Decisions Making Of Service Sector Company †Myassignmenthelp.Com

Question: Explain Decisions Making Of Service Sector Company? Answer: Introduction: The beginning of Vodafone brand started because of revolutionary idea of cellular boom when mobile telephone services were offered via the partnership between MillicomInc and Rascal Electronics Plc. In year 1991, Vodafone Group Plcwas established as an independent company. It has been the commitment of Vodafone for offering best services to customers. Company also strives to bring new offerings and innovative products to customers. Vodafone is becoming a preferred choice in many countries because of innovation and technical competence (Anderson et al. 2013). Vision statement- Vision of Vodafone Plc is to become a partner of choice and leveraging telecom experience by delivering integrated value adding services. Transformation of society is done by bringing innovative services and products in emerging markets. Vodafone helps in transformation of society by making innovative services and products available to customers and help them tacking some of the relevant business challenges faced by the. Business of Vodafone is focused on emerging markets, new serves, enterprise and data so that they are able to achieve their ambition of making contribution their global development and making contribution to business (Bjrnenak and Helgesen 2013). Mission statement- The mission of Vodafone Plc is to empower and connect the people and communities. Mission is to create value adding jobs through developing telecommunications centers of excellence. Their objective is to enhance the value of shareholders and make contribution to society by providing customers with customer friendly services and innovative products. Products and services: Business services of Vodafone helps organization to prepare future challenges, increasing connectivity and helps in boosting production and cost efficiency. In order to assist business in harnessing power of total communications, organization brings together data and voice, wireline and wireless. The audio conferencing service of Vodafone is a cost effective and reliable solution that helps in connecting workforce across time zones and geographies. A host of unique online tools and several apps for smartphones assures customer of unparalleled service experience. In addition to this, it offers mobile internet plans, email and connectivity, roaming solution, mobility solutions, secure device manager, business value added services and business device and plans (Hecht 2016). In nutshell, products of Vodafone can be listed down as world calling card, gulf calling card, Vodafone postpaid, handy phone, Vodafone 3g. Services of Vodafone comprised of entertainment, downloads, call management services, finance, sports, updates, entertainment, devotional and tunes amp. Managerial highlights: One of the sources of competitive advantage of Vodafone group is the management and human resour5ces of organization that helps in strengthening customer employees relationship. Key performance information: A number of key performance information are used by executive committee and board for monitoring regional performance of the group against forecast and budget and measurement against strategic objectives. Some of information about key performance indicators involve data revenue and related organic growth, capital expenditure, free cash flow, net promoter score, customer delight index, voice usage, proportionate mobile customers and voice usage. One of important driver of revenue growth is services provided by the Vodafone group. Describing value chain of Vodafone: A value chain analysis is a chain of activities performed by Vodafone for delivering valuable product and service in the market. The division of business process is reflected into the steps of value chain so that it can have the grates impact on the society. Value chain is an initial step towards creating clear value and making social impact. Value chain of Vodafone is based on the analysis of most vital opportunities and risk of the organization and stakeholder consultation and analysis of environment (Bhimani et al. 2016). Value chain analysis of Vodafone: (Source: Kamala et al. 2014) Different economic actors such as partners, suppliers, allies and customers work together for co-producing the value. Value network involve elementary note and links. Complementarity between various links and nodes is the feature of networks. For maintaining the competitive position, it is essential that helps in enjoying relationship by firms. The continuation of Vodafone supply chain journey focus on six areas and they involve: People- This relates to people, skills and career development Global scale- This relates to geographies and buying of partnership Obsession of customers- There are customer centric key performance indicator Operational excellence- It relates to end-to-end management performance and demand management. Sustainable supply chain- Sustainable supply chain involves transparency of activities, joint governance and Supplier relationship management- There is a continuous focus on ethical and environmental procurement. Describing the process of planning, controlling and decision-making: The center of groups action is to ensuring that needs of customers are being fulfilled. Vodafone seeks to deliver value and relevance to communicate to each customer and deliver them to household, individual and business level. Organization employs a channel that they enjoy and is best for them to make most of its deep understanding of customers with the most appropriate products. Using such approach place Vodafone an organization that enhances experience, listen to customers and delivers value. Vodafone uses groups wide issues management process for ensuring that cost reduction are fed into long range planning of company. Relating to country of operations, a range of cost reduction issues are considered by Vodafone such as supply chain and reviewing of various programs and policies. Vodafone is increasingly working by integrating cost reduction issues into decision making in terms of development of products. The products and services of organization intend to meet societal needs rather than just customer needs relating to coverage of network. The need of bottom line of pyramid of world population is addressed by organization is association with several other organizations. Decision making process in Vodafone is influenced by technological changes and such process is made in reference to objectives and goals of organization. Decision making of Vodafone is always aligned and conforms to strategic planning. Most of decision-making processes of Vodafone are based on future and current applicable technology when it comes to services of mobile network services. Decision-making are predictive regarding the way telecommunication industry behaves and this will help in attaining the desired long-term goals. Management accounting information and tools used by Vodafone: The management accounting information system has become an important part of all big and small companies. Management information system helps the organization in compiling all the information related to accounting from different departments of company and this involves all the information relating to operations, sales, human resource and marketing. The present and past financial transactions made by company and profits and loss generated are analyzed by chief financial officer sand monitoring of the available funds for right purpose is also done using this. Company has made use of balanced scorecard methodology for focusing on different aspects of business such as business process, customers, financial, growth and learning perspectives (Ramanathan 2014). Vodafone group are able to create additional values using this methodology. Information system at strategic level of organization involves both external and internal factors and strategic level mangers needs to be supplied with such information that would assist them in making decisions. Management accounting information used by the group includes detailed information about information regarding products and services suitability. Management accounting tools that are not efficient will have negative consequences that are caused by if they are not able to respond to changing market conditions if such employed tools fail to provide the information about market conditions. When concerning tactical level of management accounting, managers have breakdown of their sales regions (Garcia 2015). Vodafone will incur huge loss if efficient information systems about management accounting are not maintained by business. There is need to have constant supply of information about the service and products, available stock and credit ratings incorporated in management accounting. Vodafone group has developed some of the management accounting information that is aligned with business strategic objectives in financial perspectives. Some of the information comprised of return on equity, free cash flow and earnings before interest and tax margin, operating margin. For constructing the infrastructure, Vodafone is spending hugely on their capital expenditure and this has resulted in huge loss. However, construction of such infrastructure is one the competitive strength of business. The profitability generated by core business operations are analyzed using margin of earnings before interest, tax and depreciation (Schmidt et al. 2014). It involves deduction of capital expenditures, taxes and amount of interest attributable to the company. One of the critical sources of growth of Vodafone group is generation of free cash flow that is done by establishing the strategic alliance of the group globally, through joint venture and acquisition. The maximum value generated to shareholders and higher amount of dividend paid is supported to the company by using free cash flow. One of the most crucial bottom lines accounting ratio used by organization is return on equity that is considered as best measure for directly making assessment of the performance of the group against their set strategic objectives and it also depicts actual return earned by shareholders. It also acts as driver of generating higher return to shareholders (Yim 2014). Some of other tool involves for measuring business perspective of organization is annual capital expenditure, operational efficiency ratio that are aligned with the objectives of organization and perspective of their business. In order to provide customer with excellent services and for developing success, they are relied upon their employees. The actual performance of organization is measured by development of capital efficiency programs. A cost reduction plan of $ 1 billion has already been executed by the organization. The program has been extended to some additional amount and this involves both operating and capital expenditures. Nonetheless, the objectives of such program is to make improvement in operational efficiency along with usage of number of own employers ratio and number of subscribers (Ramanathan 2014). At the end of each accounting period, organization completes conduction of ratio analysis for determining the ability of company to repay long as well as short term debts. It also helps in determination of liquidity and solvency ratio of organization. Ratio analysis helps the management of organization in determining the profitability of company by depicting that operations are within the guidelines of company. Maintenance of proper level of inventories and receivable collection period of group are determined using the ratios. Vodafone are able to make proper and viable business decisions by making use of the accounting information The provisions of accounting information are used by managers of Vodafone group for making them informed about the accounting of organization in a better way to make the decisions. All the relevant financial data are provide to the managers so that they can be efficient in making decisions about the organization and thereby contributing to the growth and success. Some of the management accounting information of the Vodafone group comes in the form of budget forecast, financial ratios, cost analysis and variance analysis (Lari and Asllani 2013). Three internal debt protection ratios have been used by group and this comprise of retained cash flow, net interest to operating cash flow and operating cash flow to net debt. A level of debt is established by company using these ratios so that debt amounts are not exceeded by the particular limit. Using variance analysis, Vodafone makes the comparison of the budgeted expenses and actual realized expenses. There are several factors that impact the budget of Vodafone and this involves machine hours, man hours and consumption of materials and many input items. In order for organizations to be efficient in making decisions , Vodafone group assed their accounting information mostly on facts that help them in providing reliable data and thereby making relevant decisions (Campbell et al. 2014). Some of the accounting tools that management of organization intends to adopt in recent time arte balanced scorecard, service and products profitability analysis, environmental management accounting, customer profitability analysis and activity based accounting. There can be employment of some of the costing tools used by business and this involves throughput accounting, activity based costing, target costing, life cycle based costing, costing for batch, jobs, processes and charts (Seuring and Goldbach 2013). Some of the small tools used by Vodafone comprise of activity based costing and they are regarded as resource intensive. They also make use of pricing tools that helps them in determining the appropriate price for products offered and services charged. Since the service sector is always keen on introducing new pricing tools for pricing their products and thereby they make the adoption of segmental and market sensitive pricing (Henry et al. 2016). They have greater interest in se gmental pricing of the products, penetration pricing and marketing pricing. Some of the budgeting tools used by Vodafone include priority based budgeting, incremental budgeting, cash forecasts, rolling forecasts, flexible budgeting and zero based budgeting. The profitability analysis tools used by business include that there is a high level of interest used in services and products. Vodafone group make heavily use of customer profitability analysis and this is done for introducing newer products in the market. There has been a meaningful improvement in cost base by focusing directly increasing efficiencies and cost optimization. Zero based methodology has been used by Vodafone group and that involve three component. This has resulted in absolute cost reduction. There has been a fixed growth in growth net savings based on zero based budgeting. Service revenue performance of the group was slightly above the group. The service line increase in budget was also resulted. Budget also comp rised of planning comprising long range plan, cash flow statement, and debt projections (Kaplan and Atkinson 2015). Voice revenue budget is expected to benefit from acquiring new customers mainly in emerging markets. Forecasts for Cash flow budgets concerning capital expenditure are based on past experience and increasing the ongoing capital expenditures required for rolling out network in emerging markets. Capital expenditure is mainly related to purchasing of property, computer software and plant and equipment. Increase in budgeted capital expenditure is expressed as percentage of revenue. For identifying the variance in business activities, there is comparison made with the actual results and prior forecasts. This will help in understanding the drivers of change and future management so that actions may be taken that are considered appropriate. Organizations also make use of incentive plan for rewarding the performance of management and employees and the measurement has been linked to key performance indicators. Vodafone group has also launched low cost share dealing program that involve dealin g with the service economically. Another management accounting tool used by business is benchmarking and this involves customer relationship management, total quality management and 360 degree reviews. Recommendation for management accounting tool: Management accounting information helps the business in making decisions about business. Organization should be able to make the preparation of budget efficiently as this will help them in planning the purchasing and sales along with motivating employees. Such information depicting helps the organization in deciding whether it is feasible for organization to buy particular products or not. When businesses are considering the expansion, it is required in the part of financial management of business to perform cist volume profit analysis. It is considered a very powerful tool for conducting the analysis and this will help the organization in deciding their appropriate price of the services and products to be sold. It is required by mangers of organization to make the estimation about services and products that helps in dete4rming whether they are profitable. Management accounting should be encompassed by organizations in such a way that it helps in contributing to their development and growth of company. Main objective of any business is to generate maximum profits and that can be achieved by introducing sound financial planning incorporated in the management accounting information. The data related to cost accounting should be presented in such a way that it is reliable by the stakeholders of organizations. Such estimations about cost need to be pre determined. The management information used by organization needs to involve relevant facts and reliable data that are considered as useful for making business decisions. It is essential for business to consider profitable alternatives which is necessary for solving business problems which may arise resulting from increasing business competitiveness. With respect to the management tools, we can classify the management tools into different groups, these are operational, managerial and strategic tools, usage of all the different tools is not mutually exclusive, different pricing strategies may be used in different business sectors, right management tools must be used by the management accountant taking into consideration all the technical knowledge, professional experience as well as judgment. The operational tools involves the cost of activities, profit and product analysis , profitability of revenue generating activities, secondly the costing tools involves the different tools involved in costing, larger the organization, larger is the costing tools involves . Then arrive at the pricing tools which are used heavily by the larger companies rather than smaller entities. All the information related to management accounting involves has to make the decisions of the business. In nutshell, it can be summarized that two management tools that will be recommended for business are ratio analysis and budgetary control. Conclusion: From the above discussion, it can be concluded that Vodafone Plc has employed different management accounting tools for gathering required information necessary to take business decisions. There can be employment of some of the costing tools used by business and this involves throughput accounting. Budgetary control and ratio are the two recommended management accounting tools that should be used by Vodafone Plc. Reference: Anderson, M., Asdemir, O. and Tripathy, A., 2013. Use of precedent and antecedent information in strategic cost management. Journal of Business research, 66(5), pp.643-650. 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