Managing Finance Information And Knowledge In A Business Accounting Essay

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The ability to learn and to leverage the knowledge gained from learning are fundamental to organizational growth, and competitive advantage sustenance. Organizational learning equally makes business process re-engineering easier (Cardiff University, 2006).

It takes constant learning, strategic thinking and strategic management to become a leader. To maintain dominance in the market, the firm must adopt strategic Human Resource Management (SHRM) as well as consistent planning, strategy. An organization's ability to withstand change and threats depends on its learning capability, leadership quality, proactiveness and innovative visioning (Owen et al, 2009).

Marketing information system has a positive implication on all aspect of market, and has the most effect of customer's satisfaction (Ismail, 2011).

The concept of marketing information system (MKIS) is the first part in which the management information system pointed as a basic requirement for information system (Heydari et al, 2012). Cutler believes that marketing information system includes people, equipment and methods, to gather, classify, analyze, assess and distribute correct information for market decision makers (Heydari et al, 2012).

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Efficient market information must aim to attract customers, retain customs, and retain customers, increase sales and profit. Efficient marketing is a function of comprehensive and timely market information (Ismail, 2011). Access to timely information enables organization in its strategic planning activities, knowing that no firm can do without information. A sound financial information systems stores, organizes and makes access to financial information easy (KPMG, 2008).

Standards may create need for new data, change calculations and changes in reporting. All these are captured by FIS and it guides management in marketing strategic and tactical decisions (Owen et al, 2009).

EVALUATIONS

Learning orientation cut across every sphere of a business life (employee, procurement, production, processes, distribution, market, research and even administration) (Mallon, 2010). Learning orientation has great influence on employee job satisfaction and retention. It is only in a form with progressive learning culture that employees can grow with the company, both in skill acquisition and self-development (Hult and Ferrell, 1997).

As marketing managers supply the information, the information will be processed by the company's internal resources marketing information activities and research then continues. Prepared market information can be used for analysis, and it assists managers to program, executive and control information marketing (Ismail, 2011). So, marketing information system is a continuous formal, flexible and comprehensive system meant to provide and organized information flow to assist marketing decisions.

FIS does not only store all the financial information relating to current and past years spending, but also stores the approved budgets for many years, details on inflows and outflows of funds, as well as completes inventories of financial assets(KPMG, 2008).

Information system will need to be implemented, modified, re-mapped, or reconfigured to facilitate changes, (KPMG, 2008).

The purpose of knowledge management is to ensure that people have the knowledge they need, where and when they need it. Knowledge is also driven by the accelerated rate of change in today's organizations (Levinson, 2012). The benefits of knowledge management are quite numerous. Marketing information is the life blood of marketing process and marketing decisions are affected by numerous internal and external environmental variables (Lara, 2008).

Marketing decision maker needs a great deal of information from the environmental variables from the environmental variable to predict their directions and their expected effects on the internal activities of the organization (Freihat, 2012).

ANALYSIS

The Role of a Business Analyst

Business Analysis in the other hand is the set of tasks and techniques used to work as a liaison among stake holders in order to understand the structure, policies and operations of an organization, in order to prescribe solutions that enable organizations to achieve its goals (Modern Analyst, 2011). The task of business Analyst (BA) is to define the solution which helps the organization achieve its goals.

Brandenburg (2012) explains the following roles of business analysts.

Elicitation: The BA is to discover the underlying business need to be addressed, and provide information related to the product and project requirements.

Analyzing Requirements. It is the duty of the BA to organize, specify and model the requirements of the business to ensure they are complete.

Specifying Requirements: He is to document requirements in a format that can be shared with stakeholders.

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Validating and Verifying Requirements: The BA ensures that solutions mapped to the business need, are approved by all relevant stakeholders, and also meet expected standard.

Factors that Makes a Business Market Leader

Market leadership is usually understood in terms of the position of a given company within an industry based on three factors (Tatum, 2012). Profitability will play a role in market leadership, the market share volume has to be substantial, and value creation has to be considered as well (Mirow, 2005).

The features that distinguished a market leader include:

Brand reputation: Everyone including new users of a product will want to settle for a powerful brand.

Competitive strategy: A market leader initiates a new trend and is the first to introduce innovation. A market leader figures out the weaker points of its rivals and builds upon it.

