BASIC CONSIDERATION IN MS

**BASIC MANAGEMENT FUNCTIONS AND CONCEPTS**

MANAGEMENT ADVISORY SERVICES
- Profesional advisory
- improve the client's use of capabilities (labor force; core competencies) and
resources (assets; best use of assets to make profits) to achieve the objectives
(short & long term) of the organization

Managerial Accountant
Consultant - independet from the company; external; recommendations to the top
management
Controller - acts as a consultant inside the company; works under the CFO

CONCERNS
Top Level Planning
- "strategic planning (VMO)
- five-year plan
- long-range objectives and policies concerned w/ corporate results
- sustainability

Business-level strategy
- how to attain and satisfy customers
- market position: market leader, challenger, follower - low end markets, nicher -
cater to the special field

*You become successful in the market place if the customers know that you are in
the market, they became sad when you're gine in the market.*

A corporate-level strategy
- focuses on the different/divisons to make the whole company a well-oiled company.
- when a business makes a decision that affects the whole company

Operational strategies
- the methods companies
- how we are gonna stramline the production processes
*valu echain

Basic Functions of Management

POSDC
Planning - you're foreseeing what will happen in the future; "thinking process";
ex. budgetting

Organizing - gathering the requirements and resources to attain what we have

planned; materializing - making reality out of what is planned

Staffing - identifying what are the needed skills; hiring the right employees

Directing - telling the emloyees how to attain, how to make the suctomers happy,
how doe we deliver; telling how to do
*Directing Functions*
a. Supervision -
b. Leadership - showing the employees how it is done
c. Motivation: negative - punishment for not doing; positive - recognizing what
good has been done.
d. Communication - being clear about the instructions; *have to be careful about it
because sometimes failure happens because of miscommunications
Controlling - making sure that the company has attained what has planned;
identifying what has failed; getting feedbacks to improve

**Distinctions

Financial
-intended user: external
- summarize past transactions
*The end of financial accounting is the strart of management acctg
- nature of information needed: data should be objective and verifiable
- focuses on precision (free from errors)
- reporting requirements: reporting for a company as a whole
- must conform w/ reporting standards
- mandatory

Managerial
- internal
- strong emphasis on the future
- data should be relevant (usefulness of the data)
- focuses on timeliness of information
- focuses on segments of a company
- does not conform w/ reporting standards
- optional

**** Fin. vs Cost

*** Mngt vs. Cost

**Roles and Activities of controller and Treasurer

Controllership
- accounting functions that does not involve cah/money
- can also act as an internal auditor
a. Planning for Control
b. Reporting & Interpreting
c. Evaluating & Consulting
d. Tax Administration
e. Government Reporting
f. Protection of Assets
g. Economic Appraisal

Treasurer
- cash involvemnt
- cash related
a. Provision of Capital
b. Investor Relations
c. Short-term Financing
d. Banking & Custody
e. Credits & collections
f. Investments
g. Insurance

**Line & Staff

Line
- Vested w/ authority to decide
- Downward authority
- Directly responsible in attaining corporate objectives
- Front-line
- MOPS (manufacturing, operations, productions, sales)

Staff
- Provides support services
- Upward support
- Provides consultancy functions
- Back-end support
- Finance & Accounting functions

** Roles and Functions of Managerial Accountant

I. strategic Decisions
- creating value for customers while differentiating itself from its competitors

Five Stages:
1. clarify your vision
2. Gather and Anlyze Information
3. Formulate a strategy: product differentiation; cost leadership ; focus
4. Implement Your Strategy
5. Evaluate and Control

Mission
- what do you want to achieve
- What you do now
- How you do it
- What this achieves
* all the processes of the company will boil down in the mission

Mission Sattement - defines the company's usiness, it's objectives and its approach
to reach those objectives

Vision
- the driving force that will bring out the best in you in everyday life
- where you're going
- what you want your misison to ultimately achieve, for you, your customers, and/or
society

Vsion statement - describes the desired future position of the company

Goals
- SMART (specific, measurable, attainable, realistic and time-bound)
- tangible ways you'll carry out your mission and progress toward your vision

Values
- What will make you different from other companies
- What you stand for
- Beliefs through which you create and carry out your goals

competitive Advantage
(Michael Porter's Three Generic Strategies)
1. Cost Leadership
2. Differentiation
3. Focus: 1. cost leadership focus 2. differentiation focus
II. Identifying and Building REsources and Capabilities

Strategic Analysis: matching knowledge of marketplace opportunities and threats

with company's resources and capabilities; hence, need to gather information

Balance Sheet information about assets - it is the source of information neeeded

a. Current resources
b. Long-term productive assets
c. Intangible assets

*Proper utilization of resources will help you be successful in the marketplace.

