Personal Income Tax and Revenue Forecasting Assignment - 1

Personal Income Tax and Revenue Forecasting - Assignment Example The lower tax rates are expected to stimulate economic activity and to encourage business to move from the shadow to the official (taxpaying) economy, so some of the revenue loss will ultimately be recovered. The Ministry of Finance forecasts collections of 7,789,000 markka (MK) for 2001. Data on tax collections are reported on the following page. Based on the information provided, the ministry definitely needs to revise its 2001 forecast. This is because the pace of tax revenue being collected is not coinciding with its revenue forecasting, which is 7.8 million markka. Basically, at its best point, the tax revenue averaged about 1.2 million markka, at the end of 1999 and 2000. However, the data in 2001 shows a significant drop compared with the past three previous years when tax revenues were compared. This means that it will probably take about 20 more years or so until tax revenue reaches 7.8 million markka, because if it took 3 years to get to 1.2 million in revenue—one multiples 3 by 7 and one gets the number of approximately 21 years to create that amount of revenue. Of course, revenue could increase exponentially in years to come, thus making the target goal of 21 years achieved in a faster time period. However, the important point to remember is that there are several factors that go into how such data is arrived at in the first place. So, supposing that Vardar’s markka strengthens as time goes on and that more people are able to pay taxes due to the economy being stimulated and people being freed up to make more money—it is entirely possible that the economy will grow significantly before the 21-year window of economic growth is due. It depends on if people can get the jobs to provide for their families and support the economy. What factors might influence the patterns seen in the data include a variety of things. In former Soviet

Effective Manager Essay Example | Topics and Well Written Essays - 750 words

Effective Manager - Essay Example Effective Manager As this competency to negotiate and motivate people is a very key attribute in a manager (Fowler, 2000), I have been working hard to contribute as a team player and to get everyone to work as one cohesive unit. For this, I have been volunteering to take up different opportunities that help me enhance my skills to build a strong team such as leading a group of people to accomplish a given task. This has taught me how to motivate the team to function in one particular direction. According to Alimo-Metcalfe and Alban-Metcalfe (2003), flexibility is an attribute that an effective manger must possess. In the past, I have noticed that I am often rigid when it comes to getting my plans executed. I look at it as a challenge and I have been working on this aspect. I have tried to expand my horizon to look at broader situations where flexibility is required rather than just focussing on my core role. This has helped me improve my flexibility and has helped me understand how it is crucial for m anagers to demonstrate flexibility while leading a team. As per the research done by Antonioni, D. (1994), an efficient manager should be able to resolve conflicts in the working scenario. Conflict management comes in very useful in a competitive environment where the pressure to perform to the optimum is high. It takes high emotional quotient by the managers to remain in authority and yet resolve issues amicabily (Goleman, 1999). During many situations, I have faced the challenge of conflict management among peers and I found the process very tough because there are many aspects that need to be focussed upon while managing a conflicting scenario. For example, I found it difficult to resolve the situation because two candidates felt equally passionate about one particular task. Even though I awarded the task to the one who was more equipped to handle the responsibility, I found it challenging to convince the other employee as to why the task was not assigned to him. To learn the art of conflict management, I have been observing the scenarios in which managers have been resolving conflict effectively keeping the interest of the entire team as well as the mission and objective in mind. Davis et al (1989) state that an effective manager should be able to efficiently manage self and others. For example, good managers always have the goal or objective in front of them and work towards the goal effectively keeping the development of the team as well as their own development in mind (Honey, 2004). During the past, I have exclusively focussed on my core job and hence, expanding my vision to look at the development of the team was not a priority. After understanding that it is very important in the managerial domain, I have tried to align my priorities with the mission of the team so that I am better able to improve my work along with the rest of the team. This has helped me understand a lot about the various nuances of how encouragement and motivation proves to be cri tical in a team environment. I have observed how managers are able to take active interest in the development of others while keeping the mission in mind. They do it by developing a deep understanding of the psychology and thought process of the individuals and how that would fit in with the common goal. I have also tried to improve my

Hudson River Dredging Essay Example | Topics and Well Written Essays - 3750 words

Hudson River Dredging - Essay Example GE, along with supporters from a portion of the public, strongly opposed dredging as a cleanup option, stating that it was unnecessary since the river was eliminating the PCBs through natural means. However, in 2002 EPA initiated the dredging of two million cubic meters of sediment to remove an estimated 68,000 kilograms of PCBs from a 250-kilometer stretch of the upper Hudson. For the design and implementation of the dredging project, active public involvement was ensured by EPA2. The fish caught from the upper Hudson River were found to be contaminated with the 209 different chemical compounds of PCBs which accumulate in its fat tissues. Humans who consume contaminated fish increase their risk of cancer. Currently, PCB pollution is such that fishing for the purpose of human consumption is prohibited in the upper Hudson River, and permitted only to a limited extent downstream, by health advisories3. While cleaning the Hudson River through dredging and remediation are essential, the technological feasibility, the overall environmental benefits, the adverse impacts caused by hazardous waste from the operations, and the problems caused to nearby communities need to be taken into consideration. Thesis statement: The purpose of this paper is to discuss Hudson River dredging and remediation to remove PCBs; and to examine the environmental benefits and disadvantages resulting from the operations. The Hudson River in New York State is one of the best known examples of a large river system with widespread sediment contamination with PCBs. The upper forty miles of river will undergo cleaning operations, with 2.65 million cubic yards of sediment proposed to be removed. Cleanup has yet to begin, although dredging of 265,000 cubic yards from 94 acres is planned for the first year of dredging operations4. The United States federal government is compelled to address the problem of polychlorinated

