Unit 5: Management Accounting - Planning Tools for Financial Stability

This report examines effective planning tools in management accounting, focusing on Activity-Based Costing (ABC), Balanced Scorecard (BSC), and Benchmarking. It uses a case study of Accor Hotel to illustrate how ABC costing aids in scrutinizing value chain activities, improving management decisions, and controlling overhead costs, ultimately enhancing financial performance and sustainability. The report highlights the importance of these tools in maintaining financial stability and addressing financial challenges within organizations, emphasizing the role of sound decision-making in achieving better financial outcomes. The document is available on Desklib, a platform offering a wide range of study resources and solved assignments for students.

Running head: EFFECTIVE TOOLS FOR MANAGEMENT
Effective Tools for Management
Name of the Student:
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1EFFECTIVE TOOLS FOR MANAGEMENT
Effective Tools for Management
The primary objective of a business organization is to maximize the operational revenues.
These objectives are followed by the sound financial planning and management. Hence the
financial planning is the best tool for management. Financial management refers to the vital
activity that is done by the organization. The process includes plan, organize, control, and
supervision of the various resources of the organization and achieve the ultimate organizational
goal (Langfield-Smith et al. 2017). However the originations have to face a lot of issues at the
time of adapting the various management strategiec models and practices for responding to the
external changes of the organizational environment. The application of the various accounting
management tools would help in reducing the issues and enhance the regular business operations
and take effective decisions for a better financial performance. In order to maintain a sustainable
business operation, the management tools are highly effective.
Part A
Comparison of the planning tools in the process of management accounting
The management accounting tools help the organizations to create a better value for its
shareholders and enhance the performance. In the discussion the highlighted modern tools for
accounting management includes:
 Activity based Costing(ABC)
 Balanced Score Card (BSC)
 Benchmarking

2EFFECTIVE TOOLS FOR MANAGEMENT
Activity Based Costing: As per Taleb, Gibson and Hovey (2015), the activity based costing
refers to a beneficial tool that results in the greater accuracy costing of product. In Activity-based
costing (ABC) the process identifies the various overhead costs activities and then assigns the
same to its products. This tool of management system identifies the relation of the overhead
activities and manufactured items. The activities can also be taken as the event or transaction
which is known as the cost driver or activity driver. These may include the maintenance requests,
machine setups. Purchase orders, power consumed production orders and quality inspections.
Balanced Score Card: The balance Scorecard is another strategic tool for performance
management that can be used by managers of the organizations to maintain a track of the
implementation of various financial activities by the employees (Jansen 2018). This tool of
management would help in identifying and improving the various business internal functions and
their outcomes. The system is used for measurement and organizations feedback. The collection
of data is vital to give the quantitative outcomes and are gathered and interpreted by the
executives and managers for making better business decisions.
Benchmarking: The Benchmarking is anther process of measurement of the performance the
company. It measures the products, services and the processes of the business. The
benchmarking helps to identify the various improvement internal opportunities (Vladychyn
2017). In this process there is the comparison of the current company with the other company
that has a superior performance. Then comes the process of comparing the processes in which
the business would operate. Bench marking also helps in implementing the various changes that
can result insubstantial improvements in the organization.

3EFFECTIVE TOOLS FOR MANAGEMENT
Part B
Case study on how the organization apply the management tools to respond to their
financial problems
In the current discussing the chosen company is Accor Hotel which is a French
multinational company for hospitality that manages, owns and franchises several resorts, hotels
and properties for vacation. Accor at present is the largest group of hotel worldwide abroad the
United States. The primary objective of the business organization is to maximize the operational
revenues as well as the customer satisfaction (Hemmer and Labro 2016). These objectives are
followed by the sound financial planning and management that includes to plan, organize,
control, and supervision of the various resources of the organization and achieve the ultimate
organizational goal. However the originations have to face a lot of issues at the time of adapting
the various management strategies models and practices for responding to the external changes
of the organizational environment. The application of the various accounting management tools
would help in reducing the issues and enhance the regular business operations and take effective
decisions for a better financial performance. In order to maintain a sustainable business
operation, the management tools are highly effective (Maas, Schaltegger andCrutzen 2016). It
has been found that the company of Accor Hotel has adapted the management tool of ABC
costing. In the chosen company of Accor Hotel the ABC helps in a better scrutiny of the various
activities in the value chain, better decisions of management and better overhead cost control.
The ABC costing is used for the measurement of the cost of the product and profitability of the
customer. They have observe after the implementation of the same that time-driven ABC is a
simpler, more powerful and more cost effective method which simplifies costing processes,

4EFFECTIVE TOOLS FOR MANAGEMENT
making it a useful tool to obtain accurate information that enhances the financial performance of
the organization.
In the Accor Hotel the management tool for ABC is suited the best for the organizations.
Being in the hotel industry, Accor deals with variety levels of operational intensity and
complexity. ABC is therefore every well suited as the company provides its guests varying
services. The tool of ABC helps to ascertain total funds along with resources for each of the
project (Cooper, Ezzamel and Qu 2017). After the implementation of the ABC, the Accor Hotel
have improved the profitability, opportunities along with the process of decision-making. This
leads to uninterrupted improvement and sustainability in the business. Therefore, the ABC
supports the strategy and operations of the organization and manages the activities by deducting
the costs and activities that are non-value-adding.
All the business has the have the obligation to have a sustained business operation. They
need to understand the true costs. The ABC assists the organizations to understand the cost
structure in a better way with the help of estimating, budgeting and bidding (Quattrone 2016).
The ABC in addition to that also allows the organizations to measure the profitability and
customer sustainability. With the help of ABC Accor Hotel is getting assistance at the time of
setting up of the structure of price that is to be charged to the customers. Therefore, it can be said
that the organizations fully adopting the ABC can benefit since it can be served as a tool for the
reduction of cost and improvising activities of business. Sound decision-making would help in
better financial performance and sustainability in the organizations with the help of the
management tool.

5EFFECTIVE TOOLS FOR MANAGEMENT
References
Cooper, D.J., Ezzamel, M. and Qu, S.Q., 2017. Popularizing a management accounting idea: The
case of the balanced scorecard. Contemporary Accounting Research, 34(2), pp.991-1025.
Hemmer, T. and Labro, E., 2016. Productions and Operations Management & Management
Accounting.
Jansen, E.P., 2018. Bridging the gap between theory and practice in management accounting:
Reviewing the literature to shape interventions. Accounting, Auditing & Accountability Journal.
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.
Maas, K., Schaltegger, S. and Crutzen, N., 2016. Integrating corporate sustainability assessment,
management accounting, control, and reporting. Journal of Cleaner Production, 136, pp.237-
248.
Quattrone, P., 2016. Management accounting goes digital: Will the move make it
wiser?. Management Accounting Research, 31, pp.118-122.
Taleb, M.A., Gibson, B. and Hovey, M., 2015. Fifty years of sustainability accounting: Does
accounting for income in business sustainability really exist?. International Journal of
Accounting and Financial Reporting, 5(1), pp.36-47.
Vladychyn, M., 2017. Using Managerial Accounting Tools for Analysis, Control and Operative
Regulation of the Foreign Trade Activities of Trading Enterprises. Accounting and Finance, (4),
pp.20-27.

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