an individual to develop the understanding about
their work. According to the opinion of Bell, Bryman and Harley, 2018, the activity based
management has great significance as it helps management in development of business
procedure for controlling as well as making sure consistency in business performance. According
to the opinion of Labro, 2019., the activity based costing in accounting traces the expenditure
into cost with resources as well as activity driver. The author has also stated that activity based
costing in accounting provides much more visibility of the expenditures and other hidden cost as
compared to traditional accounting. As per the opinion of Maas, Schaltegger and Crutzen, 2016,
management activity based accounting is very much essential as it assist in development of
financial plan for an enterprise. However, it has been argued by some other authors that the
activity based accounting assist an organisation in identifying the suitable ways of reducing or
controlling the unnecessary expenditure. According to the perception of McVay, Kennedy and
Fullerton, 2016., with the passage of time there has been continuous increase in the value of
accounting information. However, it has been argued by other authors that because of an
exponential rate an individual shift from activity based accounting to cost reporting. As per the
opinion of Medudula, Sagar and Gandhi, 2016., activity based accounting is crucial as it assists
management in identifying the costs or expenditure associated with performing particular
business procedure. However, the other authors argues that activity assists manager in estimation
of relevant cost associated with the execution of specific business activity. According to the
opinion of Modugno and Di Carlo, 2019., activity based management has great importance and it
is considered to be as analytical tool which can be helpful in making decisions. The author has
also stated that activity based management is essential as it assists in planning, costing and in
administrating the other business functions which are based on the activities. According to the
opinion of Ndemewah, Menges and Hiebl, 2019. , activity based management in accounting is
considered to be as highly important as it helps management in developing the understanding
about the goods as well as about customers profitability. It has been argues by other researchers

that the activity based management system in accounting has great significance as it assistants in
other initiatives taken by management in an organization for increasing profit such efforts might
be business procedure re-engineering, customer relationship management.
Theme: Value of Activity based management for GSK PLC in relation to increasing its
dependency on ABM technique of management.
According to the opinion of Bedford and Speklé, 2018. , activity based management has
great value for companies in manufacturing industry, as it helps firms in eliminating the non-
value added functions. However, it has been argued by the other researcher as well as authors
that activity based management has great value for organization operating business in
manufacturing sector as it supports management in resolving the issues of traditional cost price
calculation. As per the perception of Moschidis, Chatzipetrou and Tsiotras, 2018. , activity
based management is highly valuable as it enables management to estimate profit in relation to
different business aspects. In addition to this, the author has also stated that activity based
management is valuable as it supports management in addressing the problematic area because
of which an enterprise has to face short as well as event long term losses. According to the
opinion of Allain and Laurin, 2018. , activity based management has great value as it helps firm
in minimizing the wastage. As per the opinion of few other researchers, it is the activity based
management technique which helps an organization in bringing improvement in the quality of
business procedures. As per the opinion of Moschidis, Chatzipetrou and Tsiotras, 2018. , the
activity based management is highly valuable for enterprise operating business in manufacturing
sector as it assist firm in shortening lead times as well as assists in introduction of new products.
However, it has been argued by other authors that activity based management assist in
identification of the suitable ways for providing high value to customers. The activity based
management also supports management in determining those tasks or operations that can add
value to specific good. In addition to this, strategic customer based management has significant
value, as it enables management to analyse as well as calculate customer profitability in advance.
As per the opinion of Tsai and Jhong, 2019. , the activity based management has value as it helps
management in determining which types of goods an organisation is required to developed.
According to the opinion of Shahzadi, Toor and Haq, 2018, The other advantages of
activity based management is that it helps an enterprise in increasing profitability. However , it
has been argued by other authors that activity based management assist supports manager in

determining the benefits as well as cost associated with different business activities. As per the
opinion of Otley, 2016., activity based accounting has great value as well as importance as it is
an approach to business activities which enables substantial assessment of both individual as
well as supports business costs of individual goods. Some other scholars as well as researchers
argues that activity based management system in accounting is highly valuable as it forms
internal functional choice which integrates traditional financial information with that of non
financial data and helps in planning, operating as well as evaluation of firm performance.
However , it has been argued by other authors that the strategic value of activity based
management system in an organization is completely based on provision of useful knowledge in
decision-making procedure. According to the opinion of Patten and Newhart, 2017, The activity
based management is highly valuable as it helps in improving the customers value and assist in
increasing the profitability of products. It has been argued by other authors that activity based
management system in accounting is highly valuable as it helps in maximizing the efficiency of
all functional division in an organization. As per the opinion of Liamputtong, 2018, the activity
based management system is highly valuable as it highlights those areas where little change can
bring drastic improvement in the performance of company. The other author argues that activity
based management can be considered to be as preservation of finance functions. According to
the perception of (Medudula, Sagar and Gandhi, 2016. ) , it is the value based management
system which assist manager in identifying those procedures or activities which add values to the
products. However, it has been argued by other authors that the activity based management is
highly valuable as this system in accounting assist management in reducing the customers'
response time and assist in identification of those procedures or task which consume most of the
resources, value as well as time. According to the opinion of Lal, 2017, activity based
management has proven to be valuable as well as helpful in relation to minimizing the wastage
as well as improving the quality of procedure. It has been argued by other authors that activity
based management assist in deciding the goods or services to be produced. However, it has been
argued by other authors as well as researchers that the utilisation of activity based management
system in accounting allows the cost per unit of goods or services to be measured in accurate
manner. The author has also stated that by using the activity based accounting an organization
can predict the profitability of per unit good produced. According to the investigation conducted
by author (Snyder, 2019), findings of which reveals that there are many firms in manufacturing

sector which rank their goods as per total profit. It is the twenty percent of products which
generates three hundred percent of the profit for an organization. It means that the leftover
eighty percent of goods loose two hundred of the [profit of an enterprise. The loss making
products are normally those that are produced in low volumes, or require a high level of
customisation.
Theme: Suggest the ways using which GSK PLC could increase in dependency on activity
based management technique for improving production of goods.
According to the view of Popovic, 2017., The activity based accounting can be utilized
for gathering accurate information about the cost of products. The author also stated that activity
based costing when utilize in conjunction with activity based costing an enterprise can make
drastic improvement in the business operations. According to the investigation performed by
researcher (Mackey and Gass, 2015) result of which reveals that when management in an
organization by utilizing activity based accounting with other organizational strategy can bring
improvement in its financial performance. However, it has been argued by other authors that
when activity based accounting is implemented in companies with diversified business
operation's and where the cost is too high then in such situations inter- organizational
transactions limit the benefits. As per the opinion of Renz, 2016., an enterprise by implementing
the activity based accounting system can lower the costs as well as increase the profitability.
However, as per the investigation conducted by author Machado and Alves, 2017, findings of
which reveals that management in an enterprise by applying the Activity management system in
accounting to procurement activities can increase the amount of standardization in procedures,
products or services. However, it has been argued by other researchers who believes that activity
based management system in accounting can be utilized by an enterprise for determining the way
traditional overhead activities effects costs. The author also states that using the Activity based
management for determining the expenditure in context of identification of an appropriate way
for controlling the cost. According to the opinion of Talley, 2017, business entity needs to form
strategic partnership with their suppliers, as this tactic will help management in making sure
dependability of delivery as well as price from the perspective of clients. The Author has also
stated that it is the sought of relationship which supports as well as enables the application of
management methods like activity based management system in accounting. The activity based
management in accounting can be utilize by management in a firm for performing various

