Questions and Answers on Management Accounting Information - Paper Example

1. Competitive pressures that affect small businesses

The competitive pressure includes; potential entrants, it looks at how good looking is your product's market to potential candidates .it also indicates what barriers are there that can stop others competitors from entering into your market. Some of this barriers are experienced in the market. As we can see, Sean already has an experience as an editor which provides high with low competitive pressure. A large investment cost which Sean has engaged into can be a barrier that can stop others competitors entering Sean and Mary products market. The competitive pressure emerges when Mary is not able to clarify anything from the accountant so as to make a decision as Sean does not pay the accountant dues on time. Another competitive pressure that can affect a small business is customers, in the Ireland where Sean migrates into the customers for magazines are many where Sean as the producers he has to make a decision on where to find input so as to increase the production of the magazines.

2. How power is perceived in the organization of the business

Control can be defined as a directing action on implementation to determine outcomes and is frequently influenced by actions and events. The view of control on Sean and Mary business both internal control and external control when gagged is shallow. Looking for the internal control, Mary does not have any control over the account as she is reluctant to contact the accountant as his fees are not paid in full this can affect the business as the founder or the sponsor of the firm is not given any financial report of how the finance is being used. On the external control which are the measures that can affect the business operations include control from the government. The government provides rule and regulation that which have an impact on the company. Looking for external power, Sean has to set money aside for the taxes whereby the sheriff comes to collect the money. The tax and VAT collector has so much control over the business as Sean and Mary business can be closed if they don't pay the tax and VAT.

3. The role of management accounting information in Sean's decision to enter into a business deal with Fergus.

The role of management accounting information is to give support of the company by making right choices by processing and communicating relevant information which will help the management in planning, evaluating the business, controlling coordinating and assessing the business process. The primary role of management accounting information in Sean decision to enter into a business deal with Fergus is budgeting purpose. Mary budget for the business of Sean and Fergus is not the same, and she is doubtful about Fergus estimations of advertising revenue. For example, Mary thinks that the first two issues of the magazines will earn about 32,258 - 48,387 in advertising revenue while Fergus estimation is 83,871 per item and payment terms are expected to be about sixty days Fergus expects advertising revenue to increase to 104,839, towards the end of the first year of the venture.

4. Would the use of management accounting information have prevented Sean from entering into business with Fergus?

No, this is because it helps to reduce expenses, improve cash flow, increase financial returns and also help Sean in business decision making whereby the information and reports given by the management accounting manager will help in decision making. On the reducing expenses advantage, the owner of the business will understand how much amount will take to start the business.

5. Limitations of management accounting in conditions of uncertainty.

The boundaries of management accounting in conditions of uncertainty include lack of knowledge. The employees working with the governing council information should have known about the firm this is because Sean does not give accurate information on accounting, this condition can mislead the whole organization. Other limitations of management accounting in the condition of uncertainty include lack of continuity and coordination, lack of substitute on company administration, an unquantifiable variable which includes problems in business which cannot be calculated as cash and lastly the management accounting is an expensive task to coordinate.

6 The proposed deal appeared to be financially sound, but can the same be said of Fergus?

The deal is not financially sound Fergus is so reluctant for the joint venture he is overwhelmed by the amount of sale that will be generated from the partnership he also opts to employ a large team number of employees, but he does not have enough capital.

7. It is evident that Fergus has credit and cash problems, and that there was a lack of information about his previous business dealings.

This is true since Mary does not get any credit as she reluctantly engages herself in finding more information about Fergus by having various advice from different consultants

8. How would Sean uncover details about Fergus' business situation and his dealings with other people?

This can be achieved in partnership with experts from the Ireland who have dealt with Fergus business; Sean can uncover more details about the Fergus .also the suppliers of Fergus can help Sean in acquiring more information about him.

9. Would people that had worked with Fergus be willing to speak to Sean?

Fergus works with Sean as the joint venture makes some people develop some difficult relating with Fergus because of his past behaviors. This is evident since Fergus is not in good terms with Sean.

10. Even if Sean's wife's suspicions about Fergus were confirmed, would the opportunity to do business with a prestigious supermarket be rejected?

The opportunity may be dismissed as it applies to the supermarket manager, who is not willing to work with Fergus, the opportunity to work with the supermarket will only be approved if Sean works alone or find another joint venture.

11. Consider Sean's reaction to financial information about the investment. Would cash flow information about the venture dissuade Sean?

Yes, the information about the venture will persuade Sean from taking the venture since Sean will find it too difficult to generate cash flow for the investment which has financials problems.

12. What opportunities are there for Sean to discuss the venture with experienced people?

Sean gets to know more of the upcoming products in the market; he also gets to know people and the big real business men in the community which he joint partnership with and also by talking to experienced people in business he will learn a new way of doing a thing.

13. Is Sean making what might be called a rational decision?

No, Sean is not making a sound decision he does not have alternatives in making decisions, he makes decisions without considering the business outcomes. He does not also enquire other options for talking with a consultant before starting the joint venture with Fergus his wife Mary seems to be concerned in inviting the consultant so that they can be having some alternatives in choosing effective business decisions.

14. What guarantee is there that decision making is rational?

Decision making is usually considered balanced as many decisions are based on many alternatives as well as the procedure given. The model of rational will always assume that before making a decision, one has full information on the many options.

15. Tom must also provide Sean and Mary with some advice on how to improve their business' turnover

This includes becoming so aggressive with the sales, understanding the base of the business consumers, topping customer service level by researching on what the customers need and lastly offering exclusive discounts and giving promotions on the products.

16. How can the current level of indebtedness be funded?

This includes the public and the private sector; the private sector can be funded by borrowing money from relatives and refund the money later, the public can also source its funds from government sponsorships where the state will help in promoting the growth of the business.

17. How can more business be generated?

Ways of coming up with more business ideas can be generated from various shareholders or entrepreneurs, an individual interest, exploring modes of thinking and lastly developing effective strategies for generating the business

18. How can pricing improve?

This majorly involves producing products which are differentiated with the class; the idea is mostly used to capture the customer bargaining this is because the first customers will not take note of the initial price.

19. How can suitable control systems, that Sean will use, be designed and implemented?

First, on the design, the disadvantages of the previous system should be listed then a new model coming up with effective and efficient maintenance strategies should be designed to draft new control systems tailored with a combination of data management systems, the primary priority function of scheduling should be discussed and evaluated before it is implemented.

20. What help and advice are available for all businesses and how might they be relevant for Sean's business

Each business should learn how to choose effective business entrepreneurs. Real entrepreneurs do not take advantage of the difficult business situation as seen in this context, the accountant whom Sean had employed was not giving reports since his payments were not made in time. Any business investor should always be ready to take the real opportunity that comes on the way, and one should learn to invest in his or herself mechanism as seen by Sean.