Management information systems and financial statements Essay

Question 3

( a )

Management information system ( MIS ) is a computer-based system which provides directors with the tools to form evaluate and expeditiously pull off all the sections within an organisation. It directs towards the managerial maps of planning, commanding, monitoring and determination devising.

Planning is a procedure used by company directors to place and choose ends and classs of action for the organisation. Even though John is the proprietor of the High Street Reproduction Furniture, but he does non hold much formal preparation experience in direction. But he has much hands-on experienced addition while running his concern. Therefore his company might hold some planning and commanding activities shall be implemented in his concern. Planning phase has three phases which are finding the organisation mission and ends ( specifying the concern ) , scheme preparation ( analysing current state of affairs and develop schemes ) and scheme execution ( allocating resources and duties to accomplish schemes ) . High Street Reproduction Furniture Limited is a manufacturer of reproduction sleeping room furniture. Presently, the furniture produced by them are really high in quality as it requires high grade of accomplishment in building and finishing phases of production procedure. In order to better the efficiency and effectivity of the company, John should fix a list of resources required which means, he should fix a elaborate listing of assorted accomplishment required and besides stuffs needed in order to execute the activities. Besides, John has to find the continuance of clip required for each activity. A proper clip allotment is indispensable in order to guarantee that production section has sufficient clip to bring forth the merchandise and keep the high criterion in quality. Besides, by finding the continuance of clip required for a production to finish, company can gauge and supply on clip bringing service to their clients.

Controlling is a procedure of analysing current public presentation and comparison with the preset criterions and take appropriate disciplinary actions against the identified divergence in the consequence. John should put a criterion of public presentation he wished to accomplish. After that, he should mensurate the public presentation for the period and compare it against the predefined criterions. If there is any country that lack behind in public presentation, he shall take the best disciplinary actions that will take the company to accomplish the predefined criterions. This ensures the company able to keep their high criterion hand-made furniture.

High Street Reproduction Furniture has to implement some planning and commanding activities to better their public presentation. In order to better their public presentation, John may implement public presentation hierarchy in his concern. There are three phases in public presentation hierarchy viz. operational planning, tactical planning and strategic planning. While traveling down the hierarchy, commanding procedure additions and be aftering procedure lessenings.

Get downing from the underside of the hierarchy, which is the operational planning, it is a phase whereby control is at its upper limit and planning is at its lower limit. Operational planning is a phase that deals with current deployment of resources, develop tactics instead than scheme, undertakings current operations into the hereafter and do relevant alterations. For case, scheduling employees each hebdomad, measuring, telling and carrying stock list. At this phase, John shall put his company precedences, focuses energy and resources strengthen operations and do certain employees work towards common ends. Next, is the tactical planning phase which is located in between of strategic planning and operational planning. Tactical planning is a short term be aftering procedure of which emphasizes the current operations of assorted parts of the organisations. Tactical planning are normally used in order to sketch assorted undertaking organisation must make to be successful in within a twelvemonth or lesser than a twelvemonth. For illustration, it involves the activities such as apportioning the resources in a more efficient mode by concentrating on countries where the direction wants to set more attempts. John should schedule his immediate short-run activities required in accomplishing company’s aims. Strategic planning is the top most degree in the hierarchy and it is the foundation for any organisation that wants to guarantee a successful hereafter. It is a phase whereby planning is at the maximal and control is at the lower limit. At this phase, John should determine his organisation and its resources, assesses the impact of environmental variables, develops overall aims and schemes, and he shall be concerned with the company’s long-run success of the organisations.

FIGURE 1: Performance HIERARCHY

Besides, if John wants to accept the American’s order to export, John foremost have to set up a squad to run into the demand of the client. He might desire to see spread outing his figure of workers. If there are deficient figure of employees, John will non be able to run into client demands on clip. Apart from engaging more employees, in order to keep the quality of work and efficiency of employees, John will hold to guarantee every employee possess at least minimal demand of accomplishments needed. To guarantee this, he may supply suited type of developing plan to develop his employees. By take parting in company preparation, employees can larn new things which are relevant to their occupation and they are besides larning how they can make their occupation expeditiously. Normally if employees are deficiency of cognition or accomplishments, employees will take a longer clip to carry through his work.

Besides, in order to cut down the operating cost, John might see implementing Enterprise Resource Planning ( ERP ) system. It is a system which integrates both the internal and external information flows used by the organisations. ERP system allows John to utilize a system of incorporate application to pull off all his concern and automatize back office maps. An ERP solution incorporates the practical system used by organisations in order to pull off their commercial map of their concern. Some of the commercial map includes planning, inventory/materials direction, buying, fabrication, finance, accounting, human resource, selling and gross revenues. It automates and integrates nucleus concern procedures such as taking clients order, scheduling operations, keeping stock list records and fiscal informations.

Furthermore, if John wants to spread out his concern to abroad market, he may desire to see puting up a regional office in United States. Upon puting up a new office oversea, he has to carry on a meeting to discourse with the Board of Directors. Discussion of meeting should include how to obtain sufficient capital to put up the new regional office in oversea, how to set up for sufficient work force and brainstorm new suited schemes in order to spread out their concern. Before any enlargement undertaking carried out, a proper planning is indispensable to guarantee enlargement undertaking can be carried out swimmingly and prevent company from enduring losingss. Without proper planning, a concern may neglect and this is unfortunate. Besides, puting up office in abroad can assist in cut downing fabrication cost. This is because gross revenues to locals happen without affecting expensive bringing cost, import responsibility and revenue enhancements.

In add-on, if John wishes to export, the concern will merchandise in US Dollar. John will hold to put up a squad to cover with the foreign exchange market. The squad will hold to supervise the abroad rising prices rate, involvement rate and the concern environment in America. Great fluctuations in rising prices rate and involvement rate will act upon High Street Reproduction Furniture net incomes and hard currency flow for the period significantly. If John wants to accept this America orders, they will be exposed to assorted type of hazard such as instability of the economic system in America and fluctuations of involvement rate and rising prices rate. However, they may utilize this chance to spread out their concern in America. Expanding his concern into a new market and environment is non easy. Therefore, the squad has to supervise carefully the fluctuations in oversea market and take disciplinary action in instance of any unanticipated fortunes in order to forestall the company from enduring losingss.

B )

Since High Street Reproduction Furniture wants to spread out into foreign markets, John has to make research sing the currency motion in the fiscal market. As currency rates fluctuate often, John has to update himself with the latest currency rates. Higher exchange rates will do High Street Reproduction Furniture incur a higher operating cost. This means that John has to pay a higher monetary value for every outgo that he incurred. While spread outing his concern to abroad market, John has to concentrate on foreign political environment. As certain trading disbursal and revenue enhancements are imposed merely on the non-resident or foreign company, this will take High Street Reproduction Furniture to pay for a higher cost on the foreign office. It will cut down High Street Reproduction Furniture net income significantly.

Inflation rate one of the most of import cardinal factors on the value of a nation’s currency. High rising prices rate will cut down the consumers’ buying power. When consumer’s buying power lessenings, consumer is less likely to pass freely. Besides, higher rising prices rate normally deter investing and lead to lower growing of concern as high rising prices rate additions uncertainness sing future monetary values and cost. Higher rising prices rate will do High Street Reproduction Furniture to incur a higher operating cost in puting up the new regional office. Therefore, if the rising prices rate is high in United States, John should non put up regional office in United States.

Furthermore, John has to carry on an analysis on the gross revenues tendency in America upon spread outing his concern to America market. Gross saless tendency analysis is a reappraisal of sales-related measurings or cardinal public presentation indexs ( KPIs ) for a specific period of clip. Gross saless tendency may fluctuate up and down or stay unchanged. By carry oning gross revenues tendency analysis, John can derive a better apprehension of past public presentation, solve concern jobs and predict hereafter public presentation. In add-on, a elaborate tendency analysis may include information on merchandise line, geographic locations, gross revenues district and gross revenues squad. John may reexamine and do comparing of the gross revenues consequence obtained in order to derive a better judgement on the gross revenues tendency.

When John expands his concern into foreign market, High Street Reproduction Furniture might endure from high degree of competition. Competition exist when two or more organisation produce similar merchandises for indistinguishable group of consumers. John has to vie for clients with abroad company if he were to put up an office in abroad. This might impact High Street Reproduction Furniture runing net income. Hence, it is indispensable for John to analyse the sustainability of the concern in abroad before make up one’s minding to spread out their concern to foreign market. If the sustainability of concern is dubious, John should non spread out his concern to foreign market in order to forestall company from enduring loses.

Besides, John should calculate their company hard currency flow. A hard currency flow prognosis indicates the likely future motion of hard currency flow in and hard currency flow out of High Street Reproduction Furniture. It is an estimation sum of money you expect to flux into the company ( grosss ) and flux out of the company ( payments ) . Prognosis can cover a period of a hebdomad, a month or a twelvemonth. As hard currency flow indicates hard currency excesss or hard currency deficits in the hereafter, it will assist John to do a right determination. Besides, it can besides assist in revenue enhancement planning, purchases and place possible deficits in hard currency balances in progress, guarantee company can afford to settle their debts while placing jobs with customers’ payments.

Furthermore, by sing into discrepancy analysis study, John can place the difference between existent outgo or grosss between financial old ages and quarters. A discrepancy study is a manner to estimate High Street Reproduction Furniture public presentation by comparing budget to existent figures. John may utilize discrepancy study to analyse how close their public presentation to forecasted gross revenues mark or to analyse whether if they have met their budgetary ends. Overspending may do a serious menace to the undertaking, to other undertakings and besides to the company if resources are scarce. Under disbursement may bespeak a job in quality control and it may do a serious menace to the company excessively. If existent gross sum are more than what it is expected or budgeted, the discrepancy is shown as favourable. On the other manus, if existent disbursals exceeded budgeted or expected disbursals, the discrepancy will demo as unfavourable. If discrepancy shows unfavourable, amendment shall take topographic point in order to better the efficiency of concern and prevent hereafter loses.

degree Celsiuss )

Several beginnings of information needed by John are from the fiscal statement. By mentioning to the fiscal statement of the company, John can acquire to cognize the public presentation of his company. For illustration, by mentioning to hard currency flow statement, the motion of hard currency influx and escape will be used to foretell future hard currency flow. John will be cognizant of any deficits or excesss of hard currency in progress and this can assist him to take safeguard stairss ahead. If John wants to spread out his concern to the foreign market, hard currency flow statement is of import to guarantee that he has sufficient sum of capital to fund his enlargement undertaking. Furthermore, part border statement plays an of import function in act uponing the determination doing procedure of John. Contribution border measures how growing in gross revenues translates to growing in net incomes. John shall concentrate on developing merchandise which contributes the most in the company’s operating net income instead than those that contributes little to the company’s operating net income.

Besides, incremental analysis statement, sometimes called fringy or differential analysis, is used in concern in order to find true cost difference between options. It ignores done for costs and costs that are the same between the two options and see merely the staying costs. It identifies the relevant gross and cost of each alternate available of each available alternate and its expected impact on company’s hereafter operating net income. John shall accept undertakings that generate positive incremental net income as it will maximise his company’s operating net income. Some of the illustrations of incremental analysis includes when John wants to cognize whether he should transport out extra concern, doing or purchasing parts or merchandises, selling merchandises or treating them into farther and whether to apportion scare resources or non.

When running a company, John has to carefully be after and reexamine his company’s fundss. Budgets normally represent a elaborate analysis of how a company expects to pass in future accounting period. It is normally prepared in order to assist company to carefully sketch their expected demands of each section in the concern and be after their future operations by sing conditions that might alter and stairss that should be taken to work out jobs that might originate in the hereafter. There are several types of Budges viz. gross revenues budget, production budget, capital budget, hard currency flow budget and gross budget. For case, by mentioning to gross revenues budget John can gauge his company’s future gross revenues and it can be used to make company’s gross revenues ends. In add-on, by mentioning to production budget, it can gauge figure of merchandises have to be produced to run into gross revenues ends and estimate assorted cost involved in bring forthing the merchandises.

Since John wants to spread out his concern into America’s market, he should carry on a thorough research on the America’s local Torahs and ordinances. John shall non presume that what ordinance applied in a state will be applied every bit in other state. He shall non undervalue the impact of local Torahs and ordinances on his enlargement program. For illustration, come ining America’s market will necessitate a reasonably drawn-out procedure, get downing with obtaining a concern licence in progress before John can put up a regional office in America. Different state will hold different type of Torahs and ordinances needed to use for concern licence. Besides, the processs of each state in managing applications of foreign company will be different excessively.

Furthermore, John should pass some clip in America to see the local cultural mentions, imposts and festivals first manus. This will assist him to understand more thoroughly Americans local customer’s civilization, behaviours and outlooks. It will do him understand what type of client service Americans are used to and how they by and large interact with trade names. This is an of import consideration in order for John to specify his overall proposition. Even though it takes up much of his clip and dedication, all these apprehensions will assist John to hold a broad image of Americans penchant before come ining American’s market. If he does non cognize anything about their penchant and come in the market blindly, he will be exposed to assorted hazards and he might incur serious losingss.