assessments such as strategic, attribute, benchmarking and operational analysis. The author has
also stated by performing different analysis can judge the performance of the company in the
market that can be further beneficial in relation to making important business decisions.
According to the opinion of Modugno and Di Carlo, 2019, activity based management system in
accounting can be utilized by management in service sector organization for mainly performing
different business functions such as financial reporting, understanding the costs of different
business activities and for determining the reason for increase in costs of performing the
particular business activity. According to the opinion of McVay, Kenned and Fullerton, 2016,
reward system can be introduced for positively influencing employees as well as managers for
taking high initiatives for increasing the operational efficiency of different functional department
in an enterprise. The author has also stated that in relation to the activity based management,
financial as well as non- financial measures of performance are very much crucial.
As per the perception of Patten and Newhart, 2017, Management in an organization can
utilize activity based management system in accounting for formulating business strategy, long
term plan etc. The author has also said that business entity can gain competitive advantage by
just concentration on managing its business activities. According to the investigation conducted
by the researcher Kumar, 2019, result of which reveals that there are many of firms in
pharmaceuticals industry those which have gain competitive advantage by delivering the goods
or services to customers at low cost. The author has also stated that some of enterprise in
pharmaceutical industry has gained the competitive advantage by managing the activities which
has also assisted them in reducing costs. However, it has been argued by other authors that an
enterprise in order to minimize cost is required to bring improvement in business activities. As
per the opinion of Walliman, 2017, the costs can be reduced by eliminating some non core
business activities. The author has also stated that by implementing the activity based
management system in accounting firm can reduce the costs as well as it will enable business
entity in maintaining quantity and quality. It has been argued by other authors that manager in an
enterprise can use the information gathered from activity based management system in
accounting for budget forecasting, as it is the system which provides manager with good idea
about the growth of business in the future. The statement has been criticized by other author who
perceive that management in an organization might have to face difficulty in applying the
activity based management to strategic thinking. According to the opinion of Taylor, Bogdan and

DeVault, 2015, the main advantage that business entity can gain by implementation of the
activity based management system in accounting is that manager in an organization can
categorize the expenditures or costs on the basis of activities rather than by traditional cost
categories. The author has also states that it is the activity based management system in
accounting which will assist addressing those business activities which are non value adding.
Whereas, it has been argued by other authors that it is the traditional accounting system which
helps manager in simplifying the analysis of the expenditure that is very much essential in order
to make crucial strategic business decision. According to the view of (Snyder, 2019), performing
the analysis of cost by utilize the activity based management system assist manager in getting
much more important as well as relevant information. It has been criticized by other researchers
that it is always very difficulty to determine whether business activities being performed are
value added or not. The author has stated that effectiveness as well as efficiency of business
activity can be measured and on the basis of that decision related to the need for improvement in
particular business aspects can be made. According to the opinion of Smith, 2015, management
in an organization should not utilize activity based management system in isolation. But the
author has stated that activity based management system can be used by manager in alignment
with the other strategies executed for bringing improvement in the business performance of an
enterprise. As per the view of (Silverman, 2016), It is the activity base management system in
accounting also provide in depth detail about the potential saving which an organization has able
to do by implementation of specific business project. The author has also stated that by
implementing the activity based management system in accounting the manager in an enterprise
can get an ease in monitoring the way amount of expenditure of particular activity has been
reduced by successful undertaking of project. According to the opinion of Plowman, 2017,
management in an enterprise can utilize the activity based management system in accounting for
performing customer profitability analysis. It is type of analysis where expenditures are
allocated to clients by utilizing the activity based management system procedures which assists
in obtaining more accurate data related to the profit or loss contributed by an individual client.
Whereas, in context of traditional costing it is believed that if a client makes positive
contribution then in such case providing the services or products to such customers might lead
to increase in profitability of firm. However, it has been argued by other author that the
traditional accounting system ignores the fixed expenditures that are customer specific for

instance, time and money spend on providing the training to employees in customer service
department.
CHAPTER 3 METHODOLOGY
Research methodology can be defined as the various approaches as well as strategies
applied by researcher for performing the investigation. It is basically a procedure which is
conducted by researcher for performing different activities in research such as data collection,
analysis and interpretation. Research methodology can also be referred to as systematic plan for
for performing the research. Selection of an appropriate research methodology is very much
essential in order to get an appropriate answer for research questions. The different techniques
which has been utilized by the investigator in present study for performing the various tasks in
investigation procedure include:
Research type: It can be defined as study which assist researcher in solving specific
issue. The selection of the specific research to be executed is completely based on the nature of
issue. Research type can be broadly categorized into two these are qualitative as well as
quantitative. Qualitative research is completed based on words or non numerical data. In
context of the quantitative research, investigator generally utilizes the numerical data for
resolving the problems. Considering the nature of subject as well as issue, researcher in present
study has implemented the qualitative investigation procedure. Such type of research has been
executed by the investigator as it provide them with the ample amount of technique which can be
utilized for collection of data related to the topic that is to analyse the significance of Activity
based management over traditional technique of management in UK manufacturing Industry.
The main advantages of qualitative research is that it enables investigator to analyse the facts in
detail. Other biggest advantages of performing the qualitative research is that it allows
participants to expand their responses and share their feeling which further can open up new
subjects or topics on which further studies can be performed in the future. Major drawback of the
qualitative research is that the accumulation of the large amount of information related to the
topic can be quite time as well as cost consuming.
Qualitative and quantitative is the two kind of research type which has been applied
based on research topic or if one of them is suitable for work. Qualitative research is beneficial
as it help to evaluate required information within greater detail. But on the other side, there are
some disadvantage of this research type that might be affect on findings, the quality of data

collecting in qualitative research it highly subjective. With qualitative research type data rigidity
is more difficult to demonstrate and assess. Quantitative is also considered as research type, with
the use of quantitative research technique research can gather reliable and accurate data, as data
is analysed, presented and collected in numbers and after than results obtained can be highly
reliable. The one of the main disadvantage of quantitative research type is that it collect
narrower and sometime superficial dataset that results is limited as it offer numerical description
than in depth narrative.
Research approach : It is basically a concept which is used by investigator for
collection, analysis and interpretation of data. The choice of researcher about the selection of the
specific research approach is highly influence by the nature of the issue being addressed. The
two well-known as well as commonly used research approach are inductive as well as deductive.
Inductive is basically a research approach which begins with observation as well as theories .
The deductive research approach starts hypothesis. Inductive is the approach which has been
applied in the present investigation on subject analysing the significance of Activity based
management over traditional technique of management in UK manufacturing Industry. Specific
research approach has been applied by investigator in present investigation as it supports
investigator in developing new hypothesis from the information gathered (Patten and Newhart,
2017). In addition to this inductive research approach has been chosen by researcher for
narrowing the scope of research. It is the research approach which assist investigator in reaching
to the conclusion and help them in making suitable business decisions. Other rationale because
of which researcher has selected the inductive research approach is that it enables researcher to
explain the code of conducts to participants more quickly. The biggest drawback of the
inductive research approach is that it only helps investigator in making general conclusion.
Selection of the specific research approach has significant influence on the way investigator
reach to conclusions. Advantages of inductive research approach is that it assist investigator in
determining the extend up to which data collected by them is true as well as valid. The other
main advantage of inductive approach is that at the end of investigation the researcher get the
theory which helps them in developing the in depth understanding about subject.
Deductive and inductive is the two types of research approach, deductive approach
provide following benefits like possibility to explain causal connections between variable and
concepts. Possibility to evaluate concepts qualitatively, generalize research findings to chosen