(Threats) Porter's 5 Forces

> Intensive competitive rivalry > threat of new entrants > Bargaining power of
buyers >

1. Competition in the Industry

: blue ocean - few competitions in the market; red ocean - many competitions in the
market

2. Potential of New Entrants into an Industry

: competitive market, monopoly, oligopoly, monopolistic competition

3. Power of Suppliers
4. Power of Customers
5. Threat of Substitutes

BCG Growth-Share Matrix

1. High Growth Potential - Star Performers; Blue Ocean
2. Low Growth Potential - Cash cow; while it is still profitable, maximize the
market because it mmight turn into Dog market
3. Low Growth Potential Low Market - either you close or sell the product/company
4. High Growth Potential Low Market Share - wait and see

III. Management Accountant's Role in Implementing Strategy

A. Implementing Strategy
1. Planning
- thinking proicess; selecting goals, predicting results and deciding how to attain
desired goals
- communicating what was planned

2. Control
- Taking actions; making sure that the immediate goals are attained
- deciding on performance evaluation

3. Feedback
- linking planning and cotrol to help future decision making
- comparisons of the variances; what are the results for corrective actions

B.
1. Three roles of mngt accountants for success
a. Problem Solving - the controller will provide the information needed
b. Scorekeeping
c. Attention directing - telling mngt what matters and priority issues

2. Goals to assist managers in making better decision

a. Different decisions emphasizes roles differently
i. Strategy
ii.
b. Interaction among types of decisions means activity/roles done simultaneously
c. Information must be relevant

C. Enhancing the value of management accounting systems by guiding managers to

focus on challenges
1. Customer focus
2. Value-chain and supply-chain
Supply Chain >Procurement >Logistics > Assembly >Production >Sales and Marketing
>Customer Support >Delivery >Customer Support

Value Chain> Customer >Innovation >Planning >Devpt > Testing >

3. Key Success Factors

a. Efficiency
b. Quality
c. Speed
d. Cost

4. Continuous Improvement and Benchmarking

>Identify >Plan >Execute >Review

****
Exercise #1 Part 1: 29/36

*Building resources and capabilities includes building raw-material inventory

levels.; Building resources and capabilities requires efficient logistics to become
successful. Logistics pertain to the movement of goods or services when needed and
to whom it is needed.

*Management accounting information includes: - tabulated results of customer

satisfaction surveys, the cost of producing a product, the percentage of units
produced that are defective.; Management accounting reports are designed to fit the
peculiar needs of the internal users.

*Financial reporting is NOT a function of a management accounting system.;

Financial Accounting is another field that is not directly related to Management
Accounting.

*Computer-integrated manufacturing (CIM) plants allow management to: - diagnose the

reason for a defect, -access timely and accurate information regarding production
costs, - respond faster to changes in customer preferences.; It does not create
brand recognition.; CIM enhances production efficiency by automating the production
process. Product design and its unique characteristics create brand recognition.

*A well-conceived plan allows managers the ability to take advantage of unforeseen

opportunities.; A properly formulated strategic plans allows changes to take place
in the actual implementation phase most specially if involves taking advantage of
unforeseen opportunities.

*Investments in long-term productive assets include: - investments in robotics, -

investments in information infrastructure, investments in Internet application.; it
does not include investments in a high-quality parts inventory.; High-quality parts
inventory are part of goods intended to be sold by a company. It is part of its
current assets.

*Employees pay close attention to how their performance is measured.; Employees are
made aware on how they evaluated. They tend to do their best in attaining the
performance metrics. Performance metrics should be specific, measurable,
attainable, realistic, and time bound.