Analysis of Management Planning Tools Applied to Emirates Group

This report analyzes the application of management planning tools within Emirates Group, a major aviation service provider. It explores various management accounting tools, including statement of fund flow, cost accounting, and budgetary control, highlighting their advantages and disadvantages. The report delves into specific software like Prophix and Scoro for budget forecasting and planning, and conducts a PESTLE and SWOT analysis to assess the company's external and internal environments. Furthermore, it examines how Emirates Group utilizes financial and non-financial indicators, such as liquidity, profitability, and brand awareness, to evaluate performance and respond to financial problems. The report concludes by discussing how management accounting contributes to sustainable success through strategic planning, pricing policies, and budgetary decisions, emphasizing the importance of adapting to technological changes, complying with legal regulations, and considering environmental factors.

Management planning tools

The company which has been chosen is Emirates Groups which is a company of United Arab
Emirates. The company deals in aviation services and was founded in the year 1985. The main
products of the organization are air cargo, passenger flights, and aviation services. The company
headquarter is in Dubai.
LO3
Planning tools in management accounting
There are different planning tools in management accounting such as Statement of fund flow, cost
accounting, budgetary control, standard costing, Statement of cash flow, marginal costing,
financial planning, and graphical techniques.
Advantages of planning tools in budgetary control:
 It helps to coordinates activities in various departments or division
 Strategic plans is translated into strategic actions
 Communication with staffs and employees are improved
 Assist the management in deciding the highest and lowest price which can be offered to
the customers
 The calculations can be easily done by using marginal costing or absorption costing
technique
 Sales volumes are estimated so as to achieve company target profit
 Budgets are prepared based on estimated revenues and estimate cost
 Pricing strategies uses the technique of keeping low prices so that they can increase the
market price

Disadvantages of planning tools:
 Even if the sales are fixed but the product demand can be variable
 Products which are based on cost base increase the competition in the market for the
product
 When the penetration pricing technique are applied then customer will not purchase when
the prices of the product rises
 It is not always possible to separate the fixed and variable cost from the total cost
Use of different planning tools and their applications for preparing and forecasting budgets
Prophix software: this software is very flexible and can be easily adapt by Emirates Airlines. The
tool is constantly upgraded and forecasting of budgets can be done with ease as the software is
adaptable and flexible. The company will be able to prepare the budget in a less time and the
budget which is prepared can be applied to achieve the objectives of the organization.th
alternative scenarios are created very quickly (Ittner and Michels, 2017, p-1005). The project
plan can be forecasted and can also be linked with the corporate plan.
Scoro: it helps the medium and small scale enterprise such as IT Company, consulting company,
advertising company, and other company. The Hub of the software display important
information, all the pending task, and performance indicators on one single screen. The user of
the software remains update. The task or assignments which have to be done in a month or in a
week are all displayed in a single list which makes it easy for the employees to complete the
task. It acts as a single solution for the management instead of applying different applications.

The CRM are combining with budgeting and this helps to access all financial databases in a
single data warehouse.
PESTLE ANALYSIS
Political factor: there are number of political factors such as wars and political changes,
terrorism. Emirate Airline has to comply with the political components. The airline service will
be affected by terrorism, and wars. Management of Aviation service has to make some
agreements or written contracts for taking permission of specific routes.
Economic Factor: The components of economic factors are interest rate, inflation, and other
macroeconomics elements. These elements can affect the demand, profitability, and capital
availability of Emirate Groups.
Social factor: Airline services will also be affected by the social changes. Taste and demand of
the passenger are the social factors. The other social factor is demographic element which are
elide on working employees, regions, and age of people. If the population increases then the
profit of the company will also increase as more number of passengers will travel.
Technological factor: changes in technology should be considered immediately by the
management of Emirates Airline. If other Airlines are updated and are providing the latest
technology services then passengers would like to travel on the Airlines who are updated with
new and latest technology.
Legal factor: regulations and rules of the airlines company assists the Emirates to deal
effectively in international dealings. The revenue of the airline will depend on how the airline
has adhered to the policies and rules of the Airline industry.

