Management Accounting Tools and Value Chain Analysis of Telstra

This article discusses the value chain analysis of Telstra and the management accounting tools used by the company. It also provides recommendations for two additional management accounting tools. The company's planning and decision-making process is also described. Subject: Cost Accounting

COST ACCOUNTING

Table of contents
Introduction 3
Introducing the selected company 3
Identifying and describing the value chain of the company 3
Describing the process of Planning, and Decision Making in the company 5
Summarising and presenting the various types of management accounting information and tools
that the company use in their business 6
Provide recommendation of at least 2 management accounting tools 7
Conclusion 8
References 9

Introduction
The business operation involves various activities one of these are managing financials, planning
and decision making. It can be said that a company with effective fund management, planning
competency and decision-making process is always successful in conducting their business
operation. It can be said that in the assessment there will be critical evaluation of these subjects
to determine the overall efficiency of a company using their strategies under these business
operations. The company selected for the current assessment is Telstra Australia that is a
telecommunication company based in Australia. The different system used by the company will
be evaluated in this assessment to shows the competence of the business in conducting their
business operation through consistency.
Introducing the selected company
Telstra Corporation Limited is one of the most prominent telecommunication company in
Australia. The company deals with mobile, networks, digital television network provider. The
company in the current situation is fully privatized company and at present, the company mainly
focus on their customers. During the year 1901 the postmaster- general’s department was the one
and only Telecommunication Company that used to control the entire Australian network. Later
in the year, 1975 many companies came into existence to replace the postmaster- general’s
department. Telstra was first under the postmaster- general’s department, but later it became
privatized. In Australia, Telstra controls majority of public telephones. GSM and 3G are used by
many countries till now and in Telstra maintain this wide range of network in entire Australia.
The company holds a good market position since 2011 as it has reduced its mobile phone
products price which attracts the more clients to them (McDougal, 2017). It cannot be neglected
that there are also other telecommunication companies in Australia that provide many
opportunities for their customers but Telstra is holding a constant and prestigious position in the
country. With their quality of services and their assurance to their customers, the company
attracts a wide range of customers towards themselves.
Identifying and describing the value chain of the company
In accordance to the company’s view, it can be said that Telstra is focused on creating business
value for sake of its stakeholders. It can be said that the company seeks to achieve sustainable

goals which will increase the value of the business in the upcoming years. It can be said that the
value chain of the company has been divided into some key stages which are shown in the figure
below
Figure 1: Value Chain of Telstra
(Source: exchange.telstra.com.au, 2018)
The image above shows the different line of products and services which the business conducts
and increases its value for the stakeholders of the firm (Mudambi and Puck, 2016). It can be said
that In the line of manufacturing the stages which the company comply are as follows:
Manufactured products: The company looks at developing products for the demands of the
consumer so as to meet their satisfaction levels. The products are made to fulfil the requirements
of the customer and increase the brand value of the products.
Products and solution: The products and solution are designed by the company to render high-
quality products which fulfil the demand of the customers. The core elements involved in the
manufacturing of the products, solution generation is design, procurements, and customer sales
support. It can be said that incurring core competency in these elements helps the company to
increase their brand value in the market.

Customers: The chains run down to its end when obtained by the consumer the company
effectively communicate with the consumer after sales of the product to maintain healthy and
efficient consumer relationship (Jaligot et al. 2016).
In terms of service the company rendered the following value chain
Service providers: The company organizes the services in an efficient manner to make the
service rendered by the company efficient helping the firm to effectively operate in the market.
Network and operation: The company is corley focused on there network and operations to
ensure that network field recovered by the consumer is effective and extensive providing the best
telecommunication service to their customers (El-Sayed et al. 2015.).
Community: The community in the telecommunication industry acts as a consumer to receive the
best service from the company that ultimately increases the brand value of the firm in the market
(Gereffi and Fernandez-Stark, 2016).
Describing the process of Planning, and Decision Making in the company
Planning means a proper plan which a company makes for future course and actions. Being a
telecommunication company Telstra has many future plans for their company. The company
always make a pre-plan for their upcoming events and market launch. The company used the
method of brainstorming by which they jot down all their problems to solve it. The companies
before making any plan or taking any decision first arrange meetings with the employees and
other faculty members. Taking up any new plan is a responsible thing that the company owner
does not take alone. To make a plan first they consult with their business adviser then it is
discussed with their employees. During the discussion, people clarify their doubts and suggest
some new ideas or changes if required. The manager of the company plays an important role in
the decision-making process (Ghezzi et al. 2015). The manager of the company first selector
identifies a situation and then he/she try to think about the future circumstances of that particular
or selected situation. In the planning process, the manager of the company first select specific
goals and find solutions to fulfil and attain those goals. In the planning process, it is difficult for
the company or rather the manager of the company to select goals and to fulfil the goals.
The management of the company is always concerned with planning for future related to the
short-range plan and long-range plan. The planning process of the company undergoes to take
some decisions for the company that the company fulfils in the future. Both planning and

decision-making are interrelated to each other. Both the terms are used by the company to set
future goals and to identify threats for the company. The company by utilizing the decision-
making process easily gets aware of the future problems for a selected motive (Grishin and
Suloev, 2015). Telstra chose their planning very carefully because they know that they are the
brand of Telecommunication Company in Australia and a simple mistake can ruin their rank
which they are holding at present. The management of the company first makes a plan and then
they discuss it with their other employees to know whether their employees will be able to
deliver it properly and on time or not. The company also make the decision carefully so that the
main motive behind the goals of the organization should be for the betterment of the company
(Pedron et al. 2016). All these operations are controlled by the management of the company
where the operational manager is involved and play a specific role in the case.
Summarising and presenting the various types of management accounting
information and tools that the company use in their business
Telstra Company uses two types of management accounting tool which they use for their
business which is as follows-
1. Budgeting- Budgeting is a plan which the company uses to check and control their budget
of investment and expenditure. Telstra is a telecommunication company and maintaining a
proper and balanced budget is essential for the company. The company controls networks in the
country and also provides public telephones and mobile products for which they invest a large
sum of money (Rubin 2016). With the help of a budgeting plan, the company ensures that they
can utilize their money during the time of their need. The budgeting plan helps the company to
maintain a proper budget for all the equipment and products of the company. The company also
predicts their future investment with the help of a budgeting plan. The budgeting plan also allows
the company to secure a proper financial plan related to bot profit and loss. Telstra maintains
their reputation in Australia by providing the best services to their customers and for this, they
maintain high-quality technologies and wire cables and mobile products. The budgeting plan
allows the company to purchase its products. The company maintains a proper budget plan
which also helps the company as a backup plan (Bogsnes 2016). The company is aware of its
future purchase or investments and by this, the company does not face any major financial loss.

2. Variance analysis-The variance analysis of the company helps to keep a constant control
over its operational management and helps the company to make better performance. The
variance analysis is a plan or rather an investigation which is done when the company compares
its budgeting and its investment. The variance analysis helps the company to set low rate budgets
which the company wants to maintain. The variance analysis is beneficial for the company as the
company get to know about the causes of their faults and the management than with the help of
variance analysis try to solve the problem and learn to avoid that situation in future (Campbell et
al. 2018). The variance analysis controls the entire departments of the company and it detects the
problems of the company and the company later fix all the problems and maintains a strict
protocol related to their budgeting or employment departments.
Provide recommendation of at least 2 management accounting tools
In order to make their management accounting more prominent and effective the company can
also introduce the following two management accounting tools as it will help the company to
more effectively manage their financials:
1. Cash forecasting: Cash forecasting is efficient management accounting tools which can
be used by a company to ensure that fund management system within the company
becomes more efficient. Under the procedure of cash forecasting system, the company
will forecast the amount of cash or monetary resources which will be needed by the
company in there future days of operation (Otley, 2016). It can be said that for this
purpose the company will have to determine the amount of the operations that are not
conducted in the future days of company’s operation based on which the company will
differentiate the amount of fund required under a different classified section of operation.
In this way, the company will be able to recognize the number of funds which will be
needed by the company (Langfield-Smith et al. 2017). This will help the firm in
optimizing the use of monetary resources in the company whereas it will also help the
company to monitor the flow of cash within the business activities of the firm.
2. Overhead allocation: Overhead allocation is also a process under which the company
will; allocate overhead cost on classified cost allocation areas of operations. The
company can also add the following costing system within the operational activities as it
is a prominent way of business cost allocation system. It can be said that the company