topic. Deducting hypothesis, formulating hypothesis, testing, examining the results and
modifying theory are the following stages included in deductive approach which is beneficial as
if used in research project. It help to explore the known phenomenon or data and tests if that data
is valid in research. Deductive approach has time availability, it takes short time available to
complete research and provide results effectively. On the other side, inductive research approach
focus on understanding robustness, dynamics, resilience and also focus on constructing
alternative and individual behaviour.
Research design : It can be referred to as framework which is utilized for integrating the
different components in the study. Selection of suitable research design is very much essential in
order to handle particular problem in effective manner. Research design can also be defined as
set of methodologies as well as procedures used for collection, analysis and interpretation of
facts. It is the research design which supports investigator in getting the answer to their
questions. The different types of research design are experimental, explanatory, exploratory and
descriptive research design. Experimental research design is basically a scientific approach
where set of variables are kept steady. Exploratory research design is basically executed for
issues which has not been studied clearly. Explanatory research design is performed for such
problems which was not studied earlier. Descriptive research design is basically a scientific
technique which includes observing as well as describing behaviour of subject without n
influencing it in any manner (Mackey and Gass, 2015). The exploratory design has been used in
the present investigation in order to collect, analyse and interpret ate data. Particular research
design has been applied by investigator as it provides them an ease in identifying the hidden facts
as well as background information about significance of Activity based management over
traditional technique of management in UK manufacturing Industry which can be helpful in
reaching the decisions and making suitable decisions. In addition to this, exploratory research
design also help investigator in defining the problem. Investigator has applied the exploratory
research design in order to developed depth understanding about subject. The main advantages
of exploratory research design is that it helps the investigator in identification of the root cause of
the issue. Other biggest advantages of the exploratory research design is that it supports
researcher in completion of the investigation procedure in an effective as well as efficient
manner. In simple words, it assist investigator in addressing the correct questions as well as aid
them in eliminating the mistakes in the large project. Exploration research design is considered

to be as most suitable for large as well as complex Projects. The biggest drawback of the
exploratory research design is that there are only few chances of getting the adequate answers to
research questions. In addition to this, interpretation of the result is judgemental. The main
advantages of exploratory research design is that it provide the flexibility of the sources from
where the information about the subject can be gathered. The different sources of data collection
which can be used for accumulation of the facts related to the specific subject include pilot
studies, case studies, formal structured interview and informal discussions. The researcher in
present study has applied the structured interview technique for gathering the facts related to
topic that is importance of activity based management system in accounting (Machado and
Alves, 2017). One of rationale because of which investigator has selected the exploratory
research design is that it provides researcher with directions as well as support in relation to
determination of an appropriate approach for performing investigation. In simple words,
exploratory research design assists researcher in identification of best approaches which can be
applied to investigation for accomplishing desired aim as well as objectives. Other key advantage
of exploratory research design is that it increases the usefulness of finding from the investigation
procedure. The main benefit of suing the structured interview as the exploratory technique for
collection of data is that it assist investigator in gathering the detailed information detail
information about the perceptions of participants about the significance of the activity based
management system in accounting. In addition to this, other advantages of structure interview is
that it enables investigator to ask more detailed questions from the participants. In addition to
this, it is the structured interview technique which helps researcher in getting the high response
rate.
There are some advantages and disadvantages of research design types like explanatory,
experimental, descriptive and exploratory. Exploratory research design have adaptability and
flexibility to change, is is effective in laying the whole work that will lead to further study. But
on the other hand, it usually make use of number of samples that will not adequately present
target population. Experimental research design help researcher to have control over variables
but on the other hand it might be produce artificial outcomes. Results may only implement to one
situation and be difficult to replicate. Descriptive research design may be pre cursor for further
investigation because it help in indemnifying valid variables that can be tested and used. But due
to some limitations, it cannot be used to determine effect and issues or correlate variables.

Subjects or participant may not behave naturally or be truthful when they known they are being
observed.
Research philosophy: It is considered to be as one of the crucial part of research
methodology. Research philosophy can be defined as the investigator thought about the way
information related to the topic can be gathered, analysed and interpreted. A use of an
appropriate research philosophy is necessary in order to perform investigation in systematic
manner. Research philosophy can be classified into two groups these are positivism as well as
interpretivism. Positivism research philosophy is based on the assumption certain knowledge
can be gained naturally. It is the hypothesis which states that knowledge is gained through
sensory experience.
Interpretative research philology states that and interpreted using logic as well as reasoning. In
context of the positivism the function of investigator in investigation procedure is only to
accumulate as well as interprets facts in objective manner. Interpretive is considered to be as
naturalistic approach which is basically utilised by researcher for gathering facts related to topic.
The interpretive is the approach which has been used for accumulation of data related to
significance of Activity based management over traditional technique of management in UK
manufacturing Industry. Specific research philosophy has been used in the present study as it
provides investigator an ease in analysing the data (Liamputtong, 2018) . In addition to this, it is
interpretive research philosophy that enables investigator to integrate human interest into
research. Other rationale for selecting the interpretive research philosophy is that it enables
investigator to collect data related to subject in natural setting. The biggest drawback of the
interpretative research philosophy is that the facts accumulated by applying the primary data
collection technique can not be generalized. In relation to the interpretive research philosophy,
personal value as well as opinions of investigator has significant influence on information and
great impact on reliability of data.
Interpretivism research philosophy in research report provide depth of discussion of
research philosophy that depends on level of work. On negative side, the main disadvantage
associated with Interpretivism relate to nature of this approach and great room for bias on behalf
of researcher. Primary data collected in interpretivist report cannot be generalize till data is
heavily effected by personal values and viewpoint. Positivism research philosophy is the second
types of philosophy, that is quite different from interpretivism. It relied on experience as the

valid source of knowledge, wide range of important and basic concepts like, space and time is
not based on experience.
Sampling : It can be deigned as a technique which is applied for selection of few [people
as participants in the study. Different types of sampling techniques are stratified, cluster,
purposive, random, sample random etc. 20 People working in finance as well as accounts
department in GSK PLC has been chosen as participants in research on topic significance of
Activity based management over traditional technique of management in UK manufacturing
Industry. Those people have been selected as participants as researcher perceives that they can
provide descriptive information about the importance of activity based management system in
accounting. As participants to whom data has to be gathered are already known therefore,
researcher has applied purposive sampling technique.
In research methodology, sampling is the principle that specifies directions and
conditions procedure of choosing members of population to participant in research and to
support as sources for primary data. The selection of sampling procedure determines accuracy of
research reliability, findings and validity of research and have immense implications on entire
quality of report. Non probability and probability sampling is two types of sampling chosen by
researcher based on research report (Lal, 2017) . In non probability sampling not all the members
of population have change to participate in research. It is contrary to probability sampling, where
each and every individual of population has known, non zero opportunity of being chosen to
participant in investigation. On the other side, probability sampling is different from other
sampling, it help to identify the appropriate sampling frame based on research objectives and
questions. It contribute to determine suitable and useful sample size and help in choosing most
appropriate sampling methods and selecting samples.
Data collection: The most crucial task in the investigation procedure without this the
research has no meaning. As far as activities in investigation procedure is completely based on
the facts related to the topic gathered. The two main origin from where the information related to
different subject matters can be accumulated mainly include primary and secondary source.
Primary source is considered to be as more reliable for gathering the facts about the subject. As
the researcher can judger the validity as well as reliability of data by analysing the expression of
participant (Kumar, 2019. ). Scholar has utilized both primary and secondary source for
gathering the high volume of information related to subject that is significance of Activity based

management over traditional technique of management in UK manufacturing Industry. As the
results of the research is completely based on the information accumulated therefore, Selection
of the best source as well as technique for collecting data in investigation procedure is very much
essential. The different techniques which are generally applied by investigators for gathering the
facts from the primary sources includes survey, observation , questionnaire and interview.
The questionnaire is the method which has been applied by researcher for gathering the
facts about the topic from the Participants. Close ended questions are involved in the
questionnaire form, such strategy has been applied by researcher on the basis of assumption that
it will assist them in accumulation of the facts relevant to the topic chosen for investigation. The
questionnaire form will be shared with participants through E-mail. Such technique has been
applied by researcher in order to provide participants an ease in answering the questions. Books,
Journals, accounting books of organization has been utilized by researcher in order to gather the
information about the system used by company for managing as well as controlling the costs.
Data collection it one of the most crucial and essential procedure of gathering
information based on chosen topic or from all relevant sources in order to find suitable data to
research. It is divided into two categories secondary and primary data collection, one of the best
benefit of secondary data collection method is that all the information already has been published
and used in previous research which help to save researcher time and provide in depth
information without wasting their time and money. On the other option, primary data collection
is also useful and beneficial if it is chosen. Advantage of applying primary data collection is that
researcher is collecting information or data for particular purpose of their research effectively.
Primary data is relevant and original to topic of research report so degree of accuracy is high.
Data analysis: It is the basically a technique of refining the data in order top extract
meaningful as well as useful facts. Data analysis in investigation procedure is considered to be as
one of the most useful activity which assist researcher in reaching to the conclusion and help
them in making an effective decision. There are two types of the techniques which are generally
applied by investigator for analysing the information these are qualitative as well as quantitative.
The qualitative technique includes thematic analysis ion which the theme are design on the basis
of the answering pattern of the participants (Kaplan and Atkinson, 2015). Quantitative technique
includes use of statistical as well as mathematical formulas as well as techniques applied for
analysing the numerical data. Investigator has applied the qualitative technique in the present

study for analysing the information about the significance of the activity based management
system in accounting. Researcher in present study has designed the different themes' on the basis
of the way responses are provides by the participants during the investigation procedure. In
addition to this, graph, charts and tables are used for making the research report presentable as
well as under stable by user.
Research methodology chapter in research report should include discussion about
techniques or methods of data analysis which is very essential. It will be explained in brief
manner which shows how researcher going to analyse primary or may be secondary data collect
employing method explained in this report (Hughes, 2016.). Quantitative and qualitative data
analysis is the two type of methods of data analysis. Researcher with the help of qualitative data
analysis using interviews, experience and more. data analysis is going to include determine
common patterns within responses and analysing critically in order to gain research objectives
and aims.
Ethical consideration- Regardless of chosen research method, researcher will be obliged
to address ethical aspects of writing the research report in proactive manner, researcher will
avoid misconducts during their research procedure and its research report must be free from
contradictions on ethical grounds. Ethical consideration is specified as one of the most
significance part of research, researcher should be focus on participants they must not be
subjected to harm any one. Respect for dignity of participants in research should be prioritised
for researcher (Flick, 2018). They must be avoid any kind of representation of primary data
findings as well as misleading information. Researcher should considered that any type of
communication in context to research must be done with transparency and honesty.
CHAPTER 4 : RESULTS
Theme :knowledge you have about the activity based management system in accounting.
Ques . How much knowledge you have about the
activity based accounting ?
Frequency
 Complete knowledgeable 5
 Somewhat knowledge 12
 No knowledge 3

Interpretation : According to the answer provided by the 12 people out 20,they have somewhat
knowledge about the activity based management in accounting. Those participants have also
stated that they are unaware about such system in accounting as it is completely new, and they
are not provided with any type of such training by the management in an organization. Out of 20,
12 people perceive that it is very much important for an organization to make their employees
aware about the new concepts in respective field, as this tactic will help them in improving their
performance at workplace. It has also been analysed from the data given in the table that there
are only people in an organization those who have complete knowledge about activity based
management in accounting. Those people have gained knowledge about such new system in
accounting by taking initiatives of attending the seminars organized by other firms or educational
institutions.
Theme: The different system in accounting which is best in context of reducing cost ?
Ques. Among the different system in accounting which is
best in context of reducing cost ?
Frequency
 Traditional accounting system 7
Complete knowledgeable
somewhat knowledge
No knowledge
0
2
4
6
8
10
12
Frequency

 Activity based management system 11
 Both 2
Interpretation : According to the opinion of 11 out of 20, activity based management system in
accounting is best in relation to minimizing the cots of activities. Those people have given such
answers as they themselves have experience that activity based management system in
accounting helps in identification of those activities which consumes costs and have adverse
effect on the profitability of an organization. Whereas, As per the view of 7 people out of 20,
traditional accounting is the best as it is less costly than activity based management system in
accounting. It is required by the management in an organization to consider the cost before
making decision related to the implementation of specific accounting system.
Theme: Aware about the latest trends in activity based management in accounting
Traditional accounting system
Activity based management system
Both
0
2
4
6
8
10
12
Frequency

Ques Are you aware about the latest trends in activity
based accounting?
Frequency
 Yes 7
 No 11
 don't know 2
Interpretation: As per the response provided by 7 persons out of 20, it has been found that they
are aware about the latest trends in the activity based management system in accounting. Those
11 people have also said that they have got the knowledge about the trends in the activity based
management system in accounting through research as well as seminar organized by the
company. The important thing which has been analysed from the above graph that there are 11
participants are not aware about the new trends in accounting. As many of the employees
Yes No don't know
0
2
4
6
8
10
12
Frequency

working in an enterprise are not aware about the latest trends in accounting, this is the factor
which can have significant as well as adverse effect on the accounting practice of firm. Due to
the lack of awareness about the changes in accounting system an organization might have to
suffer losses which can have negative impact on the financial performance of an enterprise in
short as well as sometimes in long run.
Theme: extend you are agreed with the statement that activity based management
accounting has great importance over traditional accounting .
Ques. Up top what extend you are agreed with the
statement that activity based management accounting has
great importance over traditional accounting ?
Frequency
 Completely agree 13
 Partially agree 4
 Completely disagree 3
Completely agree Partially agree Completely disagree
0
5
10
15
Frequency

