TUGAS III AKUNTANSI INTERNASIONAL CHAPTER 3

MANAGEMENT PLANNING AND CONTROL

PUTRI AYU PUSPA RENGGANIS

20208970

4EB11

Four dimensions in the modeling business.

The latest 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 long-term business plan of a company. It includes four main dimensions.

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

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

3. Develop data sources for support strategic choices.

4. Certain choices translate into a series of specific actions.

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 stressed to do what is necessary to achieve the desired levels of performance in a competitive market conditions.

The concept of Standard Costs :

- cost control

- Applied to existing manufacturing conditions

- Goals: compliance with performance standards

- Standards are determined each year

- Analysis of variance based on actual vs. standard

- Investigate if the standard is not met

The concept of Kaizen Cost :

- cost reduction

- Applied to manufacturing improvements on an ongoing basis

- Objective: To achieve cost reduction targets

- Target cost reduction is determined each month

- Analysis of variance based on a constant cost reduction

- Investigate if the target is not achieved cost

Estimates of investment returns abroad.

The decision to invest abroad is a very important element in the global strategy of a multinational company. Foreign direct investment generally involves a large number of capital and prospects uncertain. Investment risk, followed by the foreign environment, complex and constantly changing. Formal planning is a must and is generally performed in a capital budgeting framework that compares the benefits and costs of the proposed investment.

In the international environment, investment planning is not as simple as that. Differences in tax law, accounting systems, 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 make existing problems worse.

The calculation of capital costs of multinational companies.

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 discount, 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 At = 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 = At / 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.

problems and complexity in designing the financial control and information systems multinational companies.

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

Three global information technology strategy, 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 generated translation. Reports from overseas operations of multinational companies are generally translated into U.S. dollar equivalent value to the managers office in the U.S. to evaluate their investment in dollars.

analyze the exchange rate variance.

Three rates of exchange may be used when preparing draft operating budget at the beginning of the period:

a) The spot exchange rate prevailing when budgets prepared

b) An exchange rate is expected to apply at the end of budget period (rate projection)

c) exchange rate at the end of the period when the budget be adjusted if the exchange rate change (closing rate)

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

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 your self. 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 methods, 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.

How to overcome the effects of inflation and exchange rate fluctuations against the measurement performance of multinational corporations.

For multinational companies, fluctuations in foreign currency exchange rate uncertainty resulting from the company's operations in the international arena. Currency risk management refers to the company's risk management transactions, economic, and translation. Transaction risk refers to the possibility that cash transactions in the future will be influenced by changes in exchange rates. Economic risk refers to the possibility that the present value of cash flow company in the future will be influenced by exchange rate fluctuations.

One way to overcome problems of economic risk and the risk of the transaction is to hedge (hedging). Contract requires the buyer before a certain currency swap with a certain exchange rate (forward rate) at a predetermined date in the future. In the face translational risk, management can provide a report in the dollar-denominated and local denominations that multinational management can know the true state of the local divisions and the impact of foreign currency translation.

Multinational companies use a system of decentralization because it gives the advantage for the division of the country of origin and foreign divisions. These advantages include:

1. Local managers are able to produce better decisions through the use of local information.

2. Local managers can provide more timely responses to changing circumstances.

3. Center manager is impossible to understand all of products and markets.

4. Train and motivate local managers to make decisions daily operations so that top management can focus more on long-term problems.

Performance measurement in multinational companies have to separate the evaluation of a division manager with evaluation of the division. Managers should be evaluated based on revenue and costs incurred. Once the manager is evaluated, a subsidiary of the financial statements can be adjusted by the parent company's currency and the costs can be allocated beyond the control of managers. Environmental factors such as social, economic, political, legal, and different cultures in one country from another country is out of control but the manager will affect company profits and ROI.