AKUNTANSI INTERNASIONAL

CHAPTER IX: MANAGEMENT PLANNING AND CONTROL

ASEP SURYADI

20208200

4EB11

1. Four dimensions in the modeling business

Recent survey found that management accountants spend more time in strategic planning issues than before. Determination of the business model of the big picture, and consists of the formulation, implementation and evaluation of a long-term business plan firms. It includes four main dimensions.

a. Identify the major factors relevant to the company's progress in the future.

b. Formulate an adequate technique to predict future developments and analyze the company's ability to adapt or take advantage of these developments.

c. Develop sources of data to support strategic choices.

d. Certain choices translate into a series of actions that specification.

2. The difference between standard cost concept and kaizen

Determining the standard cost system tries to minimize the variance between budgeted costs with actual costs. Kaizen Costing to stress to do what is necessary to achieve the desired levels of performance in a competitive market conditions.

The concept of Standard Costs:

a. Cost control

b. Applied to existing manufacturing conditions

c. Goals: compliance with performance standards

d. Standards are determined each year

e. Varian analysis is based on actual vs. standard

f. Investigate if the standard is not met

The concept of Kaizen Cost:

a. Cost reduction

b. Applied to manufacturing improvements on an ongoing basis

c. Objective: To achieve cost reduction targets

d. Target cost reduction is determined each month

e. Analysis of variance based on a constant cost reduction

f. Investigate if the target is not achieved cost

3. Estimates of the return of foreign investment

A manager must determine the rate of return that is relevant for analyzing foreign investment opportunities. However, the relevant rate of return is a matter of perspective. Should the international financial manager to evaluate expectations of return on investment from the standpoint of foreign project or from the perspective of the parent company? Returns from these two viewpoints may differ significantly due to several reasons such as: (1) restrictions on repatriation of profits by the government and capital, (2) license fees, royalties and other payments which is the profit for the parent company but is a burden for subsidiaries, (3) differences in national inflation rate, (4) changes in exchange rates acing, and (5) differences in taxes.

Opinion that the rate of return and the risk of a foreign investment can be evaluated from the viewpoint of the parent company's domestic shareholders, are no longer sufficient because:

1. Investors in the parent company of the more that comes from the world community.

2. Investment objectives must reflect the interests of all shareholders, not just from domestic.

3. Observations also show that multinational companies have long-term investment horizon (and not short term). Funds generated abroad tend to be reinvested rather than repatriated to the parent company. Under these conditions, would be more appropriate to evaluate the return from the standpoint of the host country. The emphasis on local projects of return consistent with the objective to maximize the value of the consolidated group.

Adequate solution is to recognize that financial managers must meet multiple objectives, by providing a response to investor groups and no investor in organization and in its environment. Host country governments are one of the group for foreign investment. Match between the goals of multinational investors and host countries should be achieved through two financial return calculations: one from the standpoint of the host country, and the other from the viewpoint of the parent company. The host country's point of view assumes that a favorable foreign investment (including capital costs of local opportunities) would not be wrong in the somber allocate scarce host country. Evaluation of investment opportunities from the local viewpoint also provides useful information for the parent company.

If a foreign investment does not promise a return on risk adjusted value is higher than the return obtained by a local competitor, then the parent company's shareholders would be better to invest directly in local companies.

4. The process of multinational companies cost of capital calculation

If foreign investment is evaluated by using a discounted cash flow models, the appropriate discount rate should be developed. The theory of capital budgeting in

Particular using cost of capital as the level disk onto, thus a project must generate returns at least equal to the cost of capital in order to be acceptable. The level of the benchmark (hurdle rate) is related to the proportion of debt and equity in the company's financial structure as follows.

It is not easy to measure the cost of capital of a multinational company. The cost of equity capital can be calculated in several ways. One popular method that combines the expectations of return on the dividend by the dividend growth rate expectations. Assuming Di = expected dividend per share at the end of the period. Po = market price of the stock is now at the beginning of the period and g = expected growth rate in dividends, the cost of equity, to be calculated as follows to = Di / Po + g.

Although capital is to measure the price of the shares present, in most countries where shares of listed multinational companies, is often quite difficult to measure in and g. In the first place because of the expectations. Expected dividend depends on the company's operating cash flow as a whole. Measuring the cash flow is complicated by the consideration of environmental factors. Moreover measurement of the dividend growth rate a function of expectations of future cash flows is complicated by the exchange control and other government restrictions in cross-border transfer of funds.

5. Problems and complexities in designing information systems and financial control of multinational corporations

Issues Related to System

Distance is an obvious hassle. Caused by geographical conditions, the formal information communication generally replaces the personal contact between the local operations manager with office management.

Three global information technology strategies, which are each associated with a particular type of multinational organization. The success achieved depends on the suitability of the design of systems with corporate strategy:

a) The spread of low to high centralization. Used by smaller organizations with limited international business operations and information system needs to dominate the domestic

b) High with a spread of low centralization. Local subsidiaries are given significant control over the development of technology strategy related to information and their own system.

c) High with a spread of high centralization. Here global information technology strategy executed locally by the global firm with strategic alliances throughout the world. System information is designed to reflect the needs of companies that are tailored to local circumstances. Management accountants to prepare some information for the management of companies, ranging from data collection to reporting of liquidity and operational forecasts of the various types of expenditure weights. For each group of data submitted by the company management should determine the relevant time period for the report, the level of accuracy required, the frequency of reporting and the costs and benefits of depreciation and timely delivery.