Effective Manager Essay Example | Topics and Well Written Essays - 750 words

Effective Manager - Essay Example Effective Manager As this competency to negotiate and motivate people is a very key attribute in a manager (Fowler, 2000), I have been working hard to contribute as a team player and to get everyone to work as one cohesive unit. For this, I have been volunteering to take up different opportunities that help me enhance my skills to build a strong team such as leading a group of people to accomplish a given task. This has taught me how to motivate the team to function in one particular direction. According to Alimo-Metcalfe and Alban-Metcalfe (2003), flexibility is an attribute that an effective manger must possess. In the past, I have noticed that I am often rigid when it comes to getting my plans executed. I look at it as a challenge and I have been working on this aspect. I have tried to expand my horizon to look at broader situations where flexibility is required rather than just focussing on my core role. This has helped me improve my flexibility and has helped me understand how it is crucial for m anagers to demonstrate flexibility while leading a team. As per the research done by Antonioni, D. (1994), an efficient manager should be able to resolve conflicts in the working scenario. Conflict management comes in very useful in a competitive environment where the pressure to perform to the optimum is high. It takes high emotional quotient by the managers to remain in authority and yet resolve issues amicabily (Goleman, 1999). During many situations, I have faced the challenge of conflict management among peers and I found the process very tough because there are many aspects that need to be focussed upon while managing a conflicting scenario. For example, I found it difficult to resolve the situation because two candidates felt equally passionate about one particular task. Even though I awarded the task to the one who was more equipped to handle the responsibility, I found it challenging to convince the other employee as to why the task was not assigned to him. To learn the art of conflict management, I have been observing the scenarios in which managers have been resolving conflict effectively keeping the interest of the entire team as well as the mission and objective in mind. Davis et al (1989) state that an effective manager should be able to efficiently manage self and others. For example, good managers always have the goal or objective in front of them and work towards the goal effectively keeping the development of the team as well as their own development in mind (Honey, 2004). During the past, I have exclusively focussed on my core job and hence, expanding my vision to look at the development of the team was not a priority. After understanding that it is very important in the managerial domain, I have tried to align my priorities with the mission of the team so that I am better able to improve my work along with the rest of the team. This has helped me understand a lot about the various nuances of how encouragement and motivation proves to be cri tical in a team environment. I have observed how managers are able to take active interest in the development of others while keeping the mission in mind. They do it by developing a deep understanding of the psychology and thought process of the individuals and how that would fit in with the common goal. I have also tried to improve my

Major Personal Statement Example | Topics and Well Written Essays - 250 words

Major - Personal Statement Example Seeing as I was enthusiastic about business, I chose to delve into economics. In the discipline of economics, I have been able to amass multiple experiences through a hands-on rationale that drives my quest to prosper. First, I have taken up attachment positions in three firms during summer breaks, with the most influential internship being at British American. I gathered tacit lessons in corporate governance and auditing that are bound to be of help in future. I have also volunteered in peer business programs that seek to forge the way towards innovative business ideas. ‘Eco-plus’ was one such program that afforded university students the opportunity to win ten thousand dollars in grant for creative business facets, in which I acted as regional student representative for California. From these experiences, I have been able to learn the importance of communication in business, and how good communication forms the cornerstone of any successful business entity. Ethics in corporate governance has also emerged as prime cue in economies of scale, since globalization is fast changing the manner in which countries transact their businesses (Bovee & John, 43). With more involvement and interaction in the economic discipline, I am bound to gain practical skills that may yet prove influential in terms of managing a

Memo for ABC Complete Kitchens Inc Essay Example for Free

Memo for ABC Complete Kitchens Inc Essay â€Å"Great organizations demand a high level of commitment by the people involved†- Bill Gates. Introduction Having the right man for the right job is imperative for corporate success. The person that installs the cabinetry for ABC Inc. is probably not the same person you want managing the financial responsibilities and obligations. Employees of ABC Complete Kitchens Inc. encompass a similar work ethic, professionalism and accountability however; their skills vary and need to be accommodated suitably within the company. Maintaining this level of expectation is imperative to achieve organizational success. Maturity, health, financial stability and the ability to compensate accordingly to current and long term fiscal challenges is the responsibility of the financial manager and within this organization or for ABC Inc. the Chief Financial Officer (CFO). The CFO assesses, directs, monitors, controls, develops strategies, plans for current and long term financial goals and most importantly determines the organizations investment decisions. The CFO and/or financial manager must â€Å"weigh the costs and benefits of all investments and projects and decide which of them qualify as good uses of the money† (Northcentral University, 2011. 7; 709). This is money invested by others as well as yourselves within this company. There are three main tasks financial managers are responsible for beyond applying management  standards to financial capital or income of this conglomerate. These consist of; making (preferably good) investment decisions, financial decisions and managing the company’s cash flow on a day to day and a long term basis. In order to stand behind these investment decisions, it is imperative to understand the terminology and processes within the financial systems development. Assets Assets are items of ownership that can be converted into cash or have an exchange value. They are investments this company has made. From an accounting point of view, assets can be divided further into two categories, current and long-term assets. Current assets are cash or other liquid items that can be turned into cash within one year. Marketable securities are short term, low risk investments such as, the current stock you hold and what it is worth or can be sold at. Accounts receivable are debts owed to this company by consumers for products and services provided already on credit. Inventories are assets comprised of raw materials such as cabinetry, sinks, and appliances including kitchens being currently installed that ABC Inc. still owns. There are other current assets that we will view on our balance sheet later on and they are mostly prepaid expenses and deferred assets as well as expenditures for future costs such as insurance, rent and interest. Intangible assets have no physical existence. These can include intellectual property or employees who attain knowledge and skill (NCU, 2011. 7:13). If the employee leaves to go to another organization, this is considered an intangible asset. Perception of the company within the community is important. Take for example the communities perception of the company. Wal-Mart and most recently Target with their credit card theft issue experienced intangible assets. Copyrights, patents and goodwill are also intangible assets. â€Å"Recently, I was asked if I was going to fire an employee who made a mistake that cost the company $600,000. No, I replied, I just spent $600,000 training him. Why would I want somebody to hire his experience?†-Thomas J. Watson (founder of IBM). Liabilities A liability is an obligation to creditors, an entity arising from past transactions, where the settlement can result in the transfer of assets,  services or other yielding of benefits in the future. They include any type of borrowing from persons or banks for improving on a business or increasing personal income. Liabilities of this company are duties or responsibilities that require settlement by future use of assets at or by a specific date, over a short or long time period or possibly on demand. Liabilities are categorized as current and long-term classification. Classifying liabilities as either current or long term will assist ABC Inc’s CFO assess if the risk of these liabilities will involve disbursement of cash or further company assets in the near or distant future. A current liability will be satisfied within one year. Diving deeper into the definition of current liabilities, a company also identifies them as debts that are expected to be taken care of with current assets or with the use of other current liabilities. Accounts payable are considered the total sum of monies or obligations owed to purveyors for goods and/or services purchased with credit. When accounts payable are paid off, it represents a negative cash flow for the company. Short-term debt otherwise known as notes payable is the reimbursement that will occur within the next year to satisfy a debt. Items that are known monies of the company that have not been paid such as the salary for employees or taxes and deferred or unearned profit that has been received for products that have not been distributed are classified within the current liability category (NCU, 2011. 7:23-24). Long-term liabilities are debts payable over a longer period of time and unlike current liabilities, extend beyond one year. Examples of these are long-term debts, a capitol lease and deferred taxes. Long-term debt involves the obligation of our company to compensate our providers for a period of time that extends beyond one year. Currently, ABC Inc’s long-term debt consists of the construction of buildings overseas as well as most of our products utilized in the assembly of the kitchens. A capitol lease is a contract that requires this organization to make scheduled payments in exchange for the use of a certain asset. An agreement is made between ABC Inc. and another proprietor to compensate for use of things such as equipment, the plant or property. ABC Inc. needs to bear this risk and act as if it is owned as a company asset. Deferred taxes are taxes this company owes but has yet to pay. They appear as a liability because eventually they will be paid for however currently the company has exceeded its financial  income. Owners Equity or Shareholders Equity Owners or shareholders equity is the ownerships interest in a corporation in the form of common or preferred stock. This amount is calculated and identified as shareholders equity, net worth or book value (Averkamp, 2013). The equity a company has is determined by taking the total assets and subtracting the total liabilities. Equity is the quantity of ABC Inc’s assets that you as shareholders own, as opposed to what the company borrowed. Owner’s equity is also classified as net worth or net assets; it’s your interest as owners in this company. Equity can be considered as the calculation of a company’s money that is left over if an asset were converted to cash and all of the current and long-term liabilities against it are paid. Equity is the stock this company and you as individuals possess, it is the value of the assets that you the proprietor actually own. Assets are equal to equity plus liabilities, thus indicating how much of the company’s asset s belong to or are owned and by whom. The Balance Sheet The balance or statement of financial position lists the company’s assets and liabilities, providing a model of the corporation’s financial position at any given time. The balance sheet summarizes the remainder of all the assets, liabilities and overall worth of a company’s accounts as of a specific date, usually the last day of the accounting period or the last day of the quarter or fiscal year (Thomsett, 2011). The fundamental accounting equation is; the sum of all asset account balances is equal to the sum of liabilities plus net worth accounts. It can at times be utilized and analyzed as an estimate of the liquidation worth of the corporation, aiding in foreseeing the value that would be left if the assets were bought and liabilities remunerated. A balance sheet must provide a fair and valid view of an organization’s state of affairs as well as abiding by the provisions of GAAP in its preparation. A balance sheet states: What assets the company owns How assets are paid for What the company owes or what they are liable for Amount left after satisfying their debts Balance Sheet Analysis and Current Ratio Analyzing the balance sheet assesses the company’s value, control and short term cash needs. The balance sheet is a quantitative summary of a company’s financial situation or condition at a specific point in time, including but not limited to assets, liabilities and net worth. The first part of a balance sheet shows all the productive assets a company owns, and the second part shows all the financing