Management Accounting: Value Chain Concept and Budget Preparation

MANAGEMENT
ACCOUNTING BACHELOR
OF PROFESSIONAL
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Question: 1...................................................................................................................................3
Question: 2...................................................................................................................................6
CONCLUSION..............................................................................................................................13
REFERENCES............................................................................................................................1

INTRODUCTION
The concept of management accounting refers to the responsibilities of management accountant,
which involves planning and controlling business activities and then making wise decisions for
efficiently and effectively achieving the organizational goals (Schwartz, 2016). Management
accounting is one of the division of accounting which involves measurement, analysing,
interpretation and informing managers about business status to the concerned managers with the
help of preparation of various budgets and reports relation to various business activity. The
present report has two parts where first part is based on value chain concept with reference to
Australian service organization, that is, Sydney ferries which is an Australian based
transportation service network. The second part of this report is based on budget preparation for
the third quarter ending 30th September for Takulah company in order to plan and control their
business operations.
MAIN BODY
Question: 1
a) Value chain is an important concept in every manufacturing and service organization which
indicated a comprehensive range of activities that is being performed for producing a unit of
product or delivering service (Zamora, 2016). It is referred to as value chain because the set of
activities so undertaken are meant for adding value to the product or service. By performing each
and every activity of the value chain, a producer can enhance its product's value. As per Michael
Porter's value chain analysis, there are five stages in value creating chain, that is, inbound
logistics, operational activities, outbound logistics, sales and marketing activities and after sale
service.
Benefits of value chain
 With the help of value chain, the overall production activities can be bifurcated into
various stages which helps in saving costs by identifying the most expensive activities of
producing products and services and taking steps for minimizing these costly affairs.
 Through value chain, a producer can minimize wasteful activities and enhance
profitability by looking into its supply chain, and identifying ways for minimizing
wastages in order to achieve efficiency (Jaligot and et.al., 2016).
 For example, when a company recognizes that their subsidiary can produce a product at
lower costs, then they may go for outsourcing the product to its subsidiary, where they

can avail products at lower costs and offer lower prices to customers, which is helpful in
getting competitive advantage in the market.
b)
i) Here in this report, the Australian service organization, that is, Sydney ferries, has been
chosen. It's operations are mainly into service sector. The network of Sydney ferries aims at
providing transport services over nine routes. It a public transportation services mainly serving
the citizens of Sydney.
ii) Sydney ferries has the following competitive strategy:
 Cost leadership: It is the strategy of producing goods and delivering services with the
lowest possible costs. This lower cost is helpful in setting lower prices which results in
competitive advantage for a company by selling products and providing services at lower
price than its competitors (Hishe, Asfaw and Giday, 2016). In case of Sydney ferries,
they by serving large number passengers need at one point of time, are able to reduce
their overall operating costs and this reduction in operating costs leads to lower fares
charge from passengers.
 Differentiation strategy: This strategy aims to differentiate the product or services from
that of competitor's offering. This strategy is effective in attracting large number of
customers through the element of unique feature of the product or service. Sydney ferries
has 31 Fleet or vessels operating in seven different classes which satisfies different
customers need in different manner (Mudambi and Puck, 2016). Their differentiating
strategy is to provide the best possible experiences at the affordable price to the
customers. The customers can avail trustworthy and safe services from them.
 Focus strategy: this strategy aims at covering or focusing on a niche market by designing
and offering a product or service for specific group of customers. Under this strategy all
the efforts and resources are utilized for the particular segment of customers. Sydney
ferries is mainly targeting and focusing commuters and leisure travellers. Commuters are
those travelling for the purpose of education and work (Hishe, Asfaw and Giday, 2016).
Also, their niche segment according to geographical area, they are only focusing on the
citizens of Sydney.
iii) Value chain model of Sydney ferries: