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Accounting for Strategic & Management Control - BH Ltd - Case Study Example

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The company has been quite successful over the years to make a mark in the market for the quality services and environment. The company has 14 hotels and restaurants operating under its brand name in the UK…
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Accounting for Strategic & Management Control - BH Ltd
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Accounting for Strategic & Management Control Table of Contents Executive Report 3 Performance of BH Ltd 3 Mind Map for the Selected Article 6 Reflective Critique 8 References 10 Executive Report Performance of BH Ltd Ave-Co Plc is one of the most renowned chains of hotels in the UK. The company has been quite successful over the years to make a mark in the market for the quality services and environment. The company has 14 hotels and restaurants operating under its brand name in the UK. Initially, the chain of hotels was operated by BH Ltd until it was acquired by Ave-Co Plc. Despite of appreciative performances in each of the hotels of the company, the overall result for the company has not been effective in the recent past. Contextually, it is vital to identity the existing problems in the workplace and likewise, measures are needed to be developed to deal with the same to ensure long term sustainability of the business. In this regard, it would be crucial to develop a mind map to depict the problems in the operations of the business in more precise and succinct manner altogether. The mind map is provided hereunder. Mind Map: Performance Issues From the above diagram, it is apparent that the business is dealing with several key issues that are influencing the results of the business one way or the other. In this regard, it has been identified that one of the prime issues of the business is the decline in the overall performance, which further led to the decline in the performance substantially. As can be recognised from the financial data, the revenue for the business was around £5,476 £5,614 and £5,432 for the years 2012, 2013 and 2014 respectively, which do not depict any significant growth. Another issue relates to the lack of business growth. As recognised in the provided case, the business has not been able to enhance extensively in the recent time. This can also be depicted from the profit ratio of the business, which is one of the key performance indicators (KPI). Profit Ratio for 2012-2014 2012 (£369/ £5,476 = 0.06) 2013 (£527/ £5,614 = 0.09) 2014 (£429/ £5,432 = 0.07) Note: Profit Ratio = Net Profit/ Revenue From the above calculation, it is quite apparent that the profit ratio of the company has shown a fluctuating trend in the recent past and little stability can be seen in the same. This also shows the lack of growth of the business. The company also finds it difficult to meet the expectations of the customers to the continuous market trend. This aspect enables the business to make proper or accurate future forecast. The limitation of business operations only within the UK market has also affected it operations negatively in the recent time. Additionally, with the increase in business expenses along with the lack of growth in revenue has also influenced the overall performance in a negative manner. Furthermore, the limited contribution of Ancillary Revenue towards the overall business has been a major issue in the recent time. As per the financial data of the business, the contribution of Ancillary business towards the overall revenue is £1,210, £1,204 and £1,109 in 2012, 2013 and 2014 respectively, which is again quite small. Since the company has shown reluctance towards globalising its business, its customers have been quite limited (Seuring & Goldbach, 2002; Summers, 1998). This can be comprehended through analysing the performance of managers of each of the hotels separately, which is again one of the key performance indicators (KPI). For Example, Available rooms during 2012 were 210* 365 = 76,650. The number of rooms occupied during the period was 58, 254. Thus, the room occupancy percentage estimated to be around [(58254/ 76650) * 100] 76% during the year 2012. Similarly, for the year 2013, the number of available rooms was 80,665. The number of rooms occupied during the period was 65,339. Therefore, the occupancy of the rooms for the year 2013 [(65,339/ 80,665) * 100] is around 81%. This shows that in between 2012-2013 there is only a marginal growth of the occupancy rate of the hotels, which signified minimum sustainability for the business in future in terms of growth. The return on investment of the company is also important to be discussed in this context. The return on investment for the company is around 6.66%, 9.48%, 13.84% and 11.95% for the four years i.e. 2011, 2012, 2013 and 2014 respectively. This shows a fluctuating trend, which is again a negative prospect form the investors The company is also identified to lack in having an effective forecast plan owing to which it fails in making effective futuristic objectives. Moreover, lack of stability in the domain of expenses and cost is regarded as a potential problem in the business. The cost of the business in the recent years include 14.51%, 14.37%, 15.14% and 15.83% for the year 2011, 2012, 2013 and 2014 respectively. Though the increase in hotel cost is marginal, its impact on the business is deemed to be quite considerable. These factors have affected the business in a considerable