procedures, the liabilities and the shareholders equity. This is better seen from the table demonstrated on the next page. The asset accounts are added together, providing the total amount of the corporation’s properties prior to being decreased by debts and obligations. The balance sheet is comprised of assets and liabilities, each with similar sub-groups providing a final explanation of the balance sheet subsection for reference. The total of all liabilities plus net worth accounts is always equal to the total of all assets, WITHOUT EXCEPTION! â€Å"How is the balance accomplished? The sum of liabilities and net worth is always equal to the value of all asset accounts because of double-entry bookkeeping. Every entry has a debit and a credit and these are equal in value. They may also be thought of as a plus and a minus. At any time, the sum of all accounts in the corporate books will add up to zero, because debits and credits offset one another â€Å"(Thomsett, 2013). It is important to remember that creditors often compare a company’s current assets and current liabilities to evaluate whether or not the company has adequate working capital to endure their short-term financial needs. This comparison can be summarized in the company’s current ratio. The current ratio is the percentage of current assets in relation to their current liabilities. A higher current ratio gives the implication of the company experiencing less risk of a cash deficit in the near future (NCU, 2011. 7:727). The Income Statement The income statement shows the company’s net income or profitability during a specific period of time. The income statement can also be referred to as the profit and loss, or â€Å"PL† statement, and the net income is also referred to as the company’s earnings (NCU, 2011). The income statement is based on the accounting equation that; income equals revenue minus expenses which in turn illustrates the value of the owner’s equity as increasing or decreasing. The income statement analysis explains how the profitability of  the company relates to the company’s shares. Different ratios are used providing information on ABC Inc’s operation and worth (NCU, 2011). Conclusion This leaves us now analyzing not only the national but also the international fiscal aspects of ABC Complete Kitchens Incorporated. Generating sales overseas is taking this company to new heights within the business world. The income statement or statement of financial performance catalogs the company’s revenues and expenses. It is putting our name on the map while increasing profit, employment opportunities and as the Board of Directors; you are responsible for maintaining this stature. This position is not only exciting, it is manageable as well. As a project manager I foresee significant advancement within all of the departments. If everyone involved collaborates cohesively, communicates respectfully and complies with ABC Complete Kitchen Incorporated’s mission and vision, the finality will be a company that ultimately produces an exceptional product with complete customer and corporate satisfaction. References Averkamp, H. (2013). What is owners equity? Accounting Coach, LLC. Fort Atkinson, WI Retrieved from: http://www.accountingcoach.com/privacy-policy (2011). SKS 5000- Business strategies for organizational effectiveness within the global perspective. Pearson Learning Solutions ISBN: 9780558870447 (2013). List of key accounting terms and definitions. InvestorGuide Staff. Retrieved from: http://www.investorguide.com/article/13789/list-of-key-accounting- terms-and-definitions/ Thomsett, M., C. (2013). The balance sheet. Getting Started in Stock Investing and Trading Retrieved from: http://www.investorguide.com/article/12689/the-balance-sheet-ws/

Rise and Fall of Standard Pricing

Rise and Fall of Standard Pricing The Rise and Fall of Standard Pricing and Its Effect on Everyday Operations For European and American Firms The overall purpose of this paper and study is to investigate cost or lean accounting within the operations management realm and how its unpredictable rise and fall allow organisations to continuously learn and utilize knowledge management as a core value. It was also important to use a larger organisation that has history of outstanding operations and customer centered focus upon services. This investigation will require an in-depth study of work processes, communication and leadership with regard to knowledge management as a value within the team construct while looking at how this reflects leaning accounting principles. What tools are available and what kind of evolution is Nestle undergoing in order to remain competitive in a changing economy? How does this change knowledge management and communication company wide? What this study argues is that accounting practices are changing due to the evolving business plan. This is a movement toward modern accounting and it is important to see the relationships between costing accounting, its fluctuations and how they impact the health of the organisation as a whole with regard to productivity and job satisfaction. How an organisation applies methods of costing into its framework for accounting of expenses and its direct rise and fall over the time period of the product life cycle, directly influences the production, operation, distribution and employee retention of the global company. In fact changes in accounting practices have led to many tried and true business models to no longer exist. Costing and its rise and fall can have a direct relationship with success and competitive advantage in the market place. However the purpose of this study is to explore and reflect upon how accounting practices change operations management and the supply chain management model as a tool of managers and team members alike. Really it is how accounting practices have changed business practices because of new legislation focusing on global companies in Europe and the United States. Accounting costs, expenses and losses reflects the health of the organisation and with change comes confusion. This study argues th at with such changes comes a lack of defining the company’s value within the market but also the value it has for its employees, as they become active participants and investors. GENERAL OVERVIEW How corporate accounting is handled is changing worldwide. How each expense is accounted for within an organisation’s financial sheets has been evolving. Such a proposal for change has received much commentary from not only the financial community and corporate America but also key members of Congress, European union leaders and the public. Such a response results from the uncertainty that such change will benefit businesses and economic growth. It is feared that such change will have the opposite effect and cause world leaders to lose its competitive edge in the global market. Still this has not stopped the fuel of the fire as the American Financial Accounting Standards Board (also referred to as FASB) has struggled for an answer to such a dilemma. The urgency for a solution has only been