High quality with Advance Technology: A market leader deploys the latest technology and designs its products according to consumer or market trends.

Quality Products: The products of a market leader are always the best standard at all times.

Business Model: Market leaders adopt business models that have latest market trend.

Valuable Workforce: Having experts or skilled employees enables a company achieve success.

In any business that wishes to be a market leader should be ready to implement daring strategies, it should strive to always win organization and people, and must devote every effort to innovation and efficiency improvement (Kotelnikov, 2001).

The Concept and Benefits of Knowledge Management

Knowledge management is one of the basic requirements for a business to become a market leader.

From the view of Servin (2005) knowledge includes familiarity, awareness and understanding gained through experience or study. Knowledge management therefore is the process through which organizations generates value from their intellectual and knowledge-based assets (Levinson, 2012). The central idea about KM is to establish an environment in which people are encouraged to create, learn, share, and use knowledge together for the benefit of the organization, the employees, and the organization's customers (Servin, 2005).

Knowledge management is based on the idea that an organization's most valuable resource is the knowledge of its people (Levinson, 2012). The performance of an organization depends on how effective it is able to create new knowledge, share knowledge within the organization, and use the knowledge to the maximum. Knowledge management improves the performance of an organization and helps it to achieve its objectives (Servin, 2005). Generation of new ideas and innovation in the company produces improvement in processes (Lara, 2008).

Knowledge management also improves the knowledge capacity of employees in an organization (Lara, 2008). Knowledge management is the most important source of competency creation in an organization. This is because job rotation and task amplification creates a culture of innovation and learning, encourages, teamwork and groups problem-solving (Servin, 2005).

THE CONTRIBUTION OF MARKETING INFORMATION SYSTEM (MKIS) IN A BUSINESS

Marketing Information System is a structure composed of personnel, equipment, which ensures flow of internal and external information (Freihat, 2012). Amoako (2012) defines MKIS as a system that analyzes and assesses marketing information, gathered continuously from sources inside and outside organization.

MKIS is the major tool used by management to aid in problem solving and decision making. Boone and Kurtz (2007) quoted in Ismail (2011), defines MKIS as a planned computer based system designed to provide managers with continuous flow of information relevant to their specific decisions and areas of responsibility. MKIS is a continuing and interacting structure which consists of people, equipment and procedures designed to generate, sort and analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers (Zizlavsky, 2012).

Organization's needs information to determine the nature of the market and their trends, needs and chances that occur in these markets. Businesses also need to get information on the competitors, prices, options and other marketing information that aid successful marketing decision (Freihat, 2012).

Business requires maintaining contact with the latest developments of its competitors. Through market research, it needs to collect and analyze data with the aim of identifying and resolving problems related to companies marketing services and marketing opportunities.

CONTRIBUTION OF FINANCIAL INFORMATION SYSTEM (FIS) IN A BUSINESS

Financial Information System (FIS) is a comprehensive software package for entering, adjusting and retrieving financial data (Alagre and Lopez, 2012). They also agree that FIS accumulates and analyzes financial data used for optional financial planning and forecasting decisions and outcomes.

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FIS is used together with a decision support system and it helps a firm attain its financial objectives. FIS can be thought of as a financial planner for electronic commerce that can also produce large amounts of market and financial data obtained from financial database (Alegre and Lopez, 2003).

Financial data analysis may be conducted through trend evaluations ratio, analyses and financial planning modeling (SAPAG, 2001) Data, outputs produced by FIS can include operating and capital budgets, working capital reports, accounting reports and cash flow forecasts.

FIS enables business to run evaluations for the general ledger, accounts receivable, and account payable (SAP AG, 2001). FIS help businesses gain maximum operating results in the shortest amount of time. It can also yield huge amount of data for daily business operations.

Leveraging marketing information system and financial system can help our business in strategic decision making process (KPMG, 2008).

HOWTHE BUSINESS CAN DEVELOP AND SUSTAIN LEARNING CULTURE.

Organizational learning Culture is a fast growing body of literature (Farrell and Mavondo, 2004). Organizational learning Culture (OLC) refers to the capacity or process within an organization to maintain or improve performance based on experience (Nevis et al, 1995) quoted in (Cho, 2007). Phapruke (2008) refers to it as a set of norms and values, about the functioning of an organization that support the organization to acquire information, interpret the information to fully understand its meaning and transform it into knowledge. Phapruke states that OLC consist four dimensions: Information, acquisition, information dissemination, information interpretation and organizational memory.

