Management Accounting Assignment: Financial Planning for Smart Solution

Question

Task: The main idea of this case study is taken from (Drury, 2018) and main author is M. Saeudy.

A smart Solution is a small sized IT company. It was established since 1980. It produces different kinds of online Apps, Web design and online trading platforms. All these products are supplied by their own consultants from different parts of the world. Most of these products are made from customer requests and big data materials. Most of these products are very well known for local and international consumers who are interested in online transactions. The marketing manager raises his concerns regarding the expected decline in the sales target for the few next years due to some global economic and political challenges in the world such as the Covid 19, UK Brexit and Middle East Arab spring revolutions.

The main factory and head office are in very high-Tech village. This company is fully owned by small number of IT designers and technologists. The county council of this area is looking for collaborative partnerships with business organisation(s) to look after the big data for one of the biggest social media App and participate in one of the following projects:

(1) Project one:New international online payment system (Smart Pay). The total required cost for this project is £300,000,000.
(2) Project two:The free Wi-Fi App (Cloud APP) for the whole village. This area involves very high usage if IT technologies such as online trading, IT designer, Digital Education and Financial technologies. The total required cost for this project is £250,000,000.

(3) Project three: The restoration and upgrade of an old payment system. The total required cost for this project is £100,000,000.
(4) Project Four:Create an international online chatting App (Free Call App). The total required cost for this project is £100,000,000.

Required:
Read the above case scenario and prepare a management accounting assignment addressing the following parts:

(1) Critically analyze the above-mentioned four projects in terms of financial advantages, challenges and limits. You can illustrate your analysis with some qualitative and quantitative reflection.

(2) Prepare a business diagnosis analysis to explain the theoretical critique of traditional management accounting tools and practices that could be used in this case study such as investment appraisal, decision making under risk ….etc.

You may need to support your discussion and analysis with relevant research papers, business cases or examples.

Answer

Introduction
As per the research on management accounting assignment, the implication of appropriate investment appraisal methods has a significant contribution to enhancing the financial performance of a business. However, the application of proper financial management planning and approaches offer a major impact on the formulation of management decision. In the present essay, four projects have been considered for understanding the investment decision for the selection of an appropriate project for the success of the business. Development of management accounting, as well as financial planning as per changing market condition in the IT sector, provides a supportive role for achieving success in business by reducing overall risk associated with the investment decision. A smart Solution company case study has been considered in this assignment for understanding the financial performance of this organization. Apart from this, four projects were considered towards understanding the investment opportunities in market for increasing the overall sales performance of the business.

According to the changing demand for work, it becomes essential for having appropriate digital support in business for enhancing operational work. Considering the significant impact of such changes in the global platform and implication of advanced technology support provides major impacts on overall activities of a business. However, considering the UK Brexit,Covid 19 and the Middle East Arab Spring revolutions is importantly related to the adoption of the best project which is suitable for the development of operational work. Alisbha and Intishar (2020) argued that, paying attention to these factors isnecessary for perspective for meeting the overall demand of business easily. Increasing digital support based on present market demand can help enhance sales targets. Considering the overall requirement of this company implication of most suitable projects has a direct influence on the development of overall work easily (Khoufi, 2020). A smart Solution company operational work highly depend on customer preferences so paying higher attention to different online trading platforms has a significant role in enhancing overall development.

Financial advantages, challenges as well as limits of four projects
Financial advantages
Project one
As per the project one, the total required cost is £300,000,000 .therefore, considering these projects for the development of digital support in the business. The implication of the new international online payment system(Smart Pay) provides effective development on organizational work. The financial advantage of this project implication isencouraging for the development of global payment easily. Impact of these payment processes supportive for opening new opportunities for an organization to run its operational work easily as per the present business condition.

Project two
Total required cost is £250,000,000 for the accomplishmentof thisproject. As per this project, the free Wi-Fi App (Cloud APP) provided for the whole village which provides a major contribution in enhancing various services in this region. Application of this project offers excellent support for developing the It designer, online trading process as well as digital education and the financial technologies that have direct contribution towards building positive growth for the whole village.

Project three
In context to project three the total required cost is £100,000,000 for the establishment of the project. According to the nature of this project, the total cost is less in comparison to project 1 and project 2. Upgrade of the old payment system supportive for reducing the additional expenses in business which has a direct impact on the profitability of the business. In this project, the outflow of cash is less so it can be helpful for a business to develop other operational work easily.

