Advanced Management Accounting BAC204
Added on 2020-05-01
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Sustainability and management accounting IntroductionSustainability approach is an important aspect to successful business management in today’s society (Bansal, & DesJardine, 2014). The society has changed and people do not just want products from an organization but are also concerned on how they are produced (Formentini, & Taticchi, 2016). Sustainability business strategies are largely informed by management accounting. Sustainability in businesses has been enhanced by current laws and regulations, needfor managing risks, reducing costs and a desire to engage in responsible business operations. Management accounting enables managers to make production decisions (Gray, Adams, & Owen, 2014). Sustainable practices in an organization refer to strategies that minimize negative impact on environment, society, and increase economic benefits. Organizations should consider all it stakeholders in ensuring their practices do not compromise or threat future needs (Schaltegger, Burritt, & Petersen, 2017). This necessitates businesses to protect the environment,remunerate fairly and work for common good of all stakeholders. Sustainability in business is recorded in sustainability report and is part of annual report. Organizations that engage in sustainable practices get long term profits and have good public reputation as a result of good brand name and competitive advantage. The following write up is a discussion of social, economic, environmental, and financial issues inrelation to sustainability approach a case study of Spice Girls Company. The write up also highlights further information that Spice Girls company need to gather in resolving issues in adopting a sustainable approach in it production.DiscussionFirst problemThe first problem of Spice Girls Company is on the issues of production. The company is considering relocating it processing plant from Geelong to Buranda. The set up of the factory will cost A$3.6million. Secondly, the company is considering the chemicals sprayed on plantations from Buranda and Qumran where it has been importing its supplies from. The chemical used burn workers lungs when inhaled for a prolonged period of time. Lastly, the
employees working on plantations are underpaid at A$ 4 per hour and are forced to work long hours. Setting up a factory in Buranda will reduce the cost of processing spices from the current A $0.99 to A$0.33 per kilogram. The financial issues for sustainability in Spice Girls Company involve minimizing cost and risks associated to funding or investing in an organization. The financial issues in Spices Girl Company approach to sustainability are; first, the Company setting up a factory in Buranda will lower production cost in the long term. Though, the company will incur A$3.6 million to set up the new factory, the company will reduce it cost per kilogram by 67%. The cost per kilogram will reduce from A$0.99 to A$0.33. This reduction in prices will increase the revenue of the company and shareholders wealth will be increased in the long term. Therefore the company willbe able to reduce its costs in the long run thereby operating on sustainable costs and be able to meet the shareholders objective of wealth maximization. The environmental issues in first problem of Spice Girls Company approach to sustainability are the impact of the chemicals used in the plantation. The countries that the company import supplies from use toxic chemicals that have long life. These chemical have several effects on the environment because they stay for longer time than normal chemical stays. The chemical are inhaled by people that lead to burning of lungs. Therefore, the chemical used in the Spice Girls Company supply chain pollutes the air for long time that has adverse impact on people aspiratorysystem. The social issue in Spice Girls Company first problem is employees’ remuneration and working hours. Employees are paid $ 4 per hour is is far much less than the minimum pay per hour in Australia which is $18 per hour. The employees also work long hours in the supply chain which is endanger their lives as a result of chemical sprayed in the plantations. Therefore, the Spice Girls Company has to consider employees compensation and working hours to ensure that employees’ life is considered in the company.There are also economic issues in Spice Girls Company that have to be considered in the sustainability approach. First, the will be economic development in Buranda. The company will increase job opportunities of Buranda people, and increase level of income that will improve the living standards of the Buranda citizens. The company factory will also pay taxes to the
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