stressed recently in light of such debacles like Enron and Tyco. It is believed that companies do need to account honestly for expenses but at what price to its employees, the public and the economy? Part of the issue with current legislation to change the practice of accounting for employee stock options is that there is no real way to value their worth. This creates an unsettling feeling among investors and employees struggling to understand this benefit. ACCOUNTING OVERVIEW What this truly means for any corporation functioning globally or even locally this that effective cost accounting because a volatile issue for management to consider. One could argue that such rise and fall of how costing/pricing pays a part in the entire operation has a negative effect upon how the company’s valuation is seen on the open market. Costing at every step of the product life cycle plays a huge part in how this valuation is decided from inventory at the shop floor level, to everyday operations management, to an employee’s value with the company and their net worth personally. Changes within the global economy in the recent years the disappearance of tried and true business models leaves many with a poor taste in their mouths because one must understand how efficiency, affordability and effective leadership come into play. Effective pricing or costing of routine operations and corporate behaviours must be tracked and studied in order to carve the fat. This s tudy aims to look at exactly what the rise and fall of pricing or costing means to a global organisation conducting business on many levels. For the purpose of proving the argument that such changes in accounting practice has a negative effect on the organisation, one will look at examples from the shop floor to the employee’s estimated value with the company in the form of job satisfaction. Accounting for such expensing and pricing correctly is what makes the organisation strong but also accurate in valuation. With this in mind, traditional business models like Wal-Mart and Nestle are discussed because these are globally operating corporations. Debates about whether or not the fair value of the employee and the company stock options should be expensed on the income statement continue to rage among industry representatives, politicians, and pundits. Expense recognition of stock options can have significant impacts on net income and earnings per share, so this is a debate worth having. But many of those who analyze companies consider operating cash flow a better performance metric than income. One reason is that operating cash flow is thought to be free from the infection that makes income grossly weakened. In the case of employee worth and stock values, however, there is proof that this assumption is flawed. Option exercise affects operating cash flows in ways that analysts need to understand. Repurchasing shares to fund option exercise also results in financing cash outflows. The net cash flow impacts of options are often negative, but can be quite volatile from year to year. LITERATURE REVIEW STANDARD PRICING AS ACCOUNTING PRACTICE It can be difficult to assess why a product has a certain cost or price to the consumer. How is it that companies arrive at certain amount for a product or service? What are the factors that play into this amount and do they change over time while in the market? Mish defines clearly, price as being â€Å"the value or worth; the quality of one thing that is exchanged or demanded in barter or sale for another† (2004, p. 985). A mistake that happens to many companies is they allow the market to manage the price of the product and avoid strategic management of pricing in general. What is usually done according to Nagle is â€Å"they list the prices based on their own needs and then adjust transaction prices to based on what customers say they are willing to pay. Only a few companies question why someone is willing to pay no more that a particular amount or how that willingness could be changed† (2002, p. 1). In order to be strategic in pricing, a company must confident and understand that â€Å"pricing involves managing customers’ expectations to induce them to pay for the value they receive† (Nagle 2002, p.1). Fortunately, when it comes to financial products, many customers remain in the dark about product and services. Sometimes a service oriented company such as the Bank of England can take advantage of such undulation but as more information becomes available due to the Internet, it is becoming increasingly more difficult for a company to set the pace this way. More than not, more companies especially financial ones that rely on customer relationships, allow for a value-based price structure that is contingent on the customer paying when value is delivered. This type of pricing system relies heavily on segmentation of the demographic when it comes to offering promotions and incentives to buster customer loyalty. Much of this applies to financial type products that are well defined for the consumer either through education or these pr oducts are a must in life like the credit or loan product. Keeping this in mind, many financial products consist of high quality products and add-ons that when offered by one company allows that company to diversify and establish the price. The table here below aids in illustrating this point. Table 1: Pricing Strategies (Anderson Bailey 1998, p. 2) It is also important for a company to keep in mind demand for the product or service. This is why diversification and globalization are quickly becoming elements of strategy as companies look for new ways to target consumers and enter new areas where their original product has a new life cycle. This is a matter of economics but important for understanding marketing strategy with regards to cost switching or price switching. â€Å"The greater the price elasticity, the closer the company can price products to similar competitive products and vice versa† (Allen 2002). In an industry like the mortgage industry where homeownership is more prevalent in Western nations, elasticity is high and therefore, it is fair to remain competitive with other companies. Also a company like Nestle can bet that charging less may lead to more food products created as customers find they get more service for less money. In this respect elasticity can work either way. It really depends on degree of ri sk one company is willing to take. Still it remains to be found if such a tactic even works when it comes to customer loyalty, as this will be explored in greater detail later. However, it remains to be seen if price loyalty does exist. It seems â€Å"the key to effectively competing for loyalty is ensuring the quality of the customer experience, not the quantity of customer rewards or discount prices† (Compton 2005, p.1). However, the price needs to be adjusted for what the customer expects. It can be a cycle that changing continuously depending on the product or service. Carmona, and et al (2004), writes of the origin of activity based costing method of accounting or ABC that came into vogue in Europe during the 1920s. What ABC does specifically as Carmona, and et al (2004) speak of Vollmers’s work as: Deployed significant efforts to account for distribution and marketing costs, which ‘tend to be ignored today.’ This first event is then taken as record of the origin (both in terms of time and space), from which the new practice mainly spread both temporally and spatially. (p. 36) This is the start of a movement toward the double entry system and this saw delay and many weaknesses because it did not present a clear, complete picture of accounting. Its weaknesses were found in inefficiencies with charges and discharges. As a result, early double-entry systems were seen as unreliable and not useful to big business. It would not be until later that advanced book keeping procedures would take into account advanced operating processes in production. Carmona, and et al (2004) found these systems although not perfected were used in England and the Colonies as early as 1760 (p. 37). It seems this was the trend as no real streamlined, conforming system would be adopted until modern business practices came into place in the United States. Move to a global arena and model of production purposes and a more refined system is needed because a lot more is at stake. Global business is all about the details. It became common practice more investment applied, the more generally accepted accounting practices became as a diffusion of new technology. Accounting practices became more generally accepted behaviours as businesses became bigger and more prominent in communities across the world. Practices are implemented as Abu-Raddaha, and et al (2000) surmises the following: The information provided by accounting should facilitate international trade and capital flows, not hamper them. It should inform, not just report. More importantly the information demands of both domestic and international financing and other commercial relationships, have to be satisfied. (p. 19). Everything must remain in balance or presented as a well-oiled machine. How does an organisation get to this point of transformation with its accounting practices? Modern accounting asks for more participation and optimisation from the start to finish by the corporate accountant. The actions of the corporate accountants must change as the movement toward lean functioning continues to take place. It should not be a painful process but one of creativity, flexibility and growth. There is a concern that lean accounting requires one to turn off creativity and be boxed into one function or thought process. This will be explored late as a post-modern viewpoint of business where each person has a function within the total quality management or TQM perspective. Modern business may use this as a framework but the modern business model has evolved beyond this fixed view. The truth of the matter is that modern accounting practices could not be further from this view of being boxed in but rather goes beyond breaking the box and creating a different mindset where thin king is seen differently than before. Accounting is seen differently as not having finite possibilities but infinite reasoning. Traditional methods are flawed as proposed by Van Der Merwe and Thomson (2007), â€Å"the direct costing approach doesn’t absorb any overhead or even fixed costs†¦resource consumption accounting or RCA makes no arbitrary assignments at all† (p. 29). A lean, effective method allows for a more detailed account of capacity costs and a basic approach to data collection. Modern times call modern values and thought processes with regard to business seamless behaviour across the production floor. The lean method maintains a â€Å"one-touch flow system† (Van Der Merwe Thomson 2007, p. 29) for information diffusion across the life cycle. This one-touch flow system can be integrated with a supply chain easily and reflects this value added element as a method for better, honest accounting. OPERATIONS MANAGEMENT A most important factor for facilities management to recognize is the use of Total Quality Management (TQM) or a variation of TQM. TQM according to David Steingard is â€Å"a set of techniques and procedures used to reduce or eliminate variation from the production process or service delivery system in order to improve efficiency† (Steingard 2002, p. 2). TQM fits with the facilities management way of doing things as many of their functions require repetition or constant monitoring of daily, weekly and monthly items. Because this is a modernist concept and the modernist movement believed in certainty and static methods of looking at the world, there is not much room for the uncertainty that change creates in today’s workplace using strictly TQM. Therefore either change in this environment must be controlled change or a variation of TQM must be used for the process to work and involve new technologies. Otherwise, TQM alone invents a work environment reminiscent of Franz L ang’s Metropolis and dehumanizes the employee. A variation TQM can be used in facilities management to aid defining team member responsibilities as it sees the whole team as a â€Å"machine creates a system of interlocking parts each with clearly defined use, centralized authority and high degrees of worker discipline culminating with the goal of routinised, efficient and predictable system performance† (Steingard 2002, p. 2). Each team member plays a role in the functioning of the machine. Still much like today’s business environment where change is constant, this system requires continued adjustment, modification improvement of function. TQM as way of defining a work process cannot operate entirely in today’s global market because it succeeds at the expense of innovation and the growth of the employee. It also does not leave room to incorporate change and new ways of improving functions. Still a memory of pure TQM feeds the â€Å"modernist machine of c onsumer capitalism which encourages over-consumption, planned obsolescence, ecological damage and depletion of natural resources† (Steingard 2002, p. 4). This memory has also burdened management as the obsession for perfection, control, consistency, productivity and efficiency increases over time. In today’s facilities team, there must be a healthy medium to not only use past methods for increased productivity and efficiency but also to include modern tools and equipment to make the job easier. In order to remain competitive, technology cannot be ignored, the systems it provides must be implemented in order for logistics to remain seamless and keep up with demand and customer expectation. For instance failure to embrace logistics and technology results in inventory costing a company more money to store than it is worth. McCullogh writes, â€Å"Right now sitting around the globe is a bunch of inventory (worth an estimated) United States $1 trillion—United States $1 trillion of boxes of stuff is just sitting around a warehouse† (‘Warning: Don’t Snub Logistics’, p. 1). This has the potential to represent about 60 percent of the average company’s working capital. This is capital in limbo that is not maximizing its investment potential. A sign of successful shop floor operations is reliance on very little warehousing. In other words, warehousing is measured as the amount of days per month a product sits in the warehouse and if logistics is implemented effectively, this number will decrease and stabilize. The retail average storage of inventory is 26 days of investment not being utilized, profit being lost and daily expenses being incurred in an endless holding pattern. In order to reduce the amount of days inventory sits means companies must create tighter relationships with suppliers via the web or perfect a system of communication between resources to cut out warehousing all together. Instead of inventory remaining stored because of wireless communication and data collection, the product can go straight from the supply source to the retailer’s shelves via a distribution centre that acts much like mail sorting centre. This can work because technology enables a retailer to send data immediately to the supplie r of products that are moving off the shelves with a click of a button. From this electronic message, the supplier knows what the retailer needs, what products are popular, how much and sends then instantly to the retailer’s distribution centre. In organisations the size of Nestle or Wal-Mart, logistics strategy requires much forethought and planning, as there are many branches and divisions that are involved in the process. The idea is to reduce expenses and increase value to the organisation by making the company more productive and efficient. This needs to be done as seamlessly as possible to continue brand loyalty and customer relations while maintaining market share and competitive advantage. In many ways, implementation of this strategy creates a delicate balance. In order to have better Business to Business or B2B relationships, one must understand the connection. Robert Thierauf and Hoctor (2003) explain, â€Å"B2B is about connecting shared businesses and information processes of the extended trading networks, planning, shipping and logistics, inventory management and customer retention to name a few† (Thierauf Hoctor, p. 181). In other words, an optimized planning process can save millions dollars and allow a multination corporation to carry out its objective and gain market share. This means applying advanced technology such as i2 used by Dell Computers and typical ERP vendors. In today’s act of doing business, B2B exchanges are based on supply chain management or SCM technologies (Thierauf Hoctor, 2003, p. 182). This will mean considerable investment in such technology but the benefit of market share will prove it to be a valued investment over the long-run (Burn Hachney 2002; Scerbo 1999). Running these centres effectively certainly poses a challenge of management. Manufacturers must develop new skills and confront channel conflicts with dealers, distributors and independent operators. Leaders in these positions must have an understanding of managing the conflicts in these channels. But well-managed distribution centres would more than justify the risks, as it would save the organisation a significant amount of overhead. With operating expenses as the main cost, it is possible to make the distribution venture essentially self-funding. Facilities can be rented on short-term leases and surrendered if the location isnt successful within a year or two. The cost of goods and labour can be managed as volume grows. Companies should remember that a manufacturers original warranty work usually accounts for about half of the labour expenses and for as much as 20 percent of the total value of services rendered, but these costs are typically charged back to the business unit rather than borne by the company’s distribution. In markets poorly served by local dealers or other distributors, for instance, a centre should gear itself to its company’s end users or consumers by choosing a high-traffic retail site. Profits at these locations are generated largely through the sale of accessories and optional services to walk-in or mail order customers; outlets thus need appealing product displays or sales pr esentations. Different kinds of retail distribution centres pursue different economic models. Although gross margins on sales to end-users are higher, orders tend to be smaller. Locations that focus on distributors can achieve scale faster and be just as profitable. The largely similar economics of service centres vary only according to which customer segment is best served at each location. Companies run their own centres and tie management bonuses to profit and growth goals at each site. Either way, some support functions, such as marketing, human resources and information and financial systems, are best managed at the corporate level. Warehouses and distributions centres are caught in a squeeze between customer service demands and cost drivers. The challenge for most organisations is create a network that can deliver on customer demands while keeping costs down. This is the number challenge in supply chain management. Supply chain management presents a huge undertaking when it comes to overhead operating costs. Many of the tools have come down in price because usability has gotten easier. As a result, more and more companies are adopting a supply chain management philosophy for distribution and are re-evaluating its effectiveness every two years as opposed to before at every five years. Management members are interested to see if the efficiency of the centre matches its service level provided. Research has found a direct relationship between the number of distribution points, transportation costs and customer service targets. The network and its design are driven by improvements so that the cost of transportation can be offset. This may include reviewing an organisation’s transportation arrangements. Loading patterns should also be examined to find ways to cube out containers and trailers (Trunick, p. 1). What possibilities can be used to have a cost-effective outcome for the distribution centre? Does this mean consolidating shipments or a move to parcel and less than truckload shipments? Can shipments be combined to make greater use of truck cargo space? Can the organisation hire rail or air as better shipping alternatives to using company trucks over longer distances? In addition to examining loading can the routes used by the trucks be adjusted to be add to cost-efficiency? An organisation would benefit using their state’s transportation management system or a department of transportation, DOT to map out distribution volumes and patterns. This would help in providing dynamic routing options that can be flexible to change distribution needs in the network. This can benefit the fleet by reducing fuel supply needs and help control costs and usage. These efficiencies would result because the routes would decrease in mileage and also wear/tear on the vehicles and insurance costs. Efficiency inside the four walls of the distribution centre can also be improved. Relatively speaking the size of the average distribution centre has grown from 300,000 square feet to one million square feet (Trunick, p. 2). This is simply due to operating space needed to move inventory from point a to point b. But the real reason the distribution centre is larger today is mainly because organisations have seen the need to put all operations under one roof. By putting multiple facilities into one larger distribution centre improves the time it takes to transport inventory. Still the larger centre is made possible because of improved transportation systems but also implementation new technologies that not only enhance a brick and mortar store but also a virtual one. Plus, the organisation has the manpower under one roof. The company only rents one building and keeps the inventory in one place rather than moving it from warehouse to warehouse. This allows the company to provide better service to the consumer. Because of these factors, information systems are critical to the success of the larger distribution centre. Data has the need to travel from one area to another and that is why more and more companies are investing in radio frequency terminals both handheld and vehicle mounted. Investment of these RFID systems is not inexpensive and many retailers such Wal-Mart and Target are looking for ways to enrich the present technology and systems without implementing a whole new infrastructure into the walls of the centre. By being able to enhance present systems proves to be cost effective because not only is an upgrade cheaper but also it is easier to train employees to run. It is a company’s ability to effectively handle investment of new technologies that allows the centre to run better. Still as Trunick writes, the concern is not found in hardware but in data. â€Å"Databases have traditionally been structured to feed a number of different systems, but that’s not a long term architectural solution† (p. 2). Part of the problem a distribution centre faces with data storage is being able to provide the data in real time and allowing the data to remain clean and not crowd. As a result many companies are searching for better solutions than using RFID in supply chain management. It has not proven to be productive in the distribution centre setting not like 8 percent in the warehouse setting (Trunick, p. 2). One new technology that was introduced to the Nestle facilities management team in 2006 was the use of a computerized tracking system for client user orders. This system was implemented to better track the status of job orders among the team members. This system acted to alert a team member of potential deadlines and current job load status. It also allowed management to better track individual and team progress. This resulted in a monthly recognition program to signify when quotas had been met or when a team member received a client user compliment. This system also had the capability to record the negative such as being late to a service call or failing to complete monitoring of weekly items for inspection. The system would then e-mail the team member and the direct supervisor if such conduct occurred (Facilities Training Group 2007, p. 11). This system replaced the old process of â€Å"tracking† client user orders that consisted of logging each order into a spiral notebook. With the advent of the company’s intranet site, management hoped to improve communication between the facilities team and the client user by offering an electronic request system. This would reduce the amount of time the facilities team spent fielding phone called requested and allow for multi-tasking of various jobs. What management had hoped the system implementation would result in, did not happen mainly due to team member lack of communication and resistance to change due to a pre-existing TQM elements within the old process of handling client user orders. Management had hoped as the Business Open Learning Archive details, â€Å"automation would exploit available technology to speed up operations, make them more reliable and to reduce unit costs and their risks and costs. This would bring flexibility to the system already in practice† (Operations Technology 2005, p. 1). This type of new technology or just-in-time or JIT technology requires careful handling and extensive training. What facilities management team leaders had not prepared for was the team member response. Many of them despite being competent, responsible employees did not have knowledge of computer systems. Many of the team members had been with the company over twenty years and had been hired to the division. Many of thes e types, fall into the category of being older but also having a specific specialization in which they were in the field most of the time (Facilities Training Group 2007, p. 24) not requiring any other extensive skills. Another factor management had not anticipated was a considerable language barrier as many team members who had worked together for years, continued working in their native tongue of Spanish. A final aspect of the mixed response for the team had more to do with timing than anything. Management provided a three-day training session and then allowed two weeks for the new system to be adopted. The transitional period was too short and was met with much resistance from many members of the team. Many did not accept the change or completely understand the new system. Many did not check their email or use the tracking component. Finally, despite company wide advertisement of the new online request feature, most client users did not use it and continued to phone in requests. This resulted in not a decrease in time spent on the phone but due to the new system’s lack transition and rejection by some of the team, the group received three times as many calls in one week (Facilities Training Group 2007, p. 33). The team had to hire a temporary employee to aid in taking calls while team leaders provided on the job training and supervised walk-through of the new process. The period of six weeks it took the team to get back up to speed resulted in not only miscommunications among team members but also time lost to better serving the client users. As a result, many of the circulation systems did not receive their weekly maintenance and this negatively affected the climate control performance for the building’s seventh floor northwest corner (Facilities Training Group 2007, p. 39). With time the team members adjusted to the new technology with few still relying on the hand-written method. Still the process of introducing the system was not handled e ffectively and resulted in a period of adjustment where many processes met with negative results. OPERATIONS LIFE CYCLE Wal-Mart became a textbook example of managing rapid growth without losing sight of a companys basic values. In Wal-Marts case, the basic value was, and is, customer service. Still it was Wal-Mart’s ability to focus on multiple values that lends to its current success. As technologies changed, American social needs became more immediate d