Interpretation : After analysing the response provided by the respondent it has been found that
out of 20, there are 13 participants those who have shown their complete agreement with the
statement that activity based management is much useful as well as important as compared to the
traditional accounting system. These people have given such answers that in present scenario,
companies are facing the issue of high costs which can only be resolved by eliminating the
activity which are consuming the high amount of resources as well as time. They have also stated
that activity based management system plays crucial role in eliminating the tasks which are
unimportant and consume lots of time as well as resources.
Theme: the main benefit which is gained by an organization by implementing activity
based management system.
Ques What is the main benefit which is gained by an
organization by implementing activity based accounting ?
Frequency
 Elimination of unwanted activities 12
 Decline in overall expenses 4
 Increase in profit 4
Elimination of unwanted activities
Decline in overall expenses
Increase in profit
0
2
4
6
8
10
12
Column B

Interpretation : It has been analysed from the above that according to the perceptions of 12
people out of 20, elimination of the unwanted activities is considered to be as important benefit
which can be gained by an enterprise by implementation of the activity based management
accounting system. As per opinion of those 12 people avoidance of the business goals like
reductions in costs as well as increase in profitability can be accomplished only by eliminating
the unnecessary activities which is possible only through employment of the activity based
management system in accounting.
Theme: the accounting technique is presently utilized by your organization.
Ques Which is the accounting technique is presently
utilized by your organization?
Frequency
 Traditional accounting 16
 Activity based accounting 3
 Other 1
Traditional accounting
Activity based accounting
Other
0
2
4
6
8
10
12
14
16
Frequency

Interpretation : According to the answers provided by 16 respondent out of 20, there are 16
people business entity is using the traditional accounting system for recording their business
transactions. Those participants have given such answer after thoroughly analysing the
accounting practice performed by accounting department in an organization. There are only
participants who have given answer that other type of accounting system are used by firm. In
addition to this, out of 20, three people have replied that business entity is using the activity
based management system in accounting, it has been perceived that those people gave given such
answer as they are not aware about the particular system.
Theme: type of effect activity based management system in accounting practice have on
business performance of an organization ?
Ques What type of effect activity based management
system in accounting practice have on business
performance of an organization ?
Frequency
 Positive 16
 Positive 3
 both. 1

Interpretation : according to the answers provided by the 16 people out of 20, use of activity
based management system in accounting has positive effect on the accounting practices
facilitated by accounting department in an organization. Those people have given such response
as they themselves have analysed there has been drastic improvement in the accounting practices
as well as businesses performance of those firms who have employed the activity based
management system. Those people have also stated that they have observed the drastic decrease
in the costs as well as increase in the profitability of business entities which has implemented the
activity based management system in their accounting.
Theme: The major disadvantage of activity based accounting over traditional accounting
Ques What are the major disadvantage of activity based
accounting over traditional accounting ?
Frequency
 It is more costly. 15
 Complex for manager to understand 2
 It could be easily misinterpreted. 3
Positive Positive both.
0
2
4
6
8
10
12
14
16
Column B

Interpretation : As per the answer provided by 15 people out of 20 perceives that the main
drawback of the activity based management system in accounting is that it costly as compared to
the other accounting system. It is the answer provided by the respondent as they are aware about
the costs of different accounting system. However, as per the opinion of 3 respondent out of 20,
the biggest advantage of activity based management in accounting is that it can be easily
misinterpreted, those participants have given such response as they themselves have performed
the analysis of the system.
Theme: The factors which influence GSK company for implementing activity based
accounting at workplace
Ques What are the factors which influence GSK
company for implementing activity based accounting at
workplace ?
Frequency
 ABC provides information about different types
of costs.
4
 It provides good detail which helps in determining 6
It is more costly.
Complex for manager to understand
It could be easily misinterpreted.
0
2
4
6
8
10
12
14
16
Frequency

price
 Helps in profitability analysis 10
Interpretation : Out of 20, according to the opinion of 10 respondents the factor which has
encouraged an enterprise to install or employ specific system in the accounting practice is that
activity that capability of the activity based management system to provide management an ease
in analysing the profitability. There are 6 people those who believes that activity based
management system assist in determining the prices of goods it is the main feature which has
positively influenced management decision related to use of activity based management system
in accounting.
Theme: The main reason because of which many of firms in manufacturing sectors are not
considering the ABC system.
0
4
8
Frequency

Ques. According to you what is the main reason because
of which many of firms in manufacturing sectors are not
considering the ABC system ?
Frequency
 Those organizations are satisfied with existing
costing system
3
 Lack of knowledge about ABC system 5
 Cost of ABC system is too high 12
0
4
8
12
Frequency

Interpretation: it has been analysed from the information provided in the above table that there
are 12 people out of 20, those who believes that the cost of the activity based system in
accounting is too high which is considered to be as important reason for which many of
enterprises in manufacturing sector is not utilizing the specific system in accounting. There are 5
participants who perceive that the firm which has not employed the latest activity based system
in accounting as they are not aware about it. However, 3 participants have answered that an
organization which has not installed the activity based management system in accounting as they
are highly satisfied with the tradition accounting system.
Theme: The main difficulty faced by your organization in employment of ABC system ?
Ques . What is the main difficulty faced by your
organization in employment of ABC system ?
Frequency
 Identification of activities 10
 Addressing cost drivers 6
 Both 4
Identification of activities
Addressing cost drivers
Both
0
2
4
6
8
10
Frequency

Interpretation : After analysing the data present in the table, it has been found that according
tom the answer provided by 10 respondent out of 20, the main difficulty which they face is
related to the identification of those business operations or activities which are adding cost to the
organization. There are 6 people who replied that the main difficulty faced by them in related to
the addressing the costs drivers. Those people and few authors perceives that the such difficulties
in accounting can be eliminated by implementing the activity based management system in
accounting. Those participants have also stated that the activity based management system will
assist manager in ascertaining the costs drivers as well as will help them in addressing those
activities which are giving rise to extra cost to firm. It is required by manager in an organization
to develop the understanding about the activity based management system before implementing
it as this tactics will aid them in eliminating the difficulties.
Theme: Activity based accounting is best in what aspect.
Ques : According to you Activity based accounting is
best in what aspects?
Frequency
 Increase in accounting efficiency 10
 Cost ascertainment 2
 Increase in financial awareness. 8

