AAF043-6 Accounting and Financial Assignment Sample
Module code and Title: AAF043-6 Accounting and Financial Assignment Sample
Introduction
Understanding strategic management is important for a better overview of any company. In this report, the role of a balanced scorecard and its use in the airline industry is going to be highlighted. In order to provide a detailed understanding FedEx as an airline company is selected. Discussion regarding the non-financial data for performance measurement is going to be portrayed.
The importance of the pricing strategy for launching a new product and its impact on sales, profitability and cost of the company is also going to be discussed. The importance of contributing techniques for decision-making shall be discussed in this report.
1. Brief description of Balance scorecard
It is considered a matrix for measuring the strategic management of a company. It helps to analyses the internal feasibility to maintain the external outcome. Generally, it is calculated with the help of analyzing past financial data. It acts as feedback regarding how the organization can improve its financial decision abilities in future (Muda et al. 2018). It is helpful in improving the strategic planning of a company. Better communication and execution are also part of its functions.
During the Pandemic hospitality sector mainly the airline companies of the UK were suffering. This is the result of using a balanced card so that the strategies for improvement can be implemented. In the case of FedEx over 85% of the internal stakeholder had spent 1 hour on average discussing the strategy of the company (Fijałkowska and Oliveira, 2018).
Usability of Balanced Scorecard for FedEx
| Objectives | Measures | Current Initiatives | Performance indicator |
| Adding value to the internal process. | Internal HRM management has improved so that the role can be played in a seamless way. | Internal feedback is received from the employees so that the issues and problems can be identified. As per the views and findings of Mya shin, V. and Petro, (2019), Job satisfaction is also considered a matrix that can help to increase the work environment. | Better external management of functions. |
| Improve the balance between assets and liabilities. | The total asset of the company is estimated to be $80470 and the company is aiming to improve this figure in a few years. | The company is planning to improve its assets compared to its liabilities (Pylypiv et al. 2020). It has also focused on decreasing its expenses and the ventures that are creating more liabilities. | Analysing the current ratio |
| Improve the cash inflow | The cash inflow of the company needs to improve as the outflow of the company is considerably more. Identification of the problematic areas is essential so that they could be mitigated for a better workflow. | It is considered that the cash inflow of the company is $12795 and compared to that the outflow is $135650 as a result it is important for the organization to improve its course of action. | Analyzing the Cash flow statement |
| Improve Sustainability | The wastage of materials has been decreased by the company. On the other side, it is planning to reduce its carbon emission. | The company had focused on tracking the pollution created by its aircraft. Based on that the filing of the company is changed. | Decreasing the carbon footprint of the company |
| Customer retention | Analyzing the feedback from customers and use of AI to understand the preference of the customers. | FedEx had changed its pricing strategy based on the affordability of its customers (Fork et al. 2020). During the Covid, it had also improved the precision measures for social distancing. | Improvement in customer feedback and increase in goodwill. |
Table 1: Evaluation of balance score card for FedEx Airline (Source: Self-made)
Discussion on two non-financial measures that the airline company could use to monitor its performance
Considering the non-financial data is necessary from the company’s viewpoint. It can help to provide an idea about the overall growth of the company. Considering the functions of FedEx there are two major non-financial indicators for measuring the financial health of the company.
Customer satisfaction
Understanding the satisfaction of the customers is one of the major criteria for a company’s development. The company prefers to have customer surveys regarding their product and services. The business also collects different types of recommendations from its customers. This increases the value of the company in front of the customers and ensures their importance (Ackerman’s and Van Oorