Financial Statements and Budgeting in Business

This assignment delves into the significance of financial statements and budgeting in business management. It explores various types of financial statements, including balance sheets and income statements, and their role in controlling business performance and identifying variances. The report also highlights the importance of budgets in achieving organizational goals efficiently and effectively.

The Travel and
Tourism Business
Toolkit

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1. The rationale and principles of revenue management..........................................................3
P2. Investigate how travel and tourism industry applies revenue management tools.................4
TASK 2............................................................................................................................................5
P3. Different stages of HR life cycle and their importance for retaining and developing talent 5
P4. Develop a performance management plan ...........................................................................6
TASK 3............................................................................................................................................8
P5. Legislation that organisations in the travel and tourism industry have to adhere to.............8
P6. Potential impact of employment and contract law on business decision making.................8
TASK 4............................................................................................................................................9
P7. Different types of financial statements and reporting mechanism for organisation.............9
P8. Value and importance of budgets in order to control business performance and identifying
variances......................................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12
APPENDIX....................................................................................................................................13

INTRODUCTION
In today's competitive world, Travel and tourism industry is one of the fastest growing
business all over the world. Tourism industry includes series of various activities and services
which is experienced by travellers while travelling. These industries plays very essential role for
the economic development of the overall society, as it provide employment opportunities,
developing economic infrastructure and generating revenues. Carnival Corporation & PLC is
taken as the base company in this report. It is a British-American company founded in the year
1972, as a Carnival Cruise Line (Budeanu and et. al., 2016). It is composed of two different
companies, Carnival corporation and Carnival plc, but works as a single entity. In this report
various topics has been discussed which includes detailed description of various key principles
for revenue management. Along with this, it also includes various stages of HR life cycle, also it
involves impact of laws and legislation on travel and tourism industry. At last, this report
includes, detail description about how to manage budgets in order to control business operations.
TASK 1
P1. The rationale and principles of revenue management
Revenue management is a management approach with the aim of selling right products to
the potential customers at right time with right price. It also aid the company in forecasting
customer demands as well as price for maximising revenue. Revenue management is useful in
order to avoid unnecessary expenses and mainly focus on improving quality of the services they
provide. In relation to Carnival Corporation & PLC, it is concept which is used by managers
while developing strategies in order to managing human resources of the company (Chang, F.
Backman and Chih Huang, 2014). The rationale and principles of revenue management in travel
and tourism industry are as follows:
Rationale and Principle of Revenue Management:
 In order to decrease cost of unnecessary activities, revenue management system plays
very important role.
 Revenue management system is very helpful while providing training, improving
performance of employees.
Overbooking- Carnival Corporation & PLC is a British American travel and tourisms
company, they provide quality services to their customers. Due to high quality services,

consumers stay loyal towards the company and sometimes face overbooking situations. As a
result, website of the company is frequently followed by consumers across the country. This will
aid the company in generating more revenues as well as they can increase customer base by
maintaining quality of their services.
Market segmentation- In order to generate more revenue from customers, management
department of Carnival Corporation & PLC is require to set their target market. With the help of
segmentation managers can easily identify requirements and needs of targeted customers and
provide services to them accordingly (DeLacy and et. al., 2014). In addition to this, employees of
the company are also aware about customers needs and they can easily design tour packages
according to their requirements. It will help the company while generating more revenue as well
as manage the revenue in effective manner.
Pricing- By designing attractive pricing strategy, company provide services to their
customers at reasonable price. Consumers are ready to pay high price in order to utilise good
quality services offered by Carnival Corporation & PLC. As a result, company can generate
more revenue and gain competitive advantages at the marketplace. If company offer low quality
services at high price it will decrease their overall market share as well as revenue of the
company.
P2. Investigate how travel and tourism industry applies revenue management tools
Revenue management tools: These are the techniques and tools used by various
organisations which will aid them while predicting customers demands towards a particular
products or services. In the present scenario of Carnival Corporation & PLC, managers of the
company use various tools in order to generate maximum profits (Du Cros and McKercher,
2014). Some of the different revenue management tools are as follows:
 Rate shopper- In order to know the competitors price rate, Carnival Corporation & PLC
does rate shopper and develop their pricing strategics accordingly. As a result, it will
attract more and more customers and maintain their sustainability at the marketplace for a
long period of time. This tool plays very crucial role in increasing the overall revenue as
well as it also aid the company in increasing their sale.
 Booking engine- It is one of the most effective tool as it will aid the company in securing
online reservations on an international level. It is an application used by Carnival
Corporation & PLC, in order to attract more and more customers as a result it will