Interpretation : As per the opinion of 10 people out of 20, increase in accounting efficiency to
address those activities which are adding costs and identification of the cost drivers are the best
aspects of activity based management system in accounting. However, according to the
perception of eight people the best aspect of activity is that it helps in generating the financial
awareness which is very much essential in order to make an effective business decisions. While
for two participants cost ascertainment is the best aspects of activity based management system
in accounting. By generating the financial awareness through analysing the information in
activity based management system, manner in an organization can formulate an effective
strategic financial or investment plan that could be further beneficial for earning high income.
Theme: Accurate information about expenditure can result into an effective allocation of
business resources.
Increase in accounting efficiency
Cost ascertainment
Increase in financial awareness.
0
1
2
3
4
5
6
7
8
9
10
Column B

Ques Does accurate information about expenditure can
result into an effective allocation of business resources?
Frequency
 Yes 12
 No 6
 Don't know 2
Interpretation: It has been analysed from the information present in the table that out of 20
there are 12 people those who perceives that accurate information about expenditure which can
Yes No Don't know
0
2
4
6
8
10
12
Frequency

result into an effective allocation of business resources. Those people have given response such
response on the basis of their analysis. It is required by management in an organization to
implement the activity based management system in accounting as it will assist them in getting
the accurate information about the expenditure. In addition to this, it will also support manager in
analysing the activities which can be beneficial in terms of an effective allocation of resources to
different tasks.
Theme: use of activity based management in accounting
Ques. What is the use of activity based management in
accounting?
Frequency
 Analysing the cost of equipments as well as
activities.
12
 Computation of profitability 6
 Identification of problem areas. 2

Interpretation : According to the answer provided by 12 people out of 20, activity based
accounting is mainly used for analysing the cost of equipments as well as different business
activities. Those people have also replied that activity based management system in accounting
is utilized for addressing those tasks which are adding the cost to firm. However, there are six
participants those who perceives that the activity based management system in accounting is
mainly used for computation of profitability. There are two people who have replied that activity
based accounting is mainly used for identification of problem areas, as per the answer it has
been perceived that those people doest not have knowledge about the activity based management
system. Management in an enterprise can utilize the activity based system of accounting for all
three functions these are Analysing the cost of equipments as well as activities, Computation of
profitability and Identification of problem areas.
0
4
8
12
Frequency

Theme: The main functions which can only performed by using activity based management
system rather than traditional system in accounting.
Ques . According to you which is the main functions
which can only performed by using activity based
management system rather than traditional system in
accounting ?
Frequency
 Ascertainment of activities consuming costs 1
 Provision of economic feedback to managers and
operators about process efficiency
16
 Valuation of inventory for financial reporting 3
0
4
8
12
16
Frequency

Interpretation : As per the opinion of 16 people out of 20, Provision of economic feedback to
managers and operators about process efficiency is the function which can only be performed
only by using the activity based management system. Whereas, There are three participants who
stated that it is the ascertainment of activities which are consuming cost is considered to be as
important function which can only executed using the activity based accounting. It is required by
business entity to employ activity based management system as it will provide them an ease
different functions such as ascertainment of cost associated with different business functions.
The activity based management system in accounting will also provide management assistance in
measuring the efficiency as well as effectiveness of various business operations.
Theme : Important in order to gain maximum benefit by implementation of Activity based
management system in accounting
Ques . According to you what is important in order to
gain maximum benefit by implementation of Activity
based management system in accounting?
Frequency
 Support from managing director 4
 Dedication of employees towards system 10
 Both 6

Interpretation : It has been analysed from the information present in the above table that there
are 10 people out of 20, those who perceives that dedication as well as high level of commitment
from employees towards activity based management system is very much crucial for gaining the
maximum benefit by implementation of the activity based management system. However, as per
the opinion of 6 respondents both support from managing director and dedication of workers
towards activity based management system is very much essential for yielding benefit by
implementing the activity based management system in an organization. It is required by
manager in an enterprise to provide training to employees so that they can get the knowledge
related to the activity based system. It is considered to be as one of the best tactics which can be
implemented for positively influencing workers to make their significant contribution in the
generation of desired results. In addition to this, by Providing the training to employees
management in an enterprise will able to yield the maximum output by implementation of the
activity based system in accounting system.
Support from managing director
Dedication of employees towards system
Both
0
2
4
6
8
10
Frequency

Theme: The risk associated with the implementation of the activity based management
system in accounting.
Ques. What is the risk associated with the
implementation of the activity based management system
in accounting ?
Frequency
 some activities have an implicit value, not
necessarily reflected in a financial value added to
any product.
7
 Decrease in value provided to customers 10
 Chances of error in recording transaction 3
\
Interpretation : According to the opinion of 10 people out of 20, the main risk associated with
implementation of the activity based system in accounting is decrease in the value provided to
customers. Those people have given such answer as they believe that the pricing of the products
0
4
8
Frequency

which is done by management on the basis of information generated through activity based
system in accounting may not be correct. However, as per the opinion of 7 participants out
ofsytem. 20,some activities have an implicit value, not necessarily reflected in a financial value
added to any product , they have also stated that an organization might have to face losses due to
that.
Theme : Output of the activity based management system in accounting .
Ques. What is the main output which is
generated by implementation of activity based
management system in accounting ?
 Decline in cost of business activities
system and improvement in business
procedures,
10
 Accurate goods or services 6
 Decline in cost of business activities
and improvement in business
procedures,
4
0
3
6
9
Column B

Interpretation : According to the answers provided by respondents it has been found that there
are 10 participants out of 20 those who perceives that Decline in cost of business activities and
improvement in business procedure is the main output which is generated by implementation of
activity based management system in accounting. Those responded have given such answers on
the basis of their analysis of the financial report of the company. In the annual financial report.
After analysing the report they have found that there are many of organization operating business
in manufacturing sector has been able to decrease cost as well as increase profitability which is
very munch essential for fostering business growth. There are six respondents those who have
stated that accurate goods or services can be considered to be as major output for activity based
management system.
Theme: Extent you are satisfied with the results produced by the activity based system in
accounting
Ques. Up to what extent you are satisfied with the results
produced by the activity based system in accounting?
Frequency
 Completely satisfied 14
 Dissatisfied 4
 Somewhat satisfied 2

Interpretation : It has been analysed from the data present in the table that out of 20, there are
14 people those stated that they are completed satisfied with the results produced by
implementation of the activity based management system in accounting. Those people has given
such reply on the basis of their analysed that there has been great decline in the cots of activities
as well as increase in the profitability of organization. They have also stated that they have seen
the drastic improvement in the business performance of enter[prise which those people perceive
that has been possible through implementation of activity based management system in
accounting. Whereas, there are four response they have shown their dissatisfaction in relation to
the outcome generated from activity based management system in accounting. In addition to this,
out of 20, 3 respondent have stated that they are somewhat satisfied with the results produced
through the activity based management system in accounting. It has been analysed from the
literature review section that it is the activity based management system in accounting which
assist them in making suitable strategic business decisions. However, it has been argued by
Completely satisfied Dissatisfied Somewhat satisfied
0
2
4
6
8
10
12
14
Frequency

