System of Double-Entry Bookkeeping

Discuss About The Strategic Initiatives Management Critical.

The type of book keeping that has been used in the proposed business is System of Double-Entry Bookkeeping which is a standardized technique of record keeping that is more detailed and complex .It presents the concept of debit and credit, which means that for each and very every transaction there is something received that is termed as debit and what is given up is known as credit, as such, transaction that are recorded impacts two or more accounts.

Reason for choosing the type of book keeping in the system is because it has a process to make sure complete and accurate business transactions recording. It is a source of financial information that is reliable and fair valuation the condition or business performance.

 In the given plan of the business the type of control that is used is visual control. In the process of visual control the various checklists, dash boards, scorecards, budgets are considered. The visual control allows to see and analyse the things that are correct and are happening, otherwise they can raise question that lets you make sure to focus on fixing the situation. Moreover the process of visual control shall be used every quarterly so that the operations of the business are well evaluated and the performance is assessed.

The bookkeeping operation is usual terms is performed by a bookkeeper. He is the person who records the daily transactions related to finance of a business. The book keeper in usual terms is responsible for the preparation of the daybooks that contain sales, purchases records payments and receipts. It is responsibility of the bookkeeper to ensure that the transactions whether it is cash or credit transaction are recorded in the right daybook.  The accounts are to be produced by the accountants who prepares reports from the information regarding the dealings in terms of finance recorded by the bookkeeper.

The business ratios are produced by the business that are maesured from the financials of business plans, and expected and used by bankers, investors and financial analysts. It also comprises of a series of indicators of statistics of the business types that is specific. This information of the industry is categorized and classified by the codes of “Standard Industrial Classification” (SIC). The information that is associated comes from the list of “Integral Information System” a leading provider of economic information that is industry-specific. The primary ratios that are to be considered for the business are:

• Current ratios: It helps to calculate ability of the company to meet the obligations related to finance. It is conveyed as the frequency of times the current assets surpasses current liabilities. A high ratio denotes that a company can pay its creditors as they fall due. If it is less than one, it denotes the potential problems in cash flow.
• Quick ratios: This is alike ratio to Acid Test ratio that would measure the entity’s capability to overcome its present commitments using its assets that are most liquid i.e. cash or cash equivalents (Van Der Aalst, et al., 2016). It shows Total Current Assets excluding stock divided by Total Current Liabilities.
• Total Debt to Total Assets: It is the Percentage of Total Assets financed with debt.
• Pre-Tax Return on Net Worth: This ratio indicates the earnings of the shareholders before taxes for each pound invested. This ratio is not applicable if the net worth of the company for the period being analysed has a negative value.
• Pre-Tax Return on Assets: It indicates profit as a percentage of sum total of the Assets before taxes. It helps to measures the ability to manage and allocate resources of the company.

Visual Control

 The ratio analysis process gives the investor the tool that help in analysing the   financial statements of the company.  The investors use these ratios to analyse the stock in a sector in comparison to another company in the same industry. The use ratio analysis the process of comparing financial statements of multiple companies is simplified. The methods in which the ratios of the company will be examined to find out an organization are the price to earnings (P/E) ratios and the profit margin.

 The profit margin is the ratio that investors may utilize for the comparison of the company’s profitability within the same sector. The calculation is made by dividing a company’s net income by its revenues. The company and the competitor company who are in the same sector with profit margins of 50% and 10%, respectively. The investor can easily compare the two companies and conclude that the organisation was able to convert 50% of its revenues into profits, while the competitor was only able to convert 10%.

The other ratio that can be used can use is the P/E ratio. The P/E ratio helps to value and compares a company’s current share price to its earnings per share. It is the measure of  the process of buyers and sellers are pricing the stock per $1 of earnings. The ratio gives an investor an easy way to compare one company’s earnings with those of other companies. If the company has a P/E ratio of 100, the competitor has a P/E ratio of 10. Then it can be concluded that investors are willing to pay $100 per $1 of earnings that the company generates and only $10 per $1 of earnings the competitor generates.

There are several considerations that must be taken in hand while comparing ratios from one financial period to another or when comparing the financial ratios of two or more companies. 

Comparative analysis of a company’s financial statements over a certain period of time, make an appropriate allowance for any changes in accounting policies that occurred in that period.

Comparing ratios from various fiscal periods or companies, inquire about the types of accounting policies used.  Different accounting methods can result in a wide variety of reported figures.

Determination of the  ratios  that were calculated before or after adjustments were made to the balance sheet or income statement, such as non-recurring items and inventory or pro forma adjustments. Lastly a critical examination of any departure from industry norms.

• Real Time Monitoring –It set of processes through which various information are obtained.  It helps to find out the flaws in performance can indicate problems, that an lead to more issues (Stacey, 2016).
• Conduct of workarounds–It is the process of observing work processes as a manager and find out the team’s performance from different stakeholders: clients, suppliers, co-workers in other teams and so on.
• Mix– It the process of evaluation whether the business operations are on  track and whether it is  working harmoniously for achieving the common goals.

Business Ratios

The marketing plan the Business is planning to keep includes low pricing strategy for better penetration of the targeted market, innovation of products for creation of product differentiation. Moreover, the company planning to keep a sound advertisement proves to attract the clients.

The other Business controls that are considered other than the visual control are:

1. Procedural controls: It establishes a known pathway to a consistently secure result.
2. Embedded controls: These includes contracts that are standardized, designed intentionally for control the financial and automated data backups that automatically work in the background to protect the business from poor behaviour or decisions.

• The function of control enhances management of business by guiding the management in obtaining goals that are pre-determined. The process of control also guarantees the efficiency of various functions (Rocha, et al., 2016). The limitation in various grounds is also reported for taking measures that are corrective. Control gives the criteria for actionof the future. The constant flow of knowledge about projects keeps the long range of planning on the correct track. It helps in taking corrective actions in future if the performance is not up to the mark. It also enables management to avoid repetition of past mistakes. Whenever there is deviation between standard performance and actual performance the control helps in determining the future course of action.
• Control helps in the activities coordination through unity of action. The managers to coordinate the activities with its subordinates in order to achieve the goals of the departments. Similarly the chief executive also coordinates the functioning of various departments (Beedubailet al., 2016). The control checks on the performance and proper results are achieved only when there is coordination of activities. The control system helps in improvising the efficiency of the organizations. Various devices of control act manager’s motivation. The every person performance is monitored regularly and any deficiency if present is corrected at the earliest. Controls put psychological burden on persons in the entity.

In order to ascertain the additional number of products to be sold into the market, the ice wine company needs to consider the following points:

Identifying the products having the potential of sales:

There might be certain products of an organisation that a customer might buy; however, the higher pricing structure is restricting them to purchase the same. In order to deal with this issue, the ice wine company needs to compute the overall account potential by anticipating those purchased from the competition.

Majority of the managers have exclusive purchasing capacity for the departments. It is necessary to detect them, while they are plugged into the association and networks of the customers (Szolnoki et al., 2014).

It is necessary for the ice wine company to accumulate all information from its customers. It is necessary to be in close contact with the customers and as soon as strong relationship is formed with its customers, it could look for their acquaintances.

Based on the above discussion, the organisation could increase its sales volume by additional 10% through generation of new customers.

In order to become the main supplier of those individuals, the organisation needs to undertake the following steps:

• Close relationships need to be maintained with the customers along with networking with the local chambers of commerce and professional associations, as they might help in generating leads for the organisation
• Bartering with the companies for exposure, which might take place in the form of co-exhibiting at expo or negotiating trade of service for advertisement space
• Motivating the staffs for becoming active in board of directors and local charities
• Holding webinars at minimal cost or no fees

Besides the identified ice wine products, the Canadian Ice Wine Company could think of selling Weingut Markus Huber 2012 Berg Riesling Eiswein and Casa Larga 2008 Cabernet Franc Ice Wine. These two products are widely popular in the Canadian market. Along with this, these products contain certain features and they designed especially for winters. Hence, the organisation could think of adding these products during the third quarter of the first financial year. This would help in increasing its overall revenue margin and profitability. As a result, it would increase its market share in Thailand by developing a brand image that is positive in the consumer’s eyes (Higgins, Peterson & Lau, 2016).

It has been observed that before entering into the market of Thailand, the organisation would conduct adequate market research for targeting the niche market. Initially, the organisation would target the rich individuals residing in the market of Thailand. This is because the prices of ice wine products would be kept high in the market. However, it would minimise the prices of such products at a later point of time to attract the middle class customers of the nation as well. The primary aim of undertaking this decision would be to raise its sales volume. This is only possible by increasing the total number of customers for the  organisation.

References

Beedubail, G., Choy, D. M. H., Hsiao, H. I., Raghavan, S., &Vaideeswaran, G. (2016). U.S. Patent No. 9,455,990. Washington, DC: U.S. Patent and Trademark Office.

Higgins, L. M., Peterson, J. D., & Lau, M. H. (2016). Risky Business: Building a Super Luxury Wine Brand. Wine Business Case Research Journal, 1(1).

Rocha, C., Duclos, L. C., Veiga, C. P., Bischof-Dos-Santos, C., &Neves, N. A. F. (2016). The control mechanisms on the performance of the strategic initiatives management: analysis of critical sales process in a metallurgical business. International Business Management, 10(4), 357-369.

Stacey, R. D. (2016). The chaos frontier: creative strategic control for business. Butterworth-Heinemann.

Szolnoki, G., Taits, D., Nagel, M., & Fortunato, A. (2014). Using social media in the wine business: an exploratory study from Germany. International Journal of Wine Business Research, 26(2), 80-96.

Van Der Aalst, W. M., La Rosa, M., & Santoro, F. M. (2016). Business process management