Strategic Management Accounting: Wattle Jet Case Study on Stakeholders

This article discusses the stakeholders of Wattle Jet Case Study, their value and requirements, strategic objectives, strategies to achieve them, project implementation, payback period, sensitivity analysis, earned value variances, and budgeting. It also includes a bibliography for further reading.

Assignment
Strategic Management Accounting
Wattle Jet Case Study
Focus on stakeholders
1.0 Identify significant stakeholders.
The term stakeholder encompasses any person/ entity that can affect or be
affected by the actions of the entity. The key stakeholders identified in
business include: (Jonathan Kletzel, 2016)
 Customers of the company;
 Employees of the organisation ;
 Suppliers of the company;
 Shareholders of the company;
 Government rules and regulations
2.0 The value each stakeholder brings to, and requires from, the
company
The value each stake holders bring is defined here-in-below:
Sl
No Particulars Value brought Value required
1 Customers
Business, loyalty
and future
potential
Quality,
customer care
and ethical
requirements.
2 Employees
Business growth,
innovation,
problem solving
and value driver.
Safe working
condition,
payroll, job
guarantee,
recognition
3 Suppliers
Raw material
supply and credit
facility
Equal business
opportunities
4 Shareholders
Funds, seed
capital, expertise
and vision
Return on capital
, safe
management of
funds, growth
5 Government Working
environment,
safety and
Taxation, true
and fair
reporting,
1

competitive
industry compliance
(Wikipedia, 2018)
3.0 Strategic objectives related to providing stakeholder value
The strategic objective includes:
 Advantage over competitors and Market Leader;
 Survival;
 Efficiency in operations;
 Profitability;
 Wealth Maximisation;
 Reducing litigation and other disputes
4.0 Strategies to achieve the strategic objectives.
Some of the strategies to achieve the strategic objective include:
 Making B-Plan with a defined time plan and structural format;
 Enhance customer experience;
 To increase non-passenger revenue;
 Target to work at 80% occupancy rate;
 To enhance operation and reach wider networks;
 To identify new business opportunities and synergy;
 Establishing Strategic Business Units (SBU);
 Reduce fuel consumption and increase fleet utilisation etc.
Project Implementation
5.0 Use the weighted average savings calculated in Table 2 and other
cash flow information to calculate the project's payback time.
The project paybacks time 2.49 years on the basis of budgeted
data provided in the case study. Further, please find enclosed
herewith the detailed working of the payback as
Project Implementation
Projected Cash Flows
Outflow AUD
Year 0'
2350
00
2

Year 1
7500
0
Total
3100
00
Inflow
Weighted
Average AUD
Cumulativ
e
Year 1
7979
0 79790
Year 2
1425
40 222330
Year 3
1795
90 401920
Projected Pay back
period
Budgeted 2.49 Years
6.0 Comment on your results: how does the project payback inform
your views on the risk of the project?
To begin with Project payback period is the simple selection method of
analysing the feasibility of project. It is defined as the required to realise the
cash employed in the project. It generally showcases the time horizon for
realisation of original investment. The shorter the time period, the better
the investment. Further, in the proposed case since the payback period is
2.49 years, the project is taking a better part of the time to realise the
investment as it occupies 83.33% of the time horizon of the project.
(Project Selection Methods for Project Management Professionals)
On the basis of time required, the project is risky as the major benefit is on
a later part of the project.
7.0 Wattle Jet has forecast a new WACC of 13% over the project life.
What is the sensitivity of NPV to this 1% decline in discount rate?
Express the sensitivity of NPV as a percentage of total investment
in the ADS-B system ($310,000)
The sensitivity of 1% decline in WACC on project NPV as percentage of total investment is
1.93%. Further, the project would not have been feasible at 13% WACC. The calculation
assumes that AUD 75000 has been expensed at year zero since it has been considered as part
of total investment otherwise the same would have been deducted from the year 1 cash flow.
Senstivity computation
3

Sl no Cashflows Discounting @13% (A) Discounting @12% (B)
1 79790 70611 71241
2 142540 111630 113632
3 179590 124465 127829
Total (1+2+3) 306705 312702
Difference (C=B-A) 5996
Percentage of investment (C/$310000)% 1.93%
Assumption : AUD 75000 is assumed to be invested at the beginning
otherwise the said computation shall change and AUD 75000 shall be deducted
from year 1 cash flow
8.0 Calculate Wattle Jet's earned value variances and comment on the
results. Is the project ahead of, or behind schedule? Is it over or
under budget?
Earned Value = percentage of work completed * Budgeted cost
= 60%*310000
=186000.(AUD)
Earned value variance =200000-186000=14000AUD
The project is behind schedule as 60% of the work has been completed in
12 months instead of 75%.
The project is under budgeted as the actual cost exceeded the budgeted
cost at 60% completion by 14000 AUD.
Bibliography
Jonathan Kletzel, A. S. (2016). U.S. carriers need to reward their stakeholders.
Retrieved july 7, 2018, from www.strategyand.pwc.com:
https://www.strategyand.pwc.com/media/file/2016-Commercial-Aviation-
Industry-Trends.pdf
Project Selection Methods for Project Management Professionals. (n.d.).
Retrieved july 7, 2018, from www.simplilearn.com:
https://www.simplilearn.com/project-selection-methods-article
Stakeholder (corporate). (2018, may 18). Retrieved july 5, 2018, from
en.wikipedia.org: https://en.wikipedia.org/wiki/Stakeholder_(corporate)
4