Strategic Governance and Management Accounting

Question: 1. Present (using the Performance Measure Record Sheet), a KPI that is important for the future of the business? 2. Critically assess the role of this KPI in the management of the business ? Performance Measure Record Sheet 3. Discuss how you would go about setting the target for this KPI? 4. Present other complementary measures/approaches you could take to improve the effectiveness of this KPI in controlling and managing the business? Answer: 1. Present (using the Performance Measure Record Sheet), a KPI that is important for the future of the business According to (Daeki Kim and Noto, 2011), a key performance indicator is the business metric that is used to assess the factors, which are crucial to the organisational success. The key performance indicator differs as per the organisation; the KPIs in the business can be customer loyalty metric or net revenue whilst the government considers the rates of unemployment. In the case study given it seen that Bob Greenwood having a talent in designing the gaming machines was replaced by an accountant becoming the head of the company because the owners were dissatisfied with the performance of the company. The profitability of the company was not matching to their expectations that led to the replacement. The owners of the company failed to evaluate the indicators of the organisational success before making the accountant as the company head. In a manufacturing industry, there are multiple processes to increase the output of the production. In a gaming and video amusement industry, innovation is required to manufacture a gaming machine in alignment with the design and the costs of the same (Marfels, 2011). It is seen in the case study that several issues have cropped up after the replacement of Bob; materials in the plant were disorganised and no one knew what exactly they have to do, issues on the units costs of the machines parts, quality assurance, latest innovation. Reshaping the organisation can be done by reducing the cycle time of the innovation process or the production, elimination of the unproductive time causes, elimination of the time wasted in the production of the poor quality machinery. As commented by (Riexinger et al., 2015), the performance measure record sheet identifies what a good performance measure comprises of. The framework makes sure that measures are defined clearly. Below given is the Performan ce Measure Record Sheet Title Adherence To The Schedule Of The Customer Purpose Enabling the company to monitor the performance of factory completion Relates to Business Goals Meeting the standards of quality and no complaints from the customers Target 100% completion of schedule on time Frequency Weekly Who measures? Manager in Despatch Data Source Delivery Receipt Who acts on data? Manager in Production Objectives Investigating the reasons for delayed delivery Title Identification Of Latest Technologies And Innovation Purpose Enabling everyone to be involved in the identification process of technology Relates to Business Goals Improving the service quality for the customers Target 1000 assessment forms of the technology Frequency Monthly Who measures? Finance Manager Data Source Assessment forms of technology to accompany claims of the expense Who acts on data? Director of procurement Objectives Monitoring the forms returned and the contributions Title Quality Assurance Purpose Enabling the workers to maintain the product quality Relates to Business Goals - Enhancing the product quality Target 100% TQM (Total Quality Management) Frequency Daily Output Who measures? Quality Engineer Data Source Assessment of the output quality Who acts on data? Project Manager Objectives Monitoring the output produce and evaluating the same. Title Warehouse Management Purpose To ensure the organised plant premises and storage of the materials properly Relates to Business Goals - Enhancing proper management of the materials of the production Target 100% storage of the materials unused Frequency Daily Output Who measures? Warehouse Manager Data Source Assessment of materials used and unused Who acts on data? Project Manager Objectives Monitoring the management of effective warehouse 2. Critically assess the role of this KPI in the management of the business The Performance Measure Record Sheet is a tool that defines the features required for ant measurement strategy that a business may use. According to the opinion of (Roth, 2014), having a clear, relevant and unambiguous measures will form the basis of any enhancement in work. If the company concentrates on measures on a proper work area, any enhancement action might be wasted or even make the matters worse. If these measures are unreliable, than the customers can defy the actions they oppose and hold-up the implementation till the authenticated data is obtained (Samsonowa, 2012). This tool is specifically used to make sure that the business makes consistent decisions when they work in groups or as teams to recognise the metrics in use also agreeing the work of the measures and the process in which they are calculated. According to the case study, it is found that the owners of the company were dissatisfied with the performance of the company even though it was doing well in the market. The profitability of the company did not match with the expectations of the owners. They wanted more. After they replaced Bob with an accountant as the head, they forgot to evaluate the KPI of the organisation that would have improved the success of the organisation. After the new chief executive started to take a tour of the whole plant, he found some things going wrong in the factory that made him think about reshaping the company. The key performance indicator of the company is to sustain the success of the company. The business metric of this company is to earn profitability by ensuring quality products to the customers (Stumpp, 2012). If we critically assess the indicators we see that the adherence to the schedule of the customer and the quality assurance covers the part where there is a necessity to maintain t he balance between demand and the supply. Here the whole plant could be made more efficient by the alignment of both these indicators. The production department and the quality assurance tem must work together to settle the plant management system where the change in the products will be monitored and the delivery of the same will be accordingly done. This will increase the efficiency of the departments with no non-quality products and effective time management for the delivery. It was seen in the case study that the production manager pointed that the marketing department wants instant delivery of the products just after he receives the designs of the products; this creates a mismanagement as there is no time left for the production manager to settle the production system (Um, Gontarz and Stroud, 2015). As commented by (Vokorokos and dm, 2011), warehouse management is an essential part of the management and it controls primarily the movement and the storage of the materials in the warehouse and the procedure of the related transactions like receiving, shipping, picking and put away. In this case study it seen that when the new executive visited the plant, he saw the parts of the finished goods lying everywhere making the plant disorganised. None of the employees knew what to do with these parts. This key performance indicator of warehouse management is essential to keep the plant organised. It is the part of the organizational success when these parts of the finished goods are stored safely in the warehouse so that they are used when they are required to. As opined by (Watkins, West-Meiers and Song, 2013), in a warehouse of a company, the warehouse manager should integrate with the accounting department seamlessly to keep a track on the parts of the finished goods so that they are u tilised when they are in need. This will reduce the production costs of the company and will increase the profitability of the same. This falls under the business objective. As commented by (Wen, Li and Luo, 2012), when a company works in innovative industry, it is required to identify and evaluate the latest technologies for the success of the business. The case study shows that the company deals in the video amusement market and this innovation is a necessity in this market to stay ahead of the competitors. Bob, being an engineer had talent and interest in the gaming machines mechanism. After he was fired the company is at loss because innovation of the machines was at stake than. A young engineer took the responsibility of putting together the specifications of the machine with state of the art software to stay ahead of the competition. He was unable to proceed because of the abrupt departure of Bob. The company should focus on this attribute of key performance indicator because it includes the sound evaluation of likelihood of the success of the technology and the application of the scope (Zhang, 2013). 3. Setting the target for the KPI According to the outlook and viewpoint of Daniel (2011) it is essential for Birmingham Amusement Machines to set the target for the successful accomplishment of the target that is set up for the KPI. Initially the account need to be make a proper budget of the overall cost of the production of the gaming machines along with the requirements of the resources both software and hardware. The accountant need to be assisted by a lead engineer for helping in making the list of the requirements that is essential. As per commented by Phillips and Lawrence (2012) the other officials those assist in making the effective target accomplishment for the KPI are the market researcher, market research analyst along with production manager and line manager. The market researcher helps in understanding the whole market scenario that will focus in understanding the needs and wants as well as requirements of the organization. Based on the research made by the market researcher, the researched items are well analyzed for concrete and best results. So, it is the responsibility of the market researcher to collect accurate results from the market. In addition to this Santini (2013) also commented on the essential fact that the market researcher also focuses towards the accurate market research that will help the organization in producing the gaming machines as per the needs and requirements. The production manger along with the warehouse manager is focused in understanding the needs and requirements of the market and produces the goods as per the customer requirements. From the outlook and opinion of Kownatzki et al. (2012) the warehouse manager ascertains to maintain a good warehouse stock so that as per the demand of the supply of the products can be done. The organization need to be much more organized and also need to set up the goals of the organization and steps are made that helps in measuring the progress that organization is making towards accomplishment of the goals. On the other hand as per commented by Angelis (2014) the production manager also need to keep in mind and analyze the market regarding the modern technology. The more and better quality along with modern technology is used within the organization; the better will be the upgraded machines. This will therefore increase the market share of the organization along with increase in profitability of the organization as per the expectations. From the outlook and opinion of Ravasi and Phillips (2011) the production manager also need to be responsible for providing trainings to the employees for upgrading them with the modern technology. This is because it will help in better production of the goods and products. The better will be the usage of the modern technology and software, the better will be the outcome and hence the more the organization will be led towards the success in this competitive market. 