manner altogether. Mind Map for the Selected Article A research article has been selected relevant to the subject matter to provide a better understanding of the topic (Buzan, 2012). The mind map of the selected research article i.e. Leadership and Control System Design that acknowledges context, methodology and limitations of the study is provided hereunder. Mind Map for the Selected Article The article i.e. ‘Performance measurement system design: developing and testing a process-based approach’ by Neely & et. al. (2000) mainly highlights the importance of performance measurement system in ensuring better operational management and control of the business. It is evident that performance measurement is one of the integral aspects that are associated with the operations of any particular business irrespective of the sector they are operating. It has been learnt from the research article that performance measurement is crucial towards determining and ensuring the accomplishment of organizational goals and objectives by analysing the overall structure and performance of a business in each of the operational domain. In order to succeed in the long run, companies must ensure that they operate significantly in various operational domains, which collectively forms the core of the business operations. With better performance measurement within the business, management ensures that various departments are working in alignment with the eventual targets a business intends to attend. These aspects also work positively towards meeting the vision and mission of a company. The selected article of Neely & et. al. (2000) used several noteworthy models and framework as part of performance measurement systems of a business, which can again be depicted from the provided mind map of the article. Notably, some of the models and frameworks used within the article with regard to performance measurement include Du Pont Pyramid, Lynch and Cross framework and business excellence model among others. Furthermore, with proper performance measurement system and framework, planning activities of a particular company are influenced positively owing to efficient result (Hartog & Koopman, 2001). The selected article has a structured analysis methodology such as balance scorecard and performance prism, which is again believed to present accurate and reliable results. However, the absence of the use of any statistical method during the analysis can further be seen as a limitation of the research conducted by Neely & et. al. (2000). In this regard, the article also implied that performance measurement system is an important aspect based on which the operations of a business can be conducted in an efficient way. A business with the implementation of performance measurement system is able to have a better understanding about performances of employees. Accordingly, management teams are able to manage as well as organise the team efforts in order to perform operations successfully. In addition, the mind map will assist management teams in resolving issues and adopting innovation in business operations. Reflective Critique Throughout the course of conducting the research, several unexplored facts have been comprehended, which can be considered prominent personally while conducting future research on similar research study. In this regard, while conducting the research relating to the operations of any particular business by considering several factors which includes approach of the management towards mitigating the challenges of the business, meeting the needs and demands of the customers, exploring the business expansion opportunities, exploring the opportunities of globalization and efficiency of the performance measurement system within the workplace among others. Notably, lack of effective performance in alignment with the aforementioned factors may affect the overall operations in a negative manner as seen in the performance of BH Ltd. Again from the article of Neely & et. al. (2000), the role of performance measurement system in business control has been also apparently understood. However, there are certain limitations of the research, which further limits the generalizability of the results obtained towards a wider dimension. These limitation can mainly be seen with the limitation of any internal or external data about the company i.e. BH Ltd that further prevented from getting a more in-depth understanding about operation management, which comprises the issues faced by the company that leads to its declining performance in the recent years. This aspect can be criticised about the study. Furthermore, the absence of any primary data within the study has limited the extensiveness of the result obtained from a personal point of view, which can also be criticised. References Buzan, T., 2012. The Ultimate Book of Mind Maps (Google eBook). HarperCollins UK. Hartog, D. N. D. & Koopman, P. L., 2001. Leadership in Organizations. Home. [Online] Available at: http://www.sagepub.com/northouseintro2e/study/chapter/handbook/handbook4.1.pdf [Accessed November 30, 2014]. Neely, A. & et. al. 2000. Performance Measurement System Design: Developing and Testing a Process-Based Approach. International Journal of Operations & Production Management, Vol. 20, No. 10, pp. 1119-1145. Seuring, S. & Goldbach, M., 2002. Cost Management in Supply Chains. Springer Science & Business Media. Summers, M. R., 1998. Analyzing Operations in Business: Issues, Tools, and Techniques. Greenwood Publishing Group. Read More
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