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Role of managerial accounting in contemporary business
Role of managerial accounting in contemporary business
Role of managerial accounting in contemporary business
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One way to measure the success of a company is to examine, in depth, their financial history. Naturally, this includes all financial documentation past, present, and future. Setting goals and open communication in my opinion, can contribute to the financial success of a company. Without a strong team foundation, knowledgeable staff, and thorough accounting practices, I believe a company has no future. The choice of focus between managerial accounting and financial accounting can make or break a company.
US Airlines and Business Strategies
The paper given to read regarding US airlines and fuel expenses caused me to really ponder what I would do if I were the business owner in the given scenarios. Having a strong financial foundation
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I would speculate that different departments in their company aren’t focusing on how they can and should contribute to the financial growth of the airline overall. If each department was making effective business decisions that were coherent with the others, it would ultimately satisfy the goals financial accounting addresses in my opinion.
Approach
I would recommend a bottom-up approach to budgeting. Having lower management involved in identifying key factors helps. They can identify specific areas that need attention specific to their department whether it’s eliminating, adding, or restructuring an existing element of the business. It allows the company to come together as a whole to achieve its goals. It’s like the old saying, “teamwork makes the dream work. Working together paints a clear picture of who’s doing what, where it’s happening, and how it’s intended to be done.
Merger.
I do not believe merging the company or making cuts and downsizing are the only options open however, they are good options to have. Merging with a successful competitor will give Frontier Airline an opportunity to operate to its full capacity within its strongest department. Downsizing will surely cut costs by eliminating salaries not being paid. The unfortunate result is a loss of employment for the individuals laid off due to downsizing, thus decreasing economic
Financial records are very important aspects to any corporation and making sure the records are accurate is essential. Determining how a corporation is going to do is a guess but it is based on previous year's financial statements and that is a reason finical records are so important. Making a profit is a goal for any corporation.
The Airline Industry is a fascinating market. It has been one of the few industries to reach astounding milestones. For example, over 200 airlines have gone out of business since deregulation occurred in 1978. Currently, more than 50% of the airlines in the industry are operating under Chapter 11 regulations. Since 9/11, four of the six large carriers have filed for and are currently under bankruptcy court protection. Since 9/11 the industry has lost over $30 billion dollars, and this loss continues to increase. Despite the fact that the airline industry is in a state of despair, JetBlue has become the golden example, a glimpse of what the industry could be.
There are many ways to analyze the performance of a company, some more popular than others. According to the Barney text the accounting method is the most popular way of measuring a firm's performance (Barney, 2002). Some of the reasons for the popularity could include the fact that accounting measures of performance are publicly available on many firms and they communicate a great deal of information about a firm's operations. Other methods of performance analysis include firm survival and the multiple stakeholder approach.
Are the results of the business the most effective way of measuring your success as a manager?
Having a low cost of operations is one of the contributing factors to Southwest Airlines’ financial success. Such low cost model of the corporation is brought about by an effective strategy. Southwest uses only one type of aircraft – the fuel-efficient Boeing 737. This tactic keeps training and maintenance costs down. Moreover, the no-frills approach to customer service contributed to the low cost of operations for Southwest.
Southwest Airlines has a strong financial history encompassing its existence and has posted 42 consecutive years of profit. This streak of profitability has not been challenged by a US air carrier in the history of the US airline industry (Southwest Airlines, 2015a). Southwest Airlines last consecutive five years shows them to be in a modest growth position as the company realigned itself with the acquisition of AirTran.
Northwest Airlines is one of the pioneers in the airline transportation industry and is ranked at the fourth largest air carrier in the United States today. The success of the carrier depends on the quality and reliability of the service at a reasonable price. Close competitors force Northwest to innovate their services by increasing efficiency. This essay will try to examine different perspectives in the services needed to successfully complete the company’s objectives. The analysis will explain historical and financial perspectives that may give a better understanding of the current market trend of the organization.
Airline and travel industry profitability has been strapped by a series of events starting with a recession in business travel after the dotcom bust, followed by 9/11, the SARS epidemic, the Iraq wars, rising aviation turbine fuel prices, and the challenge from low-cost carriers. (Narayan Pandit, 2005) The fallout from rising fuel prices has been so extreme that any efficiency gains that airlines attempted to make could not make up for structural problems where labor costs remained high and low cost competition had continued to drive down yields or average fares at leading hub airports. In the last decade, US airlines alone had a yearly average of net losses of $9.1 billion (Coombs, 2011).
That brings a great challenge to succeed, and lets the leadership work in new and innovative ways to make such a merger successful. McClelland’s theory states, in regards to the need for achievement, that people strive “To excel one’s self.to rival and surpass others. to increase self-regard by the successful exercise of talent” (Kreitner & Kinicki, 2010, p. 215). By this definition, the merger would motivate leadership to excel in the face of a challenge, and to increase their professional self-regard in their success in doing so. On an individual level, you are asking the performers and employees to recognize both economic and social climates, and to come together in action to save both their careers, as well as their passion for life....
Financial and Managerial accounting are used for making sound financial decisions about an organization. They provide information of past quantitative financial activities and are useful in making future economic decisions. (Albrecht, Stice, Stice, & Skousen, 2002) The same financial data is used to derive reports for each accounting process yet they differ in some ways. Financial accounting primarily provides external reports for external users such as stock holders, creditors, regulating authority and others. (Garrison, Noreen, & Brewer, 2010) On the other hand Managerial accounting is concern with providing information that deals with the internal viability of the organization and is tailored to meet the needs of an individual organization. (Albrecht, Stice, Stice, & Skousen, 2002)
Companies merge and acquire other companies for a lot of strategic reasons with different degrees of success. The success of a merger is measured by whether the value of the acquiring firm is enhanced by it. The impact of mergers and acquisitions on an organization can be small and big in other cases. Mergers and acquisitions immediately impact organizations with changes in rights, and ideas and eventually, in practice. There are multiple reasons, some are motives and financial forces just to name a few.
Since its first grand opening in 1971, Southwest Airlines has shown steady growth, and now carries more passengers than any other low-cost carrier in the world (Wharton, 2010). To expand the business operations, Southwest Airlines took over AirTran in 2010 as a strategy to gain more market share for the Southeast region and international flights. However, the acquisition of AirTran brought upcoming challenges both internally and externally for Southwest Airlines. In this case analysis, the objectives are to focus on the change process post the merger with AirTran, and to evaluate alternatives to address the impacts of the merger. II.
1. Issues 2. American Airlines’ objectives 3. The airline industry 4. Market 5. Consumer needs 6. Brand image 7. Distribution system 8. Pricing 9. Marketing related strategies 10. Assumptions and risks
Life is all about setting goals and trying to achieve them. The same theory also applies in the managerial industry. The accomplishment of desired results in a business is called performance. One of the major concerns of the top managers of a firm is the actual performance of the firm so its measurement is unavoidable.
In the past, the company performance was measured by asking ‘how much money the company makes?’ To a certain extent, they are right because gross revenue, profitability, return on capital, etc. are the results that companies must bring to survive. Unfortunately, in today business if the management focuses only on the financial health of the company, numerous unwanted consequences may arise.