4. Measures or approaches that are taken for improvement of the effectiveness of the KPI for management and control of business Ratnatunga (2012) commented on the essential fact that KPI or Key Performance Indicator helps in understanding the maintenance that is done for achievement of operational performance. Effective and efficient maintenance of the overall performance of the organization helps in reduction of the risks with the less resources and time. The Birmingham Amusement Machines has taken major approaches that can be taken that help in improvement of the effectiveness of the KPI for better control and management of business are thereby discussed below. As per commented by Cosenz and Onto (2015) it is essential for the organization to take into account the effectiveness of KPI that helps in improvement and innovation within the organization. The measures or approaches are therefore discussed below- Usage of upgraded software and hardware- Juul Andersen (2011) commented on the essential fact that the organization can focus towards the usage of innovative software and hardware. This will improve the key performance of the organization and hence it will also focus towards the better and performance of the organization that will lead to the increase in market share. With the changing technology, the gaming industry needs to upgrade itself constantly for capturing as well as maintaining their already gained prestigious position in this ever competitive market scenario. According to the outlook and point of view of Harris (2011) for improving the key performance, innovation is essential. So, the higher officials unlike Bob need to focus much on innovation rather than the market price of the machines. This is because superior will be the quality the product the better will be the market share and competition with its rivals and competitors. Setting the allotted time- From the point of view of Balasubramanian et al. (2015) time is an essential instrument that focuses towards completion of the effective work at allocated time. The allocation of time is set for the organizational production and delivery of the products to the casinos, clubs, bars and pubs helps in keeping a tough competition with the other competitors. The reputation of the organization lies in the completion of the work in specified period of time and hence the target is set for the organization to deliver its products in time. According to the opinion of Phillips and Lawrence (2012) the organization should be working on the specifications mentioned by the engineers working with the organization. The specifications should be accomplished within the specified period of time and hence this can help in up-gradation of the whole system. Maintenance of quality of the Resources- As mentioned by Ravasi and Phillips (2011) resources are the essential part of the organization and it is the responsibility of the organization to maintain the quality of the resources. This improves the effectiveness of the working throughout the organization and hence focuses towards the reliability towards the production of superior quality products. The better the quality of the resources and raw materials will be the better will be the quality of the finished products that can compete with the competitors. The qualities of the resources or raw materials need to be the best of times that will definitely help in improvement of the overall production performance of the organization (Kownatzki et al. 2012). Improvement of the skills and knowledge of employees- Daniel (2011) commented that up gradation and improvement of skills and knowledge of the employees is essential for the overall operative success of the organization. The skills and knowledge need to be improved and the employees also need to be equipped with the modern and upgraded technology for staying in the competition as well as for producing the best quality products. Keeping a balance between demand and supply- From the opinion and outlook of Juul Andersen (2011) it is essential for the organization to maintain a balance between the demand and supply of the organization. This is because, it is previously seen that several parts of the machines and games are found lying within the organization that shows the cause of increased expenses or operating cost. So as commented by Ratnatunga (2012) this can be reduced extensively by maintaining a close balance between the demand and supply of the products. Instead the organization needs to focus on the adoption of modern and innovative technologies along with timely delivery of the products to the clients. In addition to this, for improvement of the KPI, it is to be remembered that the quality of the gaming machines need to be innovate, attractive and most recent on the market. Store and warehouse management- From the point of view of Harris (2011) the management and maintenance of store and warehouse is essential for Birmingham Amusement Machines. This is because it is seen that the organization need to focus on the expectations and profitability since it is failing to meet the profit expectations of the organization. Moreover, it was previously seen that the whole organization is disorganized in nature and hence the unit production costs have increased considerably. As commented strategically by Ravasi and Phillips (2011) this is caused due to the scattering of the finished and semi finished products within the organization without anybodys notice. The marketing manager also needs to be the more effective in maintaining the warehouse of the organization. This will lead in decrease in unit production cost as well as reach the expected profit margin of the organization. References Angelis, J. (2014). Strategic management of global manufacturing networks. 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