Title: Corporate Finance and Governance. Merger refers to the legal act of combining of two preexisting corporations to form a new company. Acquisition is the absorption of one company by another through the purchase of its assets. Bankruptcy, on the other hand, refers to an entity’s legal status of being unable to service the debts it owes to creditors (Boone, 2002). It occurs when the debtor files a petition with the bankruptcy courts. The petition can be filed by an individual or a corporation.
The Birds Limited Company, it can adopt various approaches to avoid the scenarios above. The business can avoid merger by reducing costs by consolidating departments within the firm. Streamlining and departments and responsibilities can help cut costs and prevent a possible merger. The company can avoid a potential acquisition by using the staggered board of directors’ approach (Clayman, Fridson, & Troughton, 2011). A group of directors is elected at different times for multiyear terms which can delay a possible takeover. The business can negotiate with its creditors to delay filing for bankruptcy and come up with a plan to settle their debts.
Business failure is caused by a range of factors that emanate from either the macro or the microenvironment. Bankruptcy is one cause of business failure. The fact that a business is unable to service its debts leads to the insolvent liquidation. A company cannot access financial assistance from the banks if declared bankrupt. Bankruptcy can seriously derail a company’s credibility.
Poor management can lead to business failure. Enterprises that are poorly managed suffer from mismanagement of funds. Issuing credit services to such corporations is hard, and the businesses end up closing down. The banks refrain from issuing credit services to such companies, and this has a telling effect on the banking sector. Operating a business in an industry that is not profitable can lead to business failure. High-profit businesses benefit the banking sector as much as the companies benefit from the banks. Such companies can boost the banking sector since they make up part of the key stakeholders in the industry.
Unprofitable businesses cannot have the spending power or the ability to acquire massive loans from the banks. The inability to acquire and service loans stagnates the development of the banking sector.
Corporate Finance and Dividend Policy
The dividend policy contains a set of guidelines a company applies to decide on the amount to pay the shareholders. Clayman et al. (2011) acknowledge that the business has to consider a range of factors before settling on the appropriate approach when formulating dividend and capital structure policies. Business risk is one of the fundamental risks that put a company’s operations in jeopardy. The optimum debt ratio is lower in firms with a greater risk level. For instance, the risk level in a retail apparel company is much higher than that of a utility company. Therefore, the retail apparel company would have a lower optimal debt, a strategy to make the business attractive to the investors.
The company’s tax exposure is a determining factor in the formulation of the dividend policy. Debt payments are taxable. If a company’s tax rate is high, financing projects using debts is attractive because the tax deductibility of the debt payments helps the business shield some of the income from taxes (Clayman et al., 2011). Market conditions also impact the company’s capital structure condition. In a struggling market, investors may limit the company’s access to capital due to market concerns. The interest rates may be higher, and it would be advisable to wait until the market conditions return to a more normal state.
Financial flexibility is the company’s ability to raise capital in bad times. When raising capital in good times, a company must remain prudent to keep the debt level low. The lower the company’s debt level is, the more the financial flexibility it has. The growth rate also determines the approach the business uses (James Sunday, 2014). Growing businesses finance that growth through debts, their revenues are unstable and unproven. High debt loads are usually not appropriate. Established companies need less debt to finance their growth, and their incomes are stable. The established companies generate cash flow that can fund projects whenever they arise.
The board of directors is critical to the corporate finance governance and leadership in organizations. The BOD is the highest governing authority in the management structure at all publicly traded companies (Anand, 2008). The board of directors directs the company’s business. Good corporate governance is primarily based on the board’s leadership structure, board size, composition, director ownership and the roles and responsibilities. The board oversees the governance and the management of the business and to monitor the senior management’s performance closely. The BOD evaluates and approves the suitable compensation for the company’s CEO and approves the attractiveness of the dividends.
Among other core responsibilities of the board, it selects individuals to board membership and assess the performance of the board, board committees and other directors. The board reviews and approves the corporate finance and governance actions. The board also reviews and approves financial statement and financial reporting of the company (Anand, 2008).
It monitors the corporate performance and evaluates the outcomes by comparing them with the strategic plans and other long-term goals. The BOD controls the implementation of the management’s strategic plans. The Board reviews and updates the corporate finance practices to cater for developments within the micro and the macro environment. The BOD ensures that the business complies with internationally recognized governance standards. This has the implication that the BOD must be committed to upholding the best practices in corporate governance.
Anand, S. (2008). Essentials of corporate finance governance. Hoboken, N.J.: John Wiley & Sons.
Boone, A. (2002). Corporate finance policy. North Chelmsford, Mass.: CEO Press.
Clayman, M., Fridson, M., & Troughton, G. (2011). Corporate Finance. Hoboken: John Wiley & Sons, Inc.
James Sunday, K. (2014). Capital Structure and Survival Dynamic of Business Organisation: The Dividend Approach. JFA, 2(2), 20.
FDI Policy – Foreign Direct Investment in the Mining Industry
FDI policy in the mining industry – Foreign Direct Investment (FDI) in economic terms refers to the investment that an investor makes in a foreign country in which the investor has a significant control of the business or company invested in. It applies in many sectors of the economy, including the mining industry. Different governments have varied policies that seek to govern and regulate the application of foreign direct investment in their respective countries. This exploration evaluates the situation of FDI in the mining industries in Nigeria and Argentina. In the analysis, the paper incorporates the Dickens’ framework to evaluate the impact that foreign direct investment has on the mining industry and determine whether the adopted FDI policies in the two countries, that is, Argentina and Nigeria serve in the best interest of the investors.
FDI policies in Mining
It is very important to consider a deeper understanding of the effects that mining activities will have in the country, both social, economic, political and environmental impacts before developing policy to regulate FDI in the mining sector. With the advent of globalization, each country tries as much as possible to engage in trade and allow trade in within their borders. This has led to global competition and the growth of Multinational Enterprises (MNE) and the Transnational Corporations (TNC). Many countries, especially the mineral rich countries have business opportunities within their borders to exploit their resources, but do not have the financial muscle to invest in such explorations. Due to the need for exploitation of the business opportunities within the borders amid limited resources to exploit them, governments enact policies that either encourage or restrict foreign direct investment in their respective countries (Johnson 2005, p. 15).
One aspect of the FDI policies that is very critical is the aspect of quality. The term quality in this regard refers to the foreign direct investment’s ability to enhance the welfare of the host country’s citizens in terms of social, economic, political and environmental wellbeing. Based on this requirement, governments, therefore, have to assess the impact of allowing FDI in the mining industry to take place within their countries and to device mechanism of mitigating the possible negative impacts of FDI policy, for the benefit of the citizens’ welfare (Vazquez-Brust et al. 2013, p. 2).
The impact of mining activities and the subsequent social conflicts depend on an array of factors, including the type of mineral mined. Some minerals when mined leave more devastating effect on the environment than other minerals. Secondly, is the technology, the technology used will determine the extent of destruction the extraction of minerals will have to the environment. Thirdly, the level of involvement by the MNCs in the mining activities will determine the impact it has on the economy. The fourth condition is the strategies of the mining companies; some companies involved in the mining business may want to optimize profit at the expense of the host country’s economic development. Finally, the culture of the host nation and its level of economic development among other conditions may also lead to conflict in the mining activities (Stiglitz 2007, p. 134).
In this respect, therefore, it is incumbent upon both the host nation and the international agencies to collectively evaluate these aspects of conflict and make decisions that are desirable and specific to every mineral extracted and the respective location of extraction. On the same breath, the researchers too have a responsibility to choose a theoretical framework, which encompasses all the conditions necessary for evaluation in order to address all research concerns (Gibson 2006, p. 19).
FDI policy in Argentina
Considering the FDI policies in Argentina, since the year 2001, Argentina has been encouraging huge foreign direct investment, especially in the mining industry. This policy followed the massive reforms that the country made in the mining code. Argentina is a developing economy having a substantial amount of mineral resources. At present, Argentina’s third most significant product for export is Gold. Gold has attracted many investors from outside the country to come and exploit the opportunity.
Nevertheless, since the government put these policies in place in 2001, with the government encouraging foreign direct investment, the mining reforms in Argentina have not fallen short of challenges. In many parts of the country, there has been an uprising resistance to the mining activities. Those who persistently resist FDI policy claim they are doing so based on the social and environmental factors. Today, about six provinces have succumbed to this public pressure to introduce legal bans on open-pit mining within their provincial zones. This public resistance has been growing and rapidly spreading manifesting lack of consensus between the government and the public on the mining policies (Auty 2001, p. 36).
This conflict between the Multinational enterprises and the public in Argentina is a clear manifestation of varied perception about the quality of FDI policy, especially in the mining sector. Whereas the companies consider boosting the local economy as an improvement of the welfare of the citizens, citizens, on the other hand, consider the effect mining activities have on their environment and the subsequent effects these negative externalities to the environment extend to affect the society. Even though there is a need for the alignment of quality of FDI between the local community, the government and the respective MNEs, it is not easy to reach a common ground on the quality of FDI, which is a relative measure that depends on other aspects of the prevailing welfare standard. This is also because, the perceptions of welfare of the citizens vary from time to time and from individual to individual depending on their expectations, level of knowledge they possess and the overriding cultural values of the community (Ali 2003, p. 70).
One case in point that supports the gap in perception of citizens about the quality of FDI policy is the Esquel case. In this case, Meridian Gold, which is a Canadian multinational corporation, secured rights to mine a gold deposit in Esquel, a town in the province of Chubut at a cost of investment of over 200 million US dollars. The provincial government approved all the standards and environmental impact assessment reports for a potential mine. The provincial government gave the project a green light terming it as a high quality FDI, being environmentally friendly and useful economic development in the province.
Nevertheless, the community had a completely different perception. According to the community, the project was low quality FDI, dangerous to the environment, economically weak and if implemented would divide the society. The subsequent social unrest that followed compelled the provincial government to organize a referendum in 2002 in which, 80% of the citizens overwhelmingly voted against the mining activities. In the year 2003, as the social pressure continued to pile against mining activities, a judge ruled against any mining project in the province, forcing the Meridian Gold to drop the project (Mutti et al. 2012).
FDI policy in Nigeria
Similarly, the FDI policy in Nigeria as well has had a long journey. Before the year 1988, the Nigerian government was still skeptical about allowing FDI into Nigeria on grounds that it deemed FDI as a scheme for economic and political control. In 1972, the government outlined a regulatory policy on FDI by establishing the Nigeria Enterprise promotion Decree (NEPD). This declaration was meant to regulate rather than promote the foreign direct investment in Nigeria by limiting foreign equity participation in some sectors to a minimum of 60 percent. By the year 1977, the government again made a declaration further limiting the participation of foreign equity to 40 percent in Nigeria’s business. These declarations implied that Nigeria had a restrictive FDI policy between 1972 and 1995. By the year 1988, the Nigerian government made some structural reforms that initiated the beginning of eliminating the restrictive policy on FDI. The government established the Industrial Development Coordination Committee to act as an agency responsible for the facilitation and the attraction of the flow of foreign investment (UNCTAD 2009, p. 89).
Subsequently, in the year 1995, the government repealed the restrictive NEPD and made a new one known as the Nigerian Investment Promotion Commission, with an aim to encourage foreign investors to come to Nigeria and set up businesses, which they could have 100 percent control. The only condition was to provide relevant documents and the NIPC would approve the application for a business permit within fourteen days. Other declarations followed thereafter promoting and encouraging FDI into Nigeria with some having free regulations on dividends accrued from foreign investment. In addition, the Nigerian government adopted an Export Processing Zone to enable interested investors establish businesses and industries within certain zones (Ayanwale 2007, p. 24).
The FDI friendly policies adopted by the government of Nigeria saw a steady rise in the foreign direct investment flow into Nigeria since 1995 in different sectors. There was also a rise in the foreign direct investment in the mining industry in Nigeria, which followed the putting up for sale of the Nigerian national petroleum corporation together with its branches. The civilian administration that began in 1999 also inspired the deregulation of the oil industry, subsequently opening up the mining sector for more FDI inflows (Albaladejo 2003, p. 43).
The Dickens’ Framework
Having looked at both the Nigerian and Argentina’s policies on FDI, it is evident that both countries have had their challenges in the implementation of these policies. Considering the Dickens’ framework, the manifestation of conflicting interests and perception between citizens and the Multinational in the execution of mining projects is a confirmation of a dynamic collaboration and conflict between TNCs and the government agencies. According to Dickens (2003, p. 275), in the foreign direct investments both the TNCs and the host government need each other.
However, they admit that the ultimate objectives of the host government and the MNEs significantly differ. For example, the aim of a host government is to ensure an increase in the gross domestic product (GDP), while the MNCs principal aim is to maximize profits and increase the value of shareholders in the investment. In his framework, Dickens admits that in the foreign direct investments, multinational enterprises can have both positive and negative impacts on the host country’s social, economic, political and environmental conditions. They may exploit or expand national economies, distort or improve economic development, create employment opportunities or destroy jobs, introduce and spread new technology or prevent the wider use of new technology. The MNEs can also contribute to the destruction of the environment through pollution and destruction of the landscape through mining activities, or participate in the reconstruction and the creation of a sustainable environment through initiatives aimed at sustaining the environment (Dickens 2003, p. 277).
According to Dickens (2003, p. 278), there are six major areas in the host country’s business environment that MNEs may have an impact on, and these include the area of technology, employment and labor related issues, industrial structure, capital and finance, trade and linkages and the environment. In the area of environment, the impact could be increased soil, water and air pollution, effects on urban settlement, change the extent of natural resources use among other impacts. On the trade and linkages, the effects may include changes in the propensity to export and import resources and changes in the use of local suppliers.
On the employment and labor issues, the effects could include changes in the volume of employment, type of employment in terms of skills and gender, wages and recruitment levels, labor relations and affect the stability of the labor market. On capital and finance, the impact could include changes in the initial inflow of capital, changes in the capital raised locally, profits retained locally and transfer pricing among other impacts. In the industrial structure area, the impact could be effects on the industry concentration, changes in the competitiveness of the local companies and impact on the creation of new local companies. Finally, in the area of technology, the impact could affect the extent of technological transfer, determination of appropriate technology and may lead to additional cost on the host nation (Yakovleva 2005, p. 45).
Dickens’ framework also has a mechanism for assessing the extent of impact of MNEs activities in the host nation’s economy. In assessing the impact of MNEs, Dickens looks at the level of control that MNEs have on the host, the increase or decrease in the general welfare, the overall macroeconomic conditions, receptivity, cultural, social and political conditions, capital mobility technology and stage development, and the extent of natural resources availability among other factors (Gibson 2006, p. 18).
The framework as elucidated by Dickens is quite relevant to the two scenarios presented both in Argentina and in Nigeria regarding FDI policies. In Dickens’ assumptions are in three perspectives, first, he assumes that in FDI deals, the government always represents the community and mediates the relationships between the MNEs and the Citizens. However, in most developing economies, this might not be the case because the community always are directly involved in the affairs deemed to directly affect their livelihood and environment (Epstein 2008, p. 113).
Several environmental studies reveal that the conflict arising when FDI deals are negotiated is because of the adamant tendency by the state and the MNEs to ignore the role played by the communities in this process. This leads to a direct involvement between the government and the MNEs, which most of the time leads to environmental and social inequalities (Martinez 2002, p. 19). In order to eliminate any conflict arising from the community, it is imperative for all the stakeholders to engage collectively in the assessment of the quality of the FDI policy in terms of scientific, MNEs, Community and government assessment. Any gap that continues to exist between the projects’ evaluation will make conflict resolution among these parties very difficult.
The second assumption by Dickens is that the ultimate objective of the MNEs is to maximize their profit and increase the value of shareholders. This assumption overrules the fact that some firms may also aim at strategic and ethical undertakings to do more proactive activities with the aim of maximizing their profits, as well as reaping benefits to the community and the environment (Vazquez-Brust et al. 2013, p. 7).
To bridge the gap between the divergent interests of the parties involved in the FDI arrangements, the government together with other stakeholders can develop a code of ethics to govern the conduct and activities of the MNEs. Similarly, the MNEs have a good avenue of mitigating the ill perception of the community by participating in the corporate social responsibility practices to give confidence to the community that their interests are considered. Corporate social responsibility is a very significant tool that firm can use to develop the businesses in the host country. By taking part in solving the societal problems, firms will not only build the confidence of the local people, but also create a sustainable environment in which they guarantee and secure the future of their businesses (Elliot & Cummings 2006, p. 87).
The third assumption Dickens is making in his framework is the existence of two variables that depend on each other, that is, the truncation effects and the increase/decrease in welfare. Truncation effects refer to cultural, economic and institutional aspects of the FDI policies that negatively affect the host country. The international economic analysis indicates that it is possible to reconceptualize truncation effects as institutional effects of the foreign direct investment, which contain robust effects on the welfare of the host country. They should be considered as influencing the welfare too rather than being treated separately from factors that increase or decrease the welfare (Stieglitz 2007, p. 43).
According to Mold (2004), the truncation effects can have an impact on the host country in two forms, that is, governance and social cohesion. Wealth and income distribution is one area where MNEs have a potential to bring social cohesion because research indicates that there is a strong connection between MNEs activities and the increase in the inequalities. This understanding of the inequalities has informed the engagement between the governments of Argentina and Nigeria and the MNEs in the FDI projects, in order to boost economic development and reduce the adverse effects of social and economic inequalities in their countries.
This analysis reveals remarkable undertakings of both Argentina and Nigerian government in trying to facilitate foreign direct investment in their respective countries. The policies the two countries encourage FDI in their mining industries with a view of exploiting the opportunities available and bringing in capital to their economies to the benefit of their citizens. However, there is still need to involve the citizens in the decision-making process and in the evaluation of the quality of the FDI in order to reduce the conflict arising from the community. The FDI projects could be good for the economic growth and development and may be well intended for the public, but failure to involve them in the evaluation of such projects is a recipe for misconception of the projects leading to resistance (Ali 2003, p. 72).
The mining industry is a very delicate industry in that its activities directly affect the natural environment before such activities benefit the society. This calls for a delicate balance between approval of mining projects and the execution of the same considering the need for a sustainable environment that will accommodate the citizens and the business for posterity. The bottom line of every government as representative of its citizens is to protect their interest of its citizens, which is what the government of Argentina and Nigeria is doing in their FDI policies.
The global economy is becoming more competitive and every nation intends to have a competitive edge in the market. Emerging economies such as that of Argentina and Nigeria with the massive endowment of the natural resources, but no capital to invest in exploitation have a responsibility to create an enabling environment. The enabling environment includes developing policies that encourage foreign direct investment to bring in foreign capital and help exploit the natural resources for economic development.
Similarly, in order to have a successful FDI policy, all the stakeholders affected by such policies such as the community, the government and the MNEs need to engage collectively in trying to develop a common perception of the impact of any project before its implementation. By doing so, conflict of interest and varied perception on the quality of FDI will definitely be resolved. The MNEs too have a responsibility to embrace corporate social responsibility in order to protect the environment for a sustainable business.
Albaladejo M 2003, Industrial realities in Nigeria: from bad to worse. QEH Working Paper, Number 102, Queen Elizabeth House, London.
Ali, S.H 2003, Mining, the Environment and Indigenous Development Conflicts. The University of Arizona Press, United States
Ayanwale A.B 2007, FDI Policy and Economic Growth: Evidence from Nigeria. AERC.
Auty, R.M. (2001). Resource Abundance and Economic Development. Oxford University Press, Oxford.
Dicken, P 2003, Global Shift: reshaping the global economic map in the 21st century, 4th ed., Sage Publication, London.
Elliot, M., & Cummings, G 2006, Exploring the risks: attitudes to risk in the global mining sector. Ernst & Young.
Epstein, M.J & Buhovac, A 2008, Making Sustainability Work: Best Practices in Managing and Measuring Corporate Social, Environmental and Economic Impacts.
Gibson, R 2006, Sustainability assessment and conflict resolution: reaching agreement to precede with the Voisey’s Bay nickel mine. Journal of Cleaner Production , vol. 14, no.3-4, p. 334-348.
Johnson, A 2005, Host Country Effects of Foreign Direct Investment. The Case of Developing and Transition Economies. JIBS Dissertation series.
Mold, A 2004, “FDI Policy and Poverty Reduction: A critical reappraisal of the arguments,” Région et développement, vol. 20, p. 92-120.
Mutti D., Yakovleva N., Vazquez-Brust D., & Di Marco M.H 2012, “Corporate social responsibility in the mining industry: Perspectives from stakeholder groups in Argentina.” Resources Policy, vol. 37, no. 2, p. 212-222.
Stiglitz, J 2007, Making globalization Work, Sage, London
UNCTAD 2009, Investment policy review Nigeria. United Nations: New York and Geneva.
Vazquez-Brust D., Yakovleva, N., & Mutti D 2013, Mining FDI in Argentina: perceptions and challenges to sustainable development. University of Manchester, England.
Yakovleva, N 2005, Corporate Social Responsibility in the Mining Industries. Corporate Social Responsibility Series. Ashgate Publishing Limited . England.
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Consumer Perception of the Effectiveness of Cryptocurrency in Day To Day Financial Operations – Dissertation
Cryptocurrency has not received that much attention from IS (Information Systems) and as a consequence of this, there is still a gap in the literature with a great potential for research, specifically how the technology fares within the consumer context. Most notably, this dissertation is interested at the traction Cryptocurrency is gaining in today’s economy and how consumers are responding to this innovation. This dissertation will broadly present the evolution of Cryptocurrency, its financial characteristics, and what factors influence its value formation. The focus will then shift at the underlying models that are used both in a practical and academic setting to illustrate the factors that contribute to the acceptance and diffusion of a new technology. The conceptual model will be based on the Innovation Diffusion Theory of Everett Rogers.
Using a specifically designed questionnaire, consumer opinions are quantified in order to ascertain current attitudes and beliefs. Furthermore, after examining specifically designed hypothesis that deal with technology adoption, it was discovered that pivotal factors such as complexity, relative benefits and education play a distinct role in the uptake of Cryptocurrency. This is important because as a new technological instrument, Cryptocurrency opens the door to a number of opportunities for consumers, but only after overcoming a number of challenges and limitations that might prevent it to be accepted.
Thus, the aim is to investigate the monetary characteristics of a financial innovation in conjunction with the sociological component. This will lead to a better understanding of the constructs that influence the decision to adopt a novel technology by looking at a number of social and psychological factors. An overview of the leading technology adoption theories is provided that will address a number of cognitive, effective and contextual factors. While the study could potentially draw from all these theories, the Innovation Diffusion Theory of Everett Rogers will serve as a foundation, and all the assumptions will be based on this particular model.
What is the consumer response regarding the use of cryptocurrencies in day to day financial operations?
The main objective of this dissertation is to determine the level of consumer awareness, perception and degree of utilisation.
What are the main factors that influence the consumer intention to adopt cryptocurrencies?
1 – Introduction Background and Context The Rationale for the Research Research Objectives
2 – Literature Review The Evolution of Cryptocurrency What Is Cryptocurrency And What Is It Based On? What Gives Cryptocurrencies Value? Difference between Cryptocurrency and Traditional FIAT Currency Cryptocurrency Nomenclature Advantages and Disadvantages in using Cryptocurrency Advantages Disadvantages Technology Adoption Theories Hypothesis
3 – Methodology Research Philosophy Research Approach Research Design and Strategy Sample Size and Population Ethical Considerations Data Analysis
Title: Management Accounting Process. Management accounting entails the process of identifying, analyzing, recording, and presentation of informed management information to the different management in entities so as to make informed decisions. The informed decisions are both short and long term ones. The information provided may be wide covering different areas like the sale made in ascertain period and the budgets, the growth in profitability, customer base and payments made. The information being provided relates to the management, is always timely and is useful in making the entity’s decision.
The managerial information is critical in making different strategic decisions, helps in making performance decisions which are involved in creating an area of comparing the profits of the entity with previous periods and coming up with better techniques of improving on the same (Drury, 2013, p.17).The organization is also involved in the creation of risk managing actions on different lines of management whereby this will be through ensuring that the entity ventures in different business through taking risks which may lead to better performance.
data which is collected by the different management accountants are involved in
the process of planning, performance rating and maintaining operational status.
Planning enables the different entities to know what to produce and when. This
is aided by knowing the amount of the raw materials being needed and the labor
force too. The planning process enables the entities to take into consideration
performance rating which entails comparing the input rate for the different
employees and the resultant profit.
the operational status enables the different management to know the cost
incurred in the production process and keeping a record of what is occurring in
the entity. The costs incurred in the production process can be identifying
from the different raw materials and the input in the production process based
on the labour force and the time employed. The improvement in the operational
status of an entity will hence lead to achievement of different set target
which will motivate the different management personnel and the staff too. These
goals can only be achieved with good setting of strategies by the management accountants
from the initial states and making the different responsible personnel on what
to do. The different roles assigned will at the end evaluated and the
achievement of the different target evaluated too.
Role of Management Accountants
traditional management accountants role were mainly geared towards cost control
and reduction but the Strategic accountants in the current era are focused on a
wide area of activities like ensuring that there is improved competitiveness,
identifying new opportunities in different markets and ensuring that the
decisions being made are longterm and of benefit to the different organizations
(Hilton, 2013,p.39).The roles of the management accountants have hence highly
changed in the current period as compared to the past. This has been brought
about by the increasing level of technological advancements, increased business
sizes and the existence of different opportunities in different areas. The
following are the different roles played by the Strategic management
accountants in the current world which are quite different from the traditional
Keeping a Prospective View in the Entity
management accounting process management is employed today by the strategic
management accountants is of more benefit as compared to the traditional one
resulting from the different changes in the global environments. The management
accountants today use information which is more broad-based and doesn’t
consider only internal information in an organization and is highly
prospective. The broad-based information has been made through having a broad
information base through the enterprise resource planning systems. The newly
implemented systems by the management accountants enable them to be able to
keep track of huge amounts of data relating to different parties. The data can
be kept for the different customers and suppliers of the entity which will
enable them to keep a track of the active and frequent customers and suppliers
too. The data enables the different management accountants in ensuring that the
make the payments to the different suppliers in time and hence they don’t build
up their balances which may lead to the inability to settle them in future.
this track enables the different suppliers need to be met in time and hence
that will also increase and improve on their supply of the different resources
to the entities as there will be no fear of losing any amount upon their
supply. The customers’ data can have also been kept to track the different
purchasing habits and in case some of the customer’s claims of any balances
owed to the entity, it can be easily traced (Malmi,2016, p.32).This has enabled the entities to be
able to identify the different measures to meet their customers’ needs and
overcome competition in their environment.
use of the prospective data on how the entity may be performing with the
different customers and suppliers has enabled the different management accou
tan ts to come up with different strategies of maintaining the existing
customers and suppliers and acquiring new more ones and hence being able to
open up in a wider area which leads to an improvement in their competitiveness.
Management Accounting Create Competitive Focus
strategic management accountants are involved in creating a competitive focus
in their different environments as compared to the manufacturing focus of the
tradition alk management accountants. The traditional management accountants
were focusing only on the manufacturing process and the monetary value benefit
they will get. This made most of the entities produce different products with
the concerned of the value they would acquire, while in the new era the
management accountants are taking into consideration the value of the different
non-financial information in an entity like the predicted sales, the market
share, the potential competitiveness.
The environmental concerns which have no direct costs but have a great impact on the public and the future generations are also taken into consideration (Hasniza Haron,2013, p.104).The consideration of the different budgeted sale has enabled different entities performance to be high as they are forced to work on tight schedules to ensure that they meet the different standards. The entities are also involved in ensuring that these deadlines are kept in track and improvements in the quality of the products with far pricing which lead to an improvement in their sales.
Taking into consideration the different aspects of their market share in the market has enabled the different entities to keep information on their performance and hence be able to track on the weak areas where improvement is highly needed. The market share size enables the different entities to borrow more from their competitors in getting to identify the gaps which exist between them and the competitors too. These gaps are core in ensuring that the entities are to out-win the other customers in the wider competitive market. The new strategic management accountants are able to identify the different non-direct cost acts which have an impact on the entity now and in the future.
The management accounts in the current era are involved in ensuring that they meet the different cost acts which are involved in creating good relations with their different stakeholders. These activities are like being involved in the different community development projects and providing incentives to the different customers and suppliers too like providing trips to the customers who made the high purchase in the entity (Malmi, 2016, p.34). These incentives create a good gesture to the different stakeholders and hence the organization can easily be in a line of attracting and maintaining more different customers and stakeholders too.
the different information of stakeholders from the different periodicals, business
magazines and newspapers to have enabled the management accountant to be able
to keep a track of the potential market opportunities in the different
environment. Benchmarking in the different entities which have been performing
well in their environments leads to the entity acquiring the different new
skills which enable them to be more competitive and hence improve on their
Identifying New Economic Possibilities
strategic management accountants are involved in learning more of the potential
economic possibilities which enable them to create a new marketing area and
acquiring more new market. The new possibilities are obtained from the
different researches which are carried out by the accountants and the teams in
their entities. The strategic management accountants are involved in
researching more on the different changes in the accounting and reporting
field, the new potential markets and the possibilities of any challenges in the
on the different possibilities has hence led to the creation of a wider line of
management techniques which are enabling the different organization thrives
well in their markets. The researches on the increasing demands of the different
products of an entity enable the different manufacturers to come up with more
efficient production mechanisms which will not only cut costs but also increase
on the quality of the different commodities (Goretzki,2017, p.20). Researches on using the
computerized production techniques in different entities has enables the organizations
to cut costs on manpower as a lot of data can be easily compiled through the use
of computers by only a few individuals.
cut cost can be employed in different fields like in research or improvement of
the production process in the entities. The entities are also able to identify
new potential marketing areas in different zones. This will hence lead to more
improved production process by the different entities which will mean that
there will be a high level of increasing quality to attract more customers. The
new marketing areas will also lead to more researches on how to target supply
over a wider market scope which will lead to more research in the area of the
population growth with demands of the different products. This leads to the
opening of different branches by the different organizations in the different
parts so as to be able to efficiently supply to their potential customers (Malmi,2016,p.38).
Management Accounting Decision Making
strategic accountants are involved in creating an environment of tracking the
past and ensuring that they focus on improving on the same. This has been
enabled through having different lines of sequence and pattern analysis in the
different entities. The different entities are hence employing the use of the
Target cost techniques in planning their different daily operations. This
technique includes the use of patterns in terms of customer growth, growth in
sales and profitability.
are carried out on a monthly basis and the trend of the movements are
extrapolated over the other years and the final amounts are compared to the
budgeted ones (Puyou,2018, p.13).
The use of the sequences and patterns has enabled the different entities in
creating a room of potential improvement in performances are the different
operation lines are considered while carrying out this.
strategic accounts considered the possibilities of improving on the past
sequences and patterns since the different cycles like increasing more
technologically advanced production machines which will cut staff costs. The
accountants are also involved in creating an environment in which the different
patterns which have been existing can be employed in making decisions on the
future performance of the entity which will be through ensuring that the past
weakness is sealed. The accountants are also involved in enabling the management
know the area where more cost is being incurred in the running of their
business and hence come up with new techniques on how to cut on the same while
maintaining or improving on their values. The sequence of the decisions being
made are all long term and are of great impact on the entity.
Identifying New Opportunities
strategic management accountants are involved in making decisions of relative positions
as compared to the traditional management accountants who were only focused on
a single entity. The strategic management accountants are hence involved in
creating a decision on different entities which involves coming g up with plans
on how to come up with new entities in different areas. Making decisions for a
wider scope has hence enabled most of the strategic accountants to come up with
new plans of creating a new potential business in different areas.
making on a wider scope leads to the increase in the level of acquiring more
new techniques in running the entity which leads to more improvements in the
different areas of management (Puyou,
2018 ,p.22) Making decisions on different areas enables the accountants
to learn more on different line businesses which are of advantage to the whole entity.
this will hence mean that the final decisions will be of great importance as
this will lead to more borrowings on the different areas which lead to better
performance. Making decisions in the different entities leads to the creation
of more opportunities in identifying new business opportunities which will be of
great importance to the different operations in the entities.
Creating Linkages With Management Accounting
management accounts take into consideration of creating different linkages. The
creation of linkages is made through creating new market opportunities in the different
business areas and also in meeting different accountants globally. There have
been different conferences which are held for the different accountants globally
which lead to the creation of linkages in sharing the different management
techniques by the different accountants. Traditionally, the different
accountants were not able to create linkages in their operations as they were
overlooking them. The creation of the linkages creates an opportunity for
different accounts in acquiring more new skills in learning their different
management roles (Janin, 2017, p.16).
The creation of the linkages makes the different accounts to be in the line of
making new opportunities in their operations and hence be able to know the
different changes which have occurred in the new management positions. Creation
of linkages in different matters in an entity leads to the creation of more
room for embracing different changes in an entity.
linkages enable different accountants to link different acts to an entitled
cause. This will hence create a room for the different accountants to know the
cause of different challenges in an entity and also come up with the solutions
to the same challenges.
The management accountants are hence core in
running the different entities as they are considered when there is an arising
in a challenge in the management in terms of operations and in determining the
performance of the entity in future. The strategic management accountants are
hence core in ensuring that the different entity operations are running
efficiently while ensuring cost-cutting measures and quality of the different
products. The accountants are hence core in ensuring that the different set
targets are achieving and helping in guiding on how the same should be
accountants are very core in the running of an entity and their contributions
towards the performance of an entity should always be appreciated as they are
core in guiding on the planning, decision making and implementation of the
different processes too.
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The issue of monetary and fiscal policy within the EU is strongly debated at this moment in time. This is particularly true with the unconventional monetary policies being put in place for the first time by the European Central Bank such as quantitative easing; as the economy looks to recover from the sovereign debt crisis of 2008. This dissertation seeks to answer the following research questions: (1) Was the lack of a fiscal union a key contributing factor to the crisis? (2) Can a monetary union be effective without a unified fiscal policy to support it? (3) Has there been increased conformity in these key indicators since the crisis?
With these questions in mind, a literature review is undertaken to discuss and analyse the key issues within the European Union and beliefs and approaches regarding fiscal and monetary policy, including the heavily debated topic of whether or not a fiscal union is required. This dissertation also carries out a study of income and corporate taxation rates and expenditure figures for seven key EU countries in order to answer the above research questions.
A clear pattern of convergence is seen in the taxation rates and allows us to conclude that there has been increased conformity in key fiscal indicators since the sovereign debt crisis of 2008. We then link these findings back to the literature review and show that they fit with the beliefs of a large amount of previous academic work in the field. Our findings suggest that there has been increased fiscal conformity since the crisis and also that the lack of fiscal conformity (not necessarily achieved through the presence of a fiscal union) was a key contributing factor to the crisis.
Finally we also find that there can be an improved level of fiscal conformity without a fiscal union within a monetary union however we are unable to say conclusively that a monetary union can be effective without a unified fiscal policy.
This finance dissertation aims to establish the answer to a number of questions that stem from the 2008 European sovereign debt crisis:
Was the lack of a fiscal union a key contributing factor to the crisis?
Can a monetary union be effective without a unified fiscal policy to support it?
Has there been increased conformity in key fiscal indicators since the crisis?
Fiscal Policy Dissertation Contents
1 – Introduction Overview of Research Aims and Strategy Research Motivation Introducing Monetary and Fiscal Policy The Maastricht Treaty and the Stability and Growth Pact Overview of Structure
2 – Literature Review Can a monetary union be effective without the support of a fiscal union? A monetary union can be effective without the support of a fiscal union A monetary union cannot be effective without the support of a fiscal union Was the lack of fiscal union a key reason behind the 2008 sovereign debt crisis? The lack of a fiscal union was not a key reason behind the crisis The lack of a fiscal union was a key reason behind the crisis Shortcomings in the literature: Has there been increased fiscal conformity since the sovereign debt crisis hit? Changing Role of the European Central Bank Summarising the Literature Anti Fiscal Union Pro Fiscal Union Lack of Fiscal Union was not key to Sovereign Debt Crisis Lack of Fiscal union was key to Sovereign Debt Crisis
3 – Research Methodology Sample Selection Criteria Hypotheses Development and Reliability Data Top Band Personal Income Tax Rates (%)
4 – Findings Income Tax Data Corporate Tax Data Total Tax Data Government Expenditure Data Implications of Findings
5 – Conclusion Summary of the Results and their Implications Limitations Suggested Areas for Future Research