automatically generate more revenues for the company. Company provide high quality
services to its customers as well as they provide different offers in order to retain them
for long period of time. Offers provided by company are discount through online
booking, attractive packages and many more (Fuchs, Höpken and Lexhagen, 2014).
 Discount allocation tool: It is a tool used by various organisations in order to generate
more revenue. By using such tools company can provide various attractive offer to their
customers in order to retain them for a long period of time. In the present context,
Carnival Corporation & PLC is using this tool in order to earn more revenues by
providing discounts to their potential and loyal customers. These offers are discount
through online booking, advance booking and many more. With the help of this tool
management team of the company attract new segment customers and retain them for
long period of time by providing them high quality services and discounts on a frequent
basis.
TASK 2
P3. Different stages of HR life cycle and their importance for retaining and developing talent
Human resource is one of the valuable asset for any organisation. HR life cycle includes
all the stages an employee go through with and each stages has its own challenges, benefits and
opportunities. In reference to Carnival Corporation & PLC, manager of the company develop a
structure of HR life cycle in order to retain talent within the company. All these stages are
discussed in detailed as follows:
 Stage 1: Recruitment: It is a process where management team of the company search
right candidate in order to fill the vacant position within the organisation. It is one of the
important as well as very crucial decision for the overall productivity, growth and
sustainability of the organisation (Getz and Page, 2016). In the present context of
Carnival Corporation & PLC, it is very important for HR manager of the company to
frame strategies in order to recruit potential candidates. Also, they should develop an
interview platform, where they can examine capabilities with the help of written test as
well as focus on their communication skills.
 Stage 2: Education: It refers to the understanding and educational qualification of an
employees. This process begins with the hiring of candidate within the organisation. In

context to Carnival Corporation & PLC, managers of the company conduct orientation
and training sessions to their new joiners in order to aware them about their roles,
responsibilities as well as expectations of the manager. is a process to appropriately
educate the employee by clarifying roles, responsibilities and expectations. In addition to
this, by conducting such sessions, managers can share information about organisational
culture in order to increase performance of the company (Höpken, Fuchs and Lexhagen,
2014).
 Stage 3: Motivation- It refers to the encouragement managers give to their employees.
In Carnival Corporation & PLC, managers of the company organise motivational sessions
provide rewards, promotions and other financial or non-financial benefits to their
employees. As a result, employees feel motivated and encouraged as well as perform
their task in an effective manner.
 Stage 4: Evaluation- At this stage, a supervisor is involved in order to measure the
performance of employees. In Carnival Corporation & PLC, top management team of the
company, examine and monitor all the issues faced by employees when they deal with
customers. If employees face any kind of problem manager of the company provide
training session which will enhance their productivity and get positive outcome.
 Stage 5: Celebration- This is the last stage of HR life cycle, where organisation
celebrate the hard work of each and every employees. Carnival Corporation & PLC, offer
perks and benefits to their hard working employees. These perks and benefits includes
extra pay, trips, incentives and many more in order to retain their cream employees which
will aid them in enhancing their performance at competitive marketplace (Höpken and et.
al., 2015).
P4. Develop a performance management plan
Performance management plan
It is a framework which involves different steps in order to analyse strengths and
weaknesses of each and every employee in order to manage their performance. It is the
responsibility of top level management of Carnival Corporation & PLC to develop strategies and
plans for guiding and directing the workforce for successful accomplishment of organisational
goal. For this, managers of Carnival Corporation & PLC have develop a performance
management plan which are as follows:

Planning- It is the first and initial stage where management team of Carnival Corporation
& PLC, make proper planning which is related to the business operations and activities. It is the
stage where HR life cycle aid the company in order to identify skilled and capable candidate in
order to attain pre determine goals and objectives of the company.
Monitoring- Manager of Carnival Corporation & PLC company analyse and observe
activities and behaviour of employees in order to resolve their problems (Kasemsap, 2016). With
the help of continuous monitoring of managers, they can increase the performance of employees.
As a result, company can provide high quality services to their customers and generate more
revenue. With the help of regular monitoring of activities performed by employees within the
organisation help in reducing the chances of defects and provide high quality services to their
customers.
Developing- In Carnival Corporation & PLC, managers of the company encourage
employees by developing motivation techniques within the organisation. With the help of
motivation technique company can improve the performance of employees by providing them
financial and no-financial benefits. As a result, continuous motivation from the management
team of the company enhance the performance of employees as well as increase the brand image
of the company at the competitive marketplace.
Rating- It is an effective tool mainly used by various organisations in order to analyse
performance of employees. In Carnival Corporation & PLC, managers of the company providing
rating to employees on the basis of their performance. With the help of this process company can
identify skilled employees and retain them for a long duration of time. In addition to this,
managers can effectively enhance the performance of employees.
Rewarding- It is the last stage of performance management plan where managers
provide rewards to the efficient employees. In Carnival Corporation & PLC, managers use
various perks, benefits and reward to their employees and retain their capable employees for a
long period of time. With the help of this, mangers motivate their employees in order to perform
their task in an effective manner (Kasemsap, 2018).

TASK 3
P5. Legislation that organisations in the travel and tourism industry have to adhere to
There is a set of various legislations which help the company in attaining organisational
goal in an ethical and lawful manner. Carnival Corporation & PLC managers apply some laws
which are as follows:
Equality Act, 2010: This act was developed by the Parliament of UK in the year, 2010.
According to this act, it is the duty and responsibility of manager of Carnival Corporation & PLC
to equally treat their employees in order to make them feel comfortable and aid the company in
successfully accomplishing organisational goals and objectives. For example, if a company
appoint two candidate at the same position but at different locations, then it is their responsibility
to provide them equal rights and pay whether they are male or female.
Human right Act, 1981: According to this act, it is the human right that they can freely
share and express their views. In addition to this Carnival Corporation & PLC provide rights &
freedom to each and every individual working in the corporation. As a result every employees
freely share new ideas and thoughts in order to provide high quality services to their customers
(Mowforth and Munt, 2015).
P6. Potential impact of employment and contract law on business decision making
Employment Act- In context to Carnival Corporation & PLC, primary objective of this
act is to provide safeguard to employees against any kind of discrimination happen within the
organisation. There are different legislations in the company which includes employee protection
from discrimination, unsafe working environment of the company and many more. With the
implementation of this act, number of complains can be reduces which will aid the manager
while taking decisions. Such legislations directly affect the working of the organisation along
with decision making process within the company.
Contract act- It is an act developed for providing protection to the rights of employees
so that higher authority of the company give them valid reason before dismissing them from their
job position. In context to Carnival Corporation & PLC, managers of the company provide
employees the rights according to the law which will aid them to perform their work in an
effective manner as well as retain them for a long period of time (Rogerson, 2015). In addition
to this, ratio of contract breach is reducing frequently which will aid the managers while taking

decisions in an effective manner. Along with this, if a firm performs any illegal activity it will
directly affect the overall revenue of the company in a negative manner. As a result, company
can reduce their overall profit share as well as decrease their market share.
TASK 4
P7. Different types of financial statements and reporting mechanism for organisation
Financial statement refers to that statement which includes required information related
to finance and fund of organisation which is invested in various activities of the firm. There are
various types of financial statements which are as follows:
Balance sheet- It refers to a financial documents which includes detailed information
about assets as well as liabilities of the company. In Carnival Corporation & PLC, accounts
department of the company prepare the balance sheet of the company. In addition to this, balance
sheet comprise of three main items which includes assets, liabilities and owners equity. With the
help of balance sheet, managers of the company analyse the current financial position of
organisation, with the help of which management team can decisions accordingly
(Wattanacharoensil, 2014).
Income statement- In Carnival Corporation & PLC, accounts managers of the prepare
the income statement over a specific time period in order to know the current profit and loss
position of the company. Income statement of the company shows total expenses and revenue of
the firm. If total revenue is higher than total expenses, in such case company is gaining net profit,
but on the other hand if expenses is higher than total income than company bear loss in such
situation.
P8. Value and importance of budgets in order to control business performance and identifying
variances
Budget is a financial plan prepared for a certain period of time mostly for one year. It acts
as the backbone of every business organisation as without having funds no business can run and
operate its function for a long period of time at the marketplace. Some of the kinds of budgets
are as follows:
Operating budget- It includes all revenues and expenses occurred during a period of
time within the company. In order to accomplish pre determine goals and plans, management
team of Carnival Corporation & PLC prepare operating budget in advance (Kasemsap, 2018).