Project Four
The total required cost is £100,000,000 for project four and in this project creation of an international online chatting App (Free Call App) provides financial support for the organization. Financial advantages of this project are increasing international communication provides support for enhancing investment activities in favour of business. Aydiner et al. (2019) stated that, these types of support offer a significant role in relation to building a positive impact on the overall performance of the business in IT Company.

Project One
Total Cost = £300,000,000

Project Two
Total Cost =£250,000,000

Project Three
Total Cost =£100,000,000

Project Four
Total Cost = £100,000,000

Comparing the above four project cost it can be said that project 1 has a higher cost in comparison to other projects. In this matter, 2 projects were having the similar cost of establishment which is £100,000,000.

Qualitative reflection
The qualitative influence on investment appraisal is crucial towards the formulation of investment decision. Therefore, understanding the qualitative issues in this project selection is essential for overcoming these issues such as the impact on employees, product quality as well as customer services (Hiebl and Richter, 2018). Impacts of project implication on various stakeholders and these types of activities were helpful for this company for reducing its financial risk associated with any investment decision.

Quantitative reflection
Bourne et al. (2018) supported that identification of quantitative influences on investment appraisal towards the establishment of investment decision is crucial. Impact of these activities influences the decision-making process so considering suitable investment guideline is supportive for reducing risk.

Particular Difference in costs of project

Table 1 : Cost analysis of projects

Challenges
Considering the above four project there are different types of challenges in business while adoption of these project. As per the project one of the challenges is a higher cost which affects their performance level of business as proper strategic planning does not consider. On the other hand, the implication of international online chatting App creates challenges related to data security.Cai (2020) commented that, having appropriate support and security process towards handling the valuable data consideration is mandatory. Challenges in free Wi-Fi App (Cloud APP) implication in the whole village requires appropriate strategic planning for enhancing overall progress of business based on these digital service support. Enhancing digital education as well as financial technologies in a country requires ample strategic planning for overcoming critical challenges so this project is important.

Limits
Free chatting based on a present market condition is crucial for the adoption of the best project in business. However, considering these factorsis helpful to offer a good influence on increasing the success rate of smart Solution company business for meeting customer demand in scientific order. According to the country council implication of collaborative partnership with business, the organization has a crucial role in the development of the performance of the business.A smart Solution company requires strong digital app support for running operational work for achieving sustainable growth on a global platform. Due to having the main factory as well as the head office in the very high-tech village it becomes important for an implication of appropriate strategic planning for selection of the biggest social media App.

Benefits of these incorporations offer positive opportunities for this organization towards meeting overall demand positively. Increasing the online communication process in IT Company can be major work towards enhancing the quality of services.Hiebl and Richter (2018) commented that, positive sales target in this sector is crucial towards achievingan organizational goal by increasing customer services as per customer demand in business.According to project three, the restoration and upgrade of an old payment system create major issues for management of this organization for running operational work for the long term. Therefore, these types of the upgrade of the payment system require appropriate management strategies for reducing the additional cost of operation in the business. On the other hand, increasing the international online chatting App can be helpful for the expansion of services in the global market in a supportive process.

Based on the above analysis it can be said that enhancing the sales performance of business it can be useful for selection of project which offers a wide area of coverage for a generation of revenue based on current market condition. Therefore, based on the comparison of the above results it can be said that the adoption of project 2 is helpful for this organization for enhancing their future sales performance positively.

2. Business diagnosis analysis
As per the traditional management accounting, there are various investment tools were considered for selection of the best project. Therefore, the impacts of these investment appraisal techniques are essential in the formulation of investment decision. Impact of these analyses in this company offers good support for making the right project.Khoufi (2020) stated that, decision making under risk has a direct influence on the successful selection of project which has a direct impact on business performance. According to the global economic changes implication of new international online payment system (Smart Pay) can be helpful for a customer for purchasing appropriate services. Advantages of this payment process are secure and less time-consuming which has positive impact on customer services.

In association with the formulation of investment decision different investment appraisal tools and techniques considered towards the selection of right investment. However, in this process accounting rate of return (ARR) or Payback method were by the business organization towards understanding the nature of investment opportunities.Muriana and Vizzini (2017) argued that, only quantitative decision criteria utilized by any firm was payback methods for the establishment of investment decision.

Cost Decisions
According to the case study paying attention to the selection of a suitable project based on financial viability has a direct contribution to the success of the project. The small firm faces challenges in investing in the new technologies due to lack of experience, knowledge as well as expertise. Due to having a high-Tech village presence application of international strategic planning helps offer a supportive role in enhancing the profitability of the business. The high opportunity cost of scare management time Malo-Alain et al. (2021) mention that, a small business generally spend relatively few time in the selection of financing and payback option as well as comparison of cost of incorporation of a new project. Quality of product and services increases by implication of appropriate strategy in business. In this matter paying attention to the cost of the project based on different investment, the appraisal has a good impact on the formulation of management decision.Hiebl and Richter (2018) stated that, considering the entire cost of the project based on investment appraisal tools reduces the various types of risk associated with an investment.

Management Control Systems
Increasing the financial performance of business highly depend on management control systems as major decision formulated for the progress of the business. Investment oriented control a system provides valuable information related to the establishment of investment decision which is highly benefits for the organization. Considering the financial information related to the selection of one of best project for investment purpose for the development of services in a scientific order has a good impact on the development of smart Solution Company.According to the viewpoint of Wahyuni and Triatmanto (2020) appropriate investment appraisal techniques for selection of appropriate project for the success of a business is crucial for the formulation of investment decision. As per the case study considering the four project cost is mandatory for this company in association with a selection of the best project as per the requirement of the company.

In relation to increasing the sales revenue of this company in the coming days, it becomes essential for having appropriate strategic planning related to reducing the risk. Higher risk in the project is responsible for increasing further expenditure in business is responsible for the creation of a negative impact on the profitability of the business.Muriana and Vizzini (2017) supported that, advance level of management control systems implication has scientific contribution towards building a positive environment.

Capital Investment Decisions
As per the case study of smart Solution Companyimplication of appropriate financial planning and budgeting planning process in business is crucial towards achieving the desired result in business. However, due to increased marketing risk and other economical factor which has a direct influence on operational work of this organization paying attention to such issues is compulsory (Hiebl and Richter, 2018). These types of management planning consideration based on capital investment decision can be efficient towards enhancing long- term growth of a business. Bourne et al. (2018) supported that, ensuring the future growth of business based on theglobal economy as well as political issues in the world is important for the adoption of the right investment decision. Comparing the four project cost implication of investment appraisal techniques provides good support for this company for running their business operations easily.

According to the case study, it is sales target of this company is expected to decline in few next years as a reason for the global economy as well as political challenges so adoption of strategic planning is important. Reducing the influence of these challenges in business increasing the new revenue generation scope in business can be supportive for enhancing the sales target.Based on the marketing manager concern of this company adoption of an appropriate project from the above 4 projects provides positive support. Aydiner et al. (2019) stated that, considering the right investment appraisal tools while the selection of project for handling the biggest social media App. Thus, offering the free Wi-Fi App (Cloud APP) in present days in business offer more support for the customer for availing the services in the market without any difficulty.

Influence of these types of project implications has a direct contribution to enhancing the overall performance of the business. Advance level IT designer and online trading in this company offer a higher level of customer services for their valuable customer that has good support for generation of revenue in the market. Hence, from the above business analysis, it can be concluded that, increasing the customer services application of investment activities based on the current situation with the support of management practices has a significant role. Increasing the positive return in IT business offers support for raising global customer by fulfilling their demand in a significant process.

Conclusion
Increasing the online trading in business towards enhancing sales performance application of advanced apps has valuable contribution in the IT sector in present days. Paying attention to global economic as well as political challenges it becomes supportive for the adoption of the appropriate project for the development of business. Therefore, increasing digital support in the village has a direct influence on progress activities. Benefits of this implication offer a positive influence on the profitability of the business for securing sustainability in the global market. Moreover, making a better profit increasing global customer based on digital support leads to a rise in new revenue generation scope in the market.Hence, it can be concluded increasing the financial performance of this company application of advanced technology based on Cloud APP provides good influence on the progress of the business by reducing the certain risk associated with it. Impact of these types of consideration in smart Solution business provides supportive role selection of the right investment plan.

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