International Business Management Research Paper - 1

International Business Management - Research Paper Example Cost of Moving The different areas where the assembly plant has to bear cost of moving are as follows: Fittings, fixtures and land for the new plant Salaries of the new workers including the overheads and the training cost Social costs Transportation cost of exporting or shipping the finished products Power consumption and utilities Cost of installing machines Shareholders Affected The current economic crisis may affect the company’s ability to get business in the market. This might be the reason of declining profits. The company must conduct an internal analysis to find the root cause of their problem areas. After evaluating, the responsibility can be laid on a certain party. The benefit would be, that the labor cost, and production cost would be lower in Mexico and the maintenance cost would be lesser in US, so the shareholders profit can be guaranteed (Elliott, 2007, p. 13-14). Answer b) The strategic implications of moving and not moving are explained below: Moving: There are both advantages as well as disadvantages of moving the plant. Moving the assembly plant from the old location to a new place would help the company to start their business with cheap labor force and a new community to target to. The company would be able to generate more revenue. The company’s machineries are old and outdated which results in declining profits. So utilizing the low transportation cost, and tax free benefits in Mexico, the assembly plant can be moved. The disadvantage would be that the company would not be able to utilize its old site; it has to adjust according to the new and advanced equipments that will be used in the new plant. Along with that the training cost would be high as the employees of a totally different culture would have to be trained on new equipments. Not Moving: Legal implications may arise while moving to Mexico. The employees’ loyalty would be questioned and the originality of the company would be lost. The major issue of the co mpany is to maintain its profitability and increase the long-term value. This could be even done by inputting new facilities into the old machineries to compete with the other players, hard-work, continuous improvement and through innovation. By keeping the assembly plant where it is the company would not only be profitable but also be loyal to the place (Deresky, 2006, p. 64-66). Answer c) If the management of the company is able to understand the obligations of communicating with the political and the social leaders, then their recently adopted obligation is right. It is important to persuade the leaders that the community as a whole and the employees are the priority and not the profits. The company must look for options for supporting their moving decisions. They may propose the existing plant to look for some new owner or explore the opportunities of owning the employees. In case of the new assembly plant in Mexico, the responsibility lies on the host country and the facilitato rs of the organization. It is important to have a good public relation in order to consider the environmental and social issues. The ethical implications may also have an impact on moving the assembly plant to a different location, through reduction of labor cost. The focus should also be on the social and

Management acounting Essay Example | Topics and Well Written Essays - 1000 words

Management acounting - Essay Example 220.5 (A) W7. Material M7 usage variance = ((2,100 ?0.68) – 1,470) ?1.75 =?73.5 (A) W8. Direct labour rate variance = (7.2 ?525) – 3,675 =?105.0 (F) W9. Direct labour efficiency variance = ((2,100 ?14/60) – 525) ? 7.2 =?252.0 (A) W10. Variable overhead expenditure variance = (2.1 ?525) – 1,260 =?157.5 (A) W11. Variable overhead efficiency variance = ((2,100 ? 14/60) – 525) ? 2.1 =?73.5 (A) Budgeted fixed production overhead = 497 ? 9= ?4,473 W12 Fixed production overhead expenditure variance = 4,473 – 4,725 = ?252.0 (A) Standard hours for actual production = 2,100 ?14/60 = 490 hours W13 Fixed production overhead efficiency variance = (490 – 525) ? 9 = ?315 (A) Fixed production overhead capacity variance = (497 – 525) ?9 = ?252 (F) b) Discuss how the operating statement can assist managers in (1) Controlling variable cost Variable cost refers to operating expenses that vary in ratio to the business activity. Examples of variable cost include in our case include Direct material, direct labor and variable production overhead. Operating statement does assist managers in controlling variable cost in the following ways. Measuring actual cost marks the beginning of controlling cost. This is followed by variance calculation that is meant to show the difference actual and budgeted/standard costs. Managers will be given these reports on variances since they have got duty to use the report on the day to day running of the business (Riahi, 2001). The manager can use the report given to him to decide whether the company needs to take action of bringing actual costs back. The operating statements for our case will play a role in providing information to managers that helps in decision-making procedure (Coombs, et, al 2005). The statement helps in quantifying the effect of the difference in volume between actual sales and budgeted sales. This means that comparison between budgeted cost of the actual output and the actual cost of the actual output will be made hence it helps to differentiate clearly between actual and planned performance. This helps management by exclusion because these mangers can now turn their energy on other important areas so that they can achieve the best results in relation to achieving actual performance. Variable costs do get affected in control terms during short period of time hence an operating system for the previous month indicating variable cost variances will outline areas where the organization needs action (Coombs, et, al 2005). For instance, managers can improve labour efficiency using different ways e.g. by training or reducing staff actions that do not aid production process. For our case, direct labour efficiency variance of ?252.0, which is 7.2%, could be reduced. Direct labour variance is given by the difference between labour flexed budget and actual results. The managers can break this down into labour rate variance and labour efficiency variance. This will help the company know what they paid for hours they actually used in comparison to what they budgeted for (Coombs, et, al 2005). On the other hand labour efficiency variance will indicate how much labour the organization used compared to what it thought it could have used. This can be illustrated from the analysis of the company’s operating statement for instance we are given direct labour rate variance to be ?105 which is favorable according to Ash plc producers. On the other hand, direct labour efficiency variance in the same company is ?252 which indicates adversity in the running