This budget can easily be designed and formulated by managers on weekly, monthly or yearly
basis and formulate policies and strategies accordingly. Operating budget is prepared by the
accounting or financial department of the company in order to achieve pre determined goal and
objective in an efficient and smooth manner. Such type of budget provides clear image to the
management team of the company regarding labour, sales, production, overheads, material cost
and many other others which will aid the managers in order to develop polices to attract more
and more customers regarding services and generate revenue for maintaining sustainability at the
marketplace (Höpken and et. al., 2015).
Master budget- In the present context of Carnival Corporation & PLC, master budget is
prepared by the accounts department which includes all financial as well as budgeted balance
sheet and income statement. With the help of this budgets management team of the company
control and manage the available financial resources within the company. With the combination
of sales, assets, operating income and other activities company frame budgets which will help
the managers of the company to develop objectives according to the funds available (Getz and
Page, 2016).
CONCLUSION
From the above report, it can been concluded that in order to perform business operations
in an effective manner, it is essential for any organisation to control and manage their budgets.
In this report it has been analysed that with the help of skilled and capable human resources
company can generate more profits and maintain their sustainability at the competitive
marketplace. In addition to this, this report has detailed description about various stages of HR
life cycle which will aid organisation for retaining and attracting fresh talent. In addition to this,
legislation such as contract and employment law has been defined in this report along with the
potential impact on the process of decision making. Also various types of financial statements
has been examined in this report along with the importance and value of budgets in order to
control business performance as well as to identify variances while accomplishing organisational
goals in an effective and efficient manner. At last various types of financial statements along
with their importance are explained in this project.

REFERENCES
Books & Journals
Budeanu, A., and et. al., 2016. Sustainable tourism, progress, challenges and opportunities: an
introduction.
Chang, L. L., F. Backman, K. and Chih Huang, Y., 2014. Creative tourism: a preliminary
examination of creative tourists’ motivation, experience, perceived value and revisit
intention. International Journal of Culture, Tourism and Hospitality Research. 8(4).
pp.401-419.
DeLacy, T. and et. al., 2014. Green growth and travelism: Concept, policy and practice for
sustainable tourism. Routledge.
Du Cros, H. and McKercher, B., 2014. Cultural tourism. Routledge.
Fuchs, M., Höpken, W. and Lexhagen, M., 2014. Big data analytics for knowledge generation in
tourism destinations–A case from Sweden. Journal of Destination Marketing &
Management. 3(4). pp.198-209.
Getz, D. and Page, S.J., 2016. Progress and prospects for event tourism research. Tourism
management. 52. pp.593-631.
Höpken, W., Fuchs, M. and Lexhagen, M., 2014. Tourism Knowledge Destination. In
Encyclopedia of business analytics and optimization (pp. 2542-2556). IGI Global.
Höpken, W. and et. al., 2015. Business intelligence for cross-process knowledge extraction at
tourism destinations. Information Technology & Tourism. 15(2). pp.101-130.
Kasemsap, K., 2016. Utilizing social media in modern business. In Encyclopedia of e-commerce
development, implementation, and management (pp. 2171-2182). IGI Global.
Kasemsap, K., 2018. Mastering social media in the modern business world. In Social Media
Marketing: Breakthroughs in Research and Practice (pp. 111-137). IGI Global.
Mowforth, M. and Munt, I., 2015. Tourism and sustainability: Development, globalisation and
new tourism in the third world. Routledge.
Rogerson, C. M., 2015. Restructuring the geography of domestic tourism in South Africa.
Bulletin of Geography. Socio-economic Series. 29(29). pp.119-135.
Wattanacharoensil, W., 2014. Tourism Curriculum in a Global Perspective: Past, Present, and
Future. International Education Studies. 7(1). pp.9-20.'
Online:
Annual Financials for Carnival Corporation & PLC. 2019. [Online]. Available Through:
<http://financials.morningstar.com/balance-sheet/bs.html?t=CUKPF&region=usa&culture=en-
US>.

APPENDIX
BALANCE SHEET OF CARNIVAL CORPORATION & PLC

INCOME STATEMENT OF CARNIVAL CORPORATION & PLC