Here also the environmental factors affecting the use of information in translational dihasilakn. Reports from overseas operations company multinational U.S. generally translated into an equivalent value dollar that manager at the headquarters of the U.S. to evaluate their investment in dollars.

6. Analysis of variance of the exchange rate

In the international environment, investment planning is not as simple as that. Law differences in tax, accounting system, the rate of inflation, the risk of nationalization, currency framework, market segmentation, restrictions on the transfer of retained earnings, and differences in language and culture adds to the complexity of elements that are rarely found in domestic environments. The difficulty for the quantification of these data makes existing problems worse. Adaptation (adjustment) by multinational companies for investment planning models has traditionally been carried out in three areas of measurement: (1) determine the relevant returns for multinational investments, (2) measure of cash flow expectations, and (3) calculate the cost of multinational capital. This adaptation provides data that support the strategic choices, the third step in the process of enterprise modeling.

7. Special difficulties in designing and implementing performance evaluation systems of multinational companies

Performance assessments should use the appropriate method / right with the agency concerned for an appropriate method in a place not necessarily compatible with other places.

Performance evaluation on certain multinational companies are basically classified into three levels, namely (1) Levels of Leadership (Director and above), (2) Supervisors and above, and (3) Employees of low (blue colors). In the evaluation of the directors to the top, the assessment is directed towards "Leadership Framework" which includes 13 behaviors that are grouped into 4 groups:

a. Inspiring people consist of:

1) Lead people. Is the ability of state employees and make them confident in doing something so that they can lead to the appearance that is consistent with the management and leadership principles with translation as follows: maintain all information relating to the relevant people, improving the effectiveness of work teams and the lead work team toward success.

2) Develop people. Is to help employees to identify the needs for the success of the development requirements, encourage employee learning by providing a suitable support. With the translation as follows: provide a detailed command and make sure the command is understood and clearly visible and creating a positive environment for the development of long-term.

3) Practice what you Preach. Is to be consistent with realizing the principles and values, including "the passage of communication" even in difficult times.

b. Opening up, consisting of:

1) Know yourself. Is the ability to precisely identify and understand the power of yourself and fix it as well as applied and implemented in an orderly, understood influence on the effectiveness of a person in the organization. And has an extensive self-care and deep. Act as a constant (stable) on the influence of their power to correct and compensate for weaknesses-weaknesses.

2) Insight. Is the capacity to identify the relationship between facts, ideas and situations that are not clear and collecting it to solve problems that require priority, clarify and explain the complex situation that has been given / created an opportunity?

3) Courage. Associated with the capacity and confidence of employees in their opinion, and allowed to make decisions or choices along with evaluating the risk and responsibility concerns in the face of critical situations and challenges.

4) Curiosity. An employee openly curiosity to learn more about the thinking environment by asking questions that appear or do simple research, widespread and constant.

5) Service orientation. Is the desire to help or serve the customer by understanding customer expectations and needs, providing quality services that are durable and mutually beneficial as well as being a long-term perspective on the benefits?

c. Dialing with others, consisting of:

1) Proactive cooperation. Is working in collaboration with others through a commitment to achieve the object group, understand the needs and other targets and adapting own views and the views, if appropriate behavior through personal contribution to effective teamwork.

2) Impact and Convince Others. Is convincing, directly or indirectly in order to gain commitment to the ideas, projects or actions that are of interest organizations through the use of as many arguments are convincing, awakening an interest in others by using the influence of a unified strategy.

d. Adding value, comprising:

1) Results focus. Ambition is to fulfill the object of performance / quality standards and work continuously to obtain a suitable process improvement method, a high motivation to achieve targets for improving the work and maximize the work in the long term.

2) Initiative. Is to make employees act in a proactive manner (act and think in simple terms) so that the initiative does not just react to situations, but also anticipating for a long time and hold it well.

3) Innovation / Renovation. Display behavior to accept the challenge 'status quo' in the repair of control and come up with new ideas so that there is a change and run efficiently.

8. How to overcome the effects of inflation and exchange rate fluctuations on multinationals performance measurement?

In identifying the relevant factors in the future, scanning the external and internal environment will greatly assist companies in recognizing the challenges and opportunities. A system can be applied to gather information on competitors and market conditions. Both competitors and market conditions are analyzed to see the influence of both the standing of the competition and the level of corporate profits. Inputs obtained from this analysis are used to plan the measures used to maintain or increase market share or to recognize and utilize the new product and market opportunities.

One such tool is the WOTS-UP analysis. This Analysis regarding the strengths and weaknesses of the company relating to the company's operating environment. This technique helps in generating a series of management strategies that can be run.

Decision tools that are currently used in the strategic planning system rely entirely on the quality of information about internal and external environment of an enterprise. Accountants can help corporate planners to obtain useful data in strategic planning decisions. Most of the required information comes from sources other than the accounting records.