will have to look out the overhead cost which will be incurred in the operational,
marketing or product activities of the company based on which the company will
determine the amount or cost required for the conduction of the particular activity in a
prominent and classified manner (Renz, 2016). Through this costing technique, the
company will be able to easily identify cost and to optimize the following in increasing
the profit margin of the firm. It can be said that this will be very beneficial for the
company to report their cost in the financial reporting time (Fullerton et al. 2014).
Conclusion
Concluding in the light of the above context it can be said that the company he prominent
competencies which have helped the company to build up a large company in the
telecommunication industry. It can be said that the company has core competency to ensure that
all of its business activities are properly planned and attempted to successful completion. This
has helped the company to have a competitive edge over others in the market. The suggested,
management accounting tools can be used by the company to increase the management
accounting system which will ultimately increase the planning and decision making the
efficiency of the firm increasing the competency of the company is performing well for future
days of operation in the market.

References
Bogsnes, B., 2016. Implementing beyond budgeting: Unlocking the performance potential. John
Wiley & Sons.
Campbell, T., Kulis, B. and How, J.P., 2018.Dynamic Clustering Algorithms via Small-Variance
Analysis of Markov Chain Mixture Models.IEEE Transactions on Pattern Analysis and Machine
Intelligence.
El-Sayed, A.F.M., Dickson, M.W. and El-Naggar, G.O., 2015. Value chain analysis of the
aquaculture feed sector in Egypt. Aquaculture, 437, pp.92-101.
exchange.telstra.com.au, 2018 Available from
https://exchange.telstra.com.au/sustainability/sustainability-value-chain/ [Accessed on 12th
September 2018]
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm
performance: The incremental contribution of lean management accounting practices. Journal of
Operations Management, 32(7-8), pp.414-428.
Gereffi, G. and Fernandez-Stark, K., 2016. Global value chain analysis: a primer.
Ghezzi, A., Cortimiglia, M.N. and Frank, A.G., 2015. Strategy and business model design in
dynamic telecommunications industries: A study on Italian mobile network operators.
Technological Forecasting and Social Change, 90, pp.346-354.
Grishunin, S. and Suloeva, S., 2015, August.Project controlling in telecommunication industry.In
Conference on Smart Spaces (pp. 573-584).Springer, Cham.
Jaligot, R., Wilson, D.C., Cheeseman, C.R., Shaker, B. and Stretz, J., 2016. Applying value
chain analysis to informal sector recycling: A case study of the Zabaleen. Resources,
Conservation and Recycling, 114, pp.80-91.
Langfield-Smith, K., Smith, D., Andon, P., Hilton, R. and Thorne, H., 2017. Management
Accounting: Information for creating and managing value. McGraw-Hill Education Australia.
McDougal, M., 2017. Insights from the company monitor: Telstra. Equity, 31(11), p.15.
Mudambi, R. and Puck, J., 2016. A global value chain analysis of the ‘regional
strategy’perspective. Journal of Management Studies, 53(6), pp.1076-1093.
Otley, D., 2016. The contingency theory of management accounting and control: 1980–2014.
Management accounting research, 31, pp.45-62.

Pedron, C.D., Picoto, W.N., Dhillon, G. and Caldeira, M., 2016.Value-focused objectives for
CRM system adoption.Industrial Management & Data Systems, 116(3), pp.526-545.
Renz, D.O., 2016. The Jossey-Bass handbook of nonprofit leadership and management. John
Wiley & Sons.
Rubin, I.S., 2016. The politics of public budgeting: Getting and spending, borrowing and
balancing. CQ Press.