Environmental factors: this is the last components which can adversely impact on the service
and credibility of company such as climate and weather changes. These components can effect
Emirates Airlines business.
SWOT ANALSIS
Strength: the services provided by Emirates Airlines are of standard quality and because of
this there are huge numbers of passengers for this organization. Emirates are providing service to
almost 70 countries in the world. The advertisements are done through television, social sites,
and online ads. These are the strengths of Emirates Group
Weakness: market share are limited and the competition is relatively high as compared to other
industry. The Airlines do not provide serviced to middle class passenger or traveller. The number
of customers or passengers will decrease as there are many travellers from the middle class who
wants to travel from Airlines.
Opportunities: new fleets should be introduced by the management so that the customer
confidence can be improved and with this customers will be satisfied by the Airline. Emirates
should do joint ventures with international players which can lead to increase in profit margin or
revenues.
Threats: The competitions in the Airlines industry are increasing rapidly which can be a threat
to the Emirates Airlines. Increase in the price or cost of fuel can be another threat for the Airline
as this increase can drastically affect the gross margin of Emirates.

LO4
Compare how organization are using management accounting system to respond to financial
problems
The management utilizes non-financial indicators and financial indicators to evaluate the
performance of organizations. The application of budgetary controls help in executing and
planning different activities of business that will assist the enterprise to achieve the targeted
result by setting standard (Collier, 2015, p-21). There are various financial indicators that
analyze the solvency, liquidity, profitability, and revenue of any Airlines.
The financial indicators are liquidity ratios, profitability ratios, revenue ratios, solvency ratios
(Irina et al. 2018, p-682). Current ratios and quick ratios are used to evaluate the liquidity of the
enterprise that is whether the enterprise is able to meet its entire short term obligation. Short term
obligation is an obligation that is required to pay within 12 months. Profitability ratios such as
gross margin ratio, net profit ratio, administrative cost ratio, and finance cost ratio are used are
used to determine the sales of the company, setting goals for the organization, evaluating the net
profit of company. Revenue ratio such as sales growth and sales ratio measures and analyze the
trend and growth in sales.
According to Sohrabi (2017, p-40), service and product quality, brand awareness, and human
resource management are some of the non-financial indicators which organization uses to fulfill
their goals and objectives. Staffs and employees are considered as an essential factor for business
success. If the customers are not satisfied by the quality of the products then the customers get
dissatisfied with the product and also with the company and switched to some other product or
company. So quality control should be considered by management. The brand which reflects the

development and future growth of the company should be measured by the company. The
dimensions of brand awareness are quality, loyalty, trademark, patent etc.
Analyze how, in responding to financial problems, management accounting can lead
organizations to sustainable success
The management accounting functions and roles in sustainable success can be elaborated below:
 The techniques used in cost accounting such as absorption costing, standard costing,
target costing, helps management in the process of decision making of the enterprise.
 Helps to prepare reporting strategy which will assist to integrate all the sustainability
issues and this will helps to report non-financial and financial information (Epstein, 2018,
p-23)
 Management can with the application of management accounting develop the policies
and strategies easily and also the sustainable goals are fulfilled
 Strategic planning, pricing policy, budgetary decision can be easily understood and this
lead to organization success.

References
Collier, P.M., (2015). Accounting for managers: Interpreting accounting information for
decision making. John Wiley & Sons. 23, pp. 21-29
Epstein, M.J., (2018). Making sustainability work: Best practices in managing and measuring
corporate social, environmental and economic impacts. Routledge. 6(3), pp.23-27
Irina, K., Svetlana, P., Nikolay, P. and Alexander, R., (2018). Value and Price of Russian
Business: The Entity, the Relationship and Impact of Financial Indicators. Journal of Reviews on
Global Economics, 7, pp.682-695.
Ittner, C.D. and Michels, J., (2017). Risk-based forecasting and planning and management
earnings forecasts. Review of Accounting Studies, 22(3), pp.1005-1047.
Sohrabi, M., (2017). The Relationship between Non-Financial Innovative Management
Accounting Tools and Risk and Return of Iranian Stock Market Listed Companies. Dutch
Journal of Finance and Management, 1(2), p.40.