other authors that the activity based management system in accounting can be helpful in relation
to supporting the business excellence and gaining the competitive advantage in the market.
CHAPTER 5 : DISCUSSION
Activity based management system in accounting is business procedure which is
executed by management in an organization for determining the profitability of different
business aspects. It is the system in accounting which mainly emphasizes on activities that are
performed for accomplishing business objectives. It is an integrated approach which intends to
maximize the value adding activities, In addition to this, activity based management system in
accounting also aims to eliminate those business activities which add cost to enterprise. The
activity based management system which provides management an ease in accurate computing
of production cost. However, there are few authors those who argues that the activity based
management in accounting has wider use than just computation of cost per unit of goods or
services.
From the above data analysis section it has been analysed that knowledge about the
activity based management system in accounting is very much essential in order to get the
benefit from specific system. The other thing which has been analysed from the above literature
review as well as data analysis section that according to some participants' activity based
management system in much more effective as compared to the traditional costing system of
accounting. Those people have stated that there are few functions which can only be performed
using the activity based management system. It has also been stated by respondents that using the
traditional accounting system only cost of the business activities can be ascertained,.By
implementing the activity based management system in accounting both cost and activities
giving rise to expenditure can also be addressed. Other fact which has been found from the above
literature review section that changes in the traditional management practices provides
management with guidance about implementation of best practices. Therefore , it is very much
important for manager in an organization to keep themselves update with the latests' system as it
is the tacit which will assist them in bringing improvement in their accounting practice which is
very much essential in order to prevent or protect firm from financial losses.
It has also been analysed from the literature review section that there are few authors who
perceive that the activity based management system in accounting have great significance as iot
builds the relationship between the different expenses and business activities. Whereas, other

authors argues that the activity based management system has great importance in accounting as
it assists in minimizing expenditures as well as assist in eliminating those activities which are
adding cost top organization. The other fact which has been discovered from the above literature
review as well as data analysis section that activity based management system is highly valuable
as it assists in determination of the suitable ways which can be implemented for providing
customers with high value proposition. However, it has been found that there are few participants
those who argues that activity based management system has high value as it provides
management an ease in computation of profit, Other researcher stated that the computation of the
profit can be done by using the traditional accounting system. It has been analysed from the
above that there are 11 participants out of 20, those who perceives that activity based
management accounting is best over traditional accounting system. Those people have given
such answer as they themselves have analysed the decline in costs as well as increase in the
profitability of an enterprise after the successful implementation of activity based management
system. Those people a have also stated that the activity based management is best as it can
perform additional functions which can not be performed by traditional accounting system.
However, as per the opinion of seven people traditional accounting system is the best as it is less
complicated as well as easy to understand.
It has been analysed from the above that knowledge about the latest trend of accounting
is very much essential in order to improve the accounting practices. The important fact which has
been discovered is that there are 11 people those who perceives that an enterprise might have to
suffer short even long term losses is they fail to adopt the new accounting system. Those people
have also stated that if an enterprise keep pace with the latest accounting system as it will help an
enterprise in improving financial performance. The other thing which has been analysed from the
data analysis section is that according to majority of the participants the activity based
management has great significance over traditional accounting system as it assists an
organization in both reducing the costs and removing the activities which are adding cost to an
organization. It is the statement given by participants which has been supported by the literature
where author has stated that activity based management system in accounting has great
significance as compared to traditional accounting system as it helps manager in exploring the
business opportunities. Whereas, other authors argues that activity based management system in
accounting allows manager to analyse the effect of different procedure or operational design on

flexibility of accounting practice performed by an enterprise. However, the other authors has
argued that the activity based management in accounting is crucial as it supports manager in
identification of the need for bringing the change in different business procedures. It has also
been found from the above analysis that it is activity based management system in accounting
which builds relationship between different expenditure and business activity. There are few
participants those who have also stated that the activity based management system in accounting
has great importance as it assist manager in maintaining their control on business activities or
procedures. It has been analysed from the above literature review section that some researchers
perceives that activity based management system in accounting is important it enables an
organization to provide high value proposition.
CHAPTER 6 CONCLUSION
From, above it has been concluded that activity based management is highly significance
for UK manufacturing sector, it is better than traditional methods of management. Galxo smith
Kline company can use activity based management method which is beneficial for business
growth and success in market. This types of technique are on trends and used by several
companies in context of manage accounting functions as well as others. Activity based costing
utilize for determining actual costs. As stated above, it is one of the best technique utilize by the
management or manager in the company in order to evaluate or determine various business
functions. It is combined approach and define as systematized one which describe decision-
making procedure of firm management which is utilized activity based costing data for offering
high stage of customers satisfaction. With help of different aspects included in activity based
management system company will be able to take better decision in context of costs and
products. In accounting activity based management mainly focuses on improving and managing
several activities within business effectively. It helps to make improvement in products or
services quality which has been offered by the firm to their consumers within efficient and
effective manner. In organization different kinds of managerial decision will be taken with the
help of activity based management which is beneficial and appropriate for business progress.
This decision might be related to bring development or improvement in organizational as well as
business structure and different process for reducing costs. Furthermore, is it utilization of

activity settled costing data for marketing strategies, purpose of administrative and operational
decisions.
It has been summarized, that in way of activity based management methods great
improvement has been shows and utilized by various companies in UK production industry. In
accounting, ABM is the best method of internal analysis that identify actions of business within
organization then measure them based on prices incurred by activities associated to firm
operations. In additional, activity based management is used to determine the great opportunities
which help to improve productivity, efficiency as well as contribute to increase profitability. The
benefits of ABM is that it reduce and determine non valuable added activities in business,
enhance value added things and redesign procedure to improve profit margin and efficiency of
work. It helps to build on the activity based costing program, once organization implement and
developed activity based costing system they can be able to generate revenue as compare to past
few years. Firm implement ABM if benefits of doing it exceeds costs, activity based
management and activity based costing will be costly in terms of resources and time that may be
negatively effect upon business financial performance and profit margin the most. It has been
concluded from above interpretation, that some people do not have any knowledge, and they are
unaware about activity based costing and management system in accounting. Because ABM is
new in market trends, management do not provide any kind of development and training sessions
which is good for professional as well as personal growth. On the other side, it has been stated
from above analysis that only few people have appropriate and complete skills and knowledge
related to activity based management in accounting which is beneficial for them in order to
achieve business objective with ABM. Traditional accounting system and activity based
management system both is beneficial and suitable in accounting and help to reduce costs.
Furthermore, it has been stated from above report that few people have aware about current
trends in ABM in accounting which provide many benefits to them but on the other side some
peoples do not have any knowledge about the latest trends in activity based management
program.
Recommendation
It is recommended to Glaxo smith Kline that they should implement and develop activity
based management system in accounting, if company face any intense price competition this
system help a lot and provide cost effective benefits (Ahmad, 2014). It is recommended to

