Marketing Accounting - PDF

MARKETING
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 3............................................................................................................................................1
Planning tools for budgetary control...........................................................................................1
TASK 4............................................................................................................................................2
Adaption of various management accounting system to respond financial problems................2
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
Management accounting is a branch of management which makes strategies and plan
for the business as to make the company more cost efficient and enhance the profitability of
business. The study includes various planning tools of budgetary control along with their
advantages and disadvantages and also some management accounting systems to be used to
respond various financial problems.
TASK 3
Planning tools for budgetary control
Budgetary control
Budgetary control means analysis of actual results with budgeted figures to identify the
actual performance and efficiency of business organisation, and in case of any inefficiency,
taking effective steps to reduce inefficiency of business.
Planning tools
There are various planning tools that can be used in budgetary control like:
 Cash budget: it predicts cash requirement of the business in specific time period.
Prediction of cash flow in the business is quite uncertain, in this order it should be
prepared on short term basis (Gooneratne and Hoque, 2016). Therefore, TATA
prepares cash budget on monthly basis.
Advantages
 It helps management of TATA in making fund available to meet the obligations of
business.
 It shows availability of cash in business, which may help in planning to invest
excessive cash as to earn profit from investment.
Disadvantage
 Cash budget is quite uncertain. Therefore, it may provide negative estimation to
TATA.
 It needs to be prepared after short time period.
 Capital budget: capital budgets includes prediction of cash flows, management of
assets, incomes and other financial activities. TATA prepares capital budget in order to
determine the financial position of company.
Advantages
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 It shows the financial health of the company.
 It helps managers in determine actual financial position of business.
Disadvantage
 Management needs historical financial data of business to prepare it.
 It can provide wrong result as financial position of business and economy of country
need not to be same every year.
 Operating budget: it predicts future income and expenses of the business (Budgetary
Controlling Techniques, 2019.). Managers of TATA Ltd. Prepares operating budgets to
forecast the sources to fulfil the debts' obligation of the business for its smooth running.
Advantages
 It helps in predicting areas of cash inflows and outflows.
 It predicts future income and expenses which helps management in developing
effective strategies for earning more profit (Kyei, Kwaning and Francis, 2015)
Disadvantage
 It makes the financial performance of company rigid.
 This budget is quite uncertain as surroundings of business keeps changing frequently,
therefore, it may provide wrong result.
Usage: All the above depicted planning tools are highly significant which in turn provides
assistance in developing competent financial framework. By using financial frameworks like
cash, capital and operating business unit can develop master budget. In addition to this, such
budget enables related department to make proper balance within income & expenses. Further,
by using budget actual performance of department can be evaluated in monetary terms.
Through this manager of the firm can easily assess deviations and thereby would become able
to take corrective action within suitable time frame.
TASK 4
Adaption of various management accounting system to respond financial problems
There are some management accounting techniques available for business to solve
financial problems of business like:
key performance indicators
This technique helps in providing measurement of the overall performance of business.
With the help of key performance indicator, management of TATA tracks actual performance
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of each department of business (Podgórski, 2015). With the help of it TATA can detact the
inefficiency in the business and making strategies for problem that could be arisen due to
them.
Balance score card:
With the help of this technique, management can interrelate its various factors like
consumers, financial permanence, sales, etc. it provides effective control over all the factors of
business. It enables in detecting all the problems to be arisen in all departments due to
inefficiency of anyone and determine solution for them in advance.
Bench marking:
In this technique, business selects some key factors of business and analyses those
factors only in order to analyse overall performance of the business. Other factors are simply
avoided by the business that may cause inefficiency in those factors and overall business
performance as well (Wang, 2015). It reduces the workload of managers. With the help of it,
they can effectively manage detect all major financial problems in advance and find there
appropriate solutions.
Comparison of various management techniques to respond financial problems
TATA uses the key performance management technique, which helps company in
facing various financial problems effectively. With the help of this technique, management
enables to predicting future financial problems of business along with of each department like
lack of cost efficiency, lack of co-ordination, etc. with the help of this prediction management
can develop their plans and strategies accordingly. It helps the company in becoming more
efficient in solving major financial problems and also helps in saving time to solve the
problems. For instance: Tata considers KPI pertaining to sales, profit, market share etc every
year with the motive to attain business objectives. For instance: Objective of TATA to attain
capture 40% market share at the end of accounting year. In this situation, by comparing market
share captured with standard figure company can easily assess the extent to which goals are
met. Referring this, firm can take corrective measures for improvement and thereby gain
competitive advantage.
On the other hand Vectair Holding adopts bench marking technique in order to respond
various financial problems of the company. While using this technique, company has selected
some key factors of the business like competition, profit making, promotion, sales, etc.
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company majorly manages these factor. It helps managers in predicting problems relating to
these factors like lack of positioning in competitive market, inefficiency in attracting
customers, etc. through which managers makes strategies to face these problems efficiently.
The technique ignores other management of other factors, which may result in inefficiency of
overall business performance. For instance: Vectair Holding sets benchmark in relation to
By doing assessment, it has found that KPI tool undertaken by TATA is highly effectual
over others. Moreover, when business unit fails to set suitable benchmarks then it may result
into high deviations. This in turn places negative impact on employee motivation and thereny
performance as well.
CONCLUSION
With the help of above study it has been concluded that TATA have an efficient
budgetary control in the business. It prepares various budgets to have effective control over
business. Company uses KPI technique and Vectair holding uses bench marking technique
both help companies in effectively responding to financial problems.
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REFERENCES
Books and Journals
Gooneratne, T. N. and Hoque, Z., 2016. Institutions, agency and the institutionalization of
budgetary control in a hybrid state-owned entity. Critical Perspectives on
Accounting. 36. pp.58-70.
Kyei, E., Kwaning, O. C. and Francis, D., 2015. Budgets and Budgetary Control as a
Management Tool for Ghana Metropolitan Assemblies. Journal of Finance and
Accounting. 3(5). pp.159-163.
Podgórski, D., 2015. Measuring operational performance of OSH management system–A
demonstration of AHP-based selection of leading key performance indicators. Safety
science. 73. pp.146-166.
Wang, E., 2015. Benchmarking whole-building energy performance with multi-criteria
technique for order preference by similarity to ideal solution using a selective objective-
weighting approach. Applied Energy. 146. pp.92-103.
Online
Budgetary Controlling Techniques. 2019. [ONLINE] Available through
<https://iedunote.com/budgetary-controlling-techniques>
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