Organization's can develop learning culture by learning to provide high service quality and promote best performance through value chain creation (Kandemir and Hult, 2005). The culture of service and excellence will then help the business understand customer's needs and expectations, and potentially responds to needs by displaying quality (Cho, 2007). The business must meet customer's needs always in order to enjoy competitive advantage. Developing OLC involve such attributes as tangibles, reliability, responsiveness, assurance, and empathy.

One of the best ways to develop learning culture is for a business to promote and sustain highest service quality (Kandemir and Hult, 2005). This will enable it gain performance in the competitive markets. Many organizations especially service oriented firms apply OLC in order to enhance performance through service quality (Phapruke, 2008).

EFFECT OF KNOWLEDGE MANAGEMENT, MKIS, FIS AND LC

ON A BUSINESS COMPETITIVE ADVANTAGE AND PROFITABILITY.

From the introduction and the analysis of features of market leadership above, KM, MKIS, FIS and OLC are the foundational make up of a market leader. Any competitive firm must have the right integration of the four in order to remain dominant (Varadan, 2012). Other effects include:

It earns a firm good name and public reputation.

It enables the human resource think strategically, even as conducive learning happit is sustained.

It enables the business to maintain leadership by being the first to introduce new products best brands and latest trend.

The culture of quality and best practice out the company first in consumers mind. This leads to increase patronage of products and services which increases productivity.

THE IMPORTANCE OF FLEXIBLE BUDGETS FOR CONTROL PURPOSE

A budget is prepared to show how actual results compare to the budgeted numbers. If the actual results cause net income to be higher than budgeted net income, the variance is favorable (Perego, 2005-06). If actual net is low than planned, the variance is unfavorable. Higher revenue causes a favorable variance, while higher costs and expenses cause an unfavorable variance.

The usefulness or importance of a flexible budget depends on the accuracy of the classification of expenses into fixed, semi-fixed and variable ones. The importance of flexible budgets includes (Blogsport, 2012):

A flexible budget enables the management to analyse the deviation of actual output from expected output.

The management can compare actual costs at the actual volume with the budgeted costs at the actual volume.

The flexible budget provides a correct basis for comparison between actual and expected cost for an actual activity.

It helps to fulfill the objectives of cost control as it shows where the actual performance deviated from the planned performance.

Flexible Budget and Variance Analyses.

Key Interpretations

If the actual results cause net income to be higher than budgeted net income, the variance is favorable.

If actual net income is lower than planned, then, the variance is favorable.

In the other words, higher revenue causes a favorable variance, while higher costs and expenses cause an unfavorable variance.

FLEXIBLE BUDGET

Budget

Actual

Variance

Product and Sales of Jigsaw (Units)

2,000

2,400

Sales Revenue

20,000

24,000

4,000

Direct materials

6,000

6,600

600

Direct Labour

4,000

3,600

400

Production Overheads

4,600

5,240

640

Administration Overheads

3,500

3,800

300

Gross Earning

1,900

4,760

2,860

Income Tax

1000

1,200

200

Net Income

900

3,500

2,660

From the table above, the budgeted sales revenue for 2000 units is £20,000 at £10 per unit. The actual sales revenue is £24,000 for 2,400 units at £10 per unit. This yielded increased income of £4000.

The budgeted direct materials £6000 is about 30.3% of £20,000. The actual material is £6,600 showing increased variable cost of £600.

The direct budget labour is £4,000 representing 20% of sales, while the actual direct labour cost is £3,600 which reduced cost by £400.

The production overheads budgeted is £4,600 which is around 22% of sales revenue, while the actual production overheads increased to £5,240, showing increased cost of £640.

Administration overheads budgeted is £3,500, which increased in the actual figure to £3,800, showing increase of £300.

The budgeted gross earning is £1,900 against the actual of £4,760 after total cost.

If there is budgeted income two of £1,000, that is 5%, the actual income tax will then be £1,200.

The resultant budgeted net income or profit will be £900, while the Actual will be £3,560.

The variance figure shows an increase in revenue which indicates a favourable variance.