organization and other firms with complex processes and products as opposed to firm with
simple procedures and goods. With the help of activity based management in accounting GSK
organization improve consumer satisfaction and maximize profitability as well as generate
market revenue. For example firm must used ABM in order to analyse profit of their goods
offered by them to customer, they measure production costs, and reduce non valuable things that
might be consumer time and money. Activity based management refers as discipline that
centring on management of accounting activities as route to improve value received by
consumers and profit gain by provider this value. Activity based accounting help to recognize
relationship of cost driver to actions. With the help of ABM company will be able to focuses on
accountability for functions more than emphasizes and cost maximization of system better
performance instead of individual performance (Mahal and Hossain, 2015). It contributes for
controlling recognize that increasing efficiency of individual subunits do not needfully lead to
increase efficiency for whole system. GSK company should apply Activity based management
system in accounting which is appropriate and beneficial for reducing non value things and save
costs that invest in unnecessary activities. It is required by management in an organization to
provide proper training to employees as this tactic will help them in yielding maximum benefit
by implementation of activity based management system in accounting. By providing the
training manager an enterprise can enable workers to develop the skills or competencies which
are needed for performing the accounting functions using the activity based system. The other
suggestion to manager in an organization is to continuously monitor the operations or tasks with
the support of activity based management system as it will provide manager an ease in
identifying the different activities which are consuming the cost. The other advice to activity
based management system is that they should use activity based management system for
recording the customer activities, as this strategy will assist them in addressing those clients
those who are making the significant contribution towards increase in profitability of enterprise.
It has been recommended to manager in an enterprise to keep themselves update with the latest
trends as it will help them in improving their accounting practice. Business entity should
implement the activity based management system as it will help an enterprise in bringing drastic
improvement in the costing system. It is the activity based management system which supports
business excellence. In addition to this, management in a firm can utilize both activity based
costing as well as management system as this tactic will help manager in making strategic

decisions. The other advice to management in an enterprise is that they should mainly emphasize
on analysing the demand for activities and sources of the same, as it will help them in analysing
the requirement for designing the specific business procedure or activity.

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<https://theinvestorsbook.com/benchmarking.html>

APPENDIX
Name :
Designation :
Ques . How much knowledge you have about the activity based accounting ?
 Complete knowledgeable
 somewhat knowledge
 No knowledge
Ques. What are the different management system in accounting ?
 Traditional accounting
 Activity based management accounting
 Both
Ques Are you aware about the latest trends in activity based accounting?
 Yes
 No
 don't know
Ques. Up to what extend you are agreed with the statement that activity based management
accounting has great importance over traditional accounting ?
 Completely agree
 Partially agree
 Completely disagree
Ques What is the main benefit which is gained by an organization by implementing activity
based management system in accounting ?
 Elimination of unwanted activities
 Decline in overall expenses
 Increase in profit

Ques Which accounting technique is presently utilized by your organization?
 Traditional accounting
 Activity based accounting
 Other
Ques What effect activity based management system in accounting have on business
performance of an organization ?
 Positive
 negative
 Both
Ques What are the major disadvantage of activity based accounting over traditional accounting ?
 It is more costly.
 Complex for manager to understand
 It could be easily misinterpreted.
Ques What are the factors which influence GSK company for implementing activity based
accounting at workplace ?
 ABC provides information about different types of costs.
 It provides good detail which helps in determining price
 Helps in profitability analysis
Ques. According to you what is the main reason because of which many of firms in
manufacturing sectors are not considering the ABC system ?
 Those organizations are satisfied with existing costing system
 Lack of knowledge about ABC system
 Cost of ABC system is too high
Ques . What is the main difficulty faced by your organization in employment of ABC system ?
 Identification of activities
 Addressing cost drivers
 Both
Ques : In what aspects management accounting is best ?
 Increase in accounting efficiency

 Cost ascertainment
 Increase in financial awareness.
Ques Does accurate information about expenditure can result into an effective allocation of
business resources?
 Yes
 No
 Don't know
Ques. What is the use of activity based management in accounting?
 Analysing the cost of equipments
 Computation of profitability
 Identification of problem areas.
Ques . According to you which is the main functions which can only performed by using activity
based management system rather than traditional system in accounting ?
 Ascertainment of cots
 Provision of economic feedback to managers and operators about process efficiency
 Valuation of inventory for financial reporting
Ques . According to you what is important in order to gain maximum benefit by implementation
of Activity based management system in accounting?
 Support from managing director
 Dedication of employees towards systematic
 Both
Ques. What is the risk associated with the implementation of the activity based management
system in accounting ?
 Some activities have an implicit value, not necessarily reflected in a financial value added
to any product.
 Decrease in value provided to customers
 Chances of error in recording transaction

Ques. What is the main output which is generated from the activity based management system
in accounting ?
Ques. Up to what extent you are satisfied with the results produced by the activity based system
in accounting?
 Completely satisfied
 Dissatisfied
 Somewhat satisfied
Ques According to you what is appropriate ways through which Glaxo Smith line can increase
its dependency on activity based accounting ?

APPENDIX A : Participants information sheet
Who I am and what this study is about?
I am a researcher and this study is about “To analyse significance of Activity based
management over traditional technique of management in UK manufacturing Industry – A
investigation on Glaxo Smith Kline (GSK) PLC”.
What will taking part involve?
Trends of activity based management prevailing in UK manufacturing industry, Significance
of activity based management over traditional technique, Value of Activity based management
for GSK PLC in relation to increasing its dependency on ABM technique of management and
Suggest ways using which GSK PLC could increase in dependency on activity based
management technique for improving production of goods. All these themes is included in this
study.
What have you been invited to take part?
Manager of Glaxo Smith Kline has been invited to take part as participant in this study,
because they provide in depth information.
Do you have to take part?
Yes.
What are the possible benefits and risks to taking part?
Gather more information is possible benefits of taking part and job loss is considered as risks to
taking part.
Will taking part be confidential?
Will use high protective technologies and do not discuss any think in front of others.
How will information you provide be stores, recorded and protected?
Recorded interview and research data is stored in safe place where no one can be able to
entered without permission.
What will happen to results of the study?
 It explore the trends of activity based management existing in UK manufacturing
industry.

 Gain the knowledge about the importance of Activity based management
 Analyse value of activity based management technique in Glaxo Smith Kline (GSK)
PLC.
Who should you contact for further information?
Employees of Glaxo Smith Kline.

APPENDIX B : Consent form
Consent Form
I participant name, agree to participate or agree to participation of my child participant name in the research project
titled significance of Activity based management over traditional technique of management in UK
manufacturing Industry, conducted by researcher(s) name who has (have) discussed the research project with
me.
I have received, read and kept a copy of the information letter/plain language statement. I have had the opportunity
to ask questions about this investigation and I got answers. I understand the general purposes, risks and methods of
this research.
I consent to participate in the research project and the following has been explained to me:
 the research may not be of direct benefit to me
 my participation is completely voluntary
 my right to withdraw from the study at any time without any implications to me
 the risks including any possible inconvenience, discomfort or harm as a consequence of my participation
in the research project
 the steps that have been taken to minimise any possible risks
 public liability insurance arrangements
 what I am expected and required to do
 whom I should contact for any complaints with the research or the conduct of the research
 I am able to request a copy of the research findings and reports
 security and confidentiality of my personal information.
In addition, I consent to:
 audio-visual recording of any part of or all research activities (if applicable)
 publication of results from this study on the condition that my identify will not be revealed.
Participant name:______________________________________________________________(please print)
Signature:___________________________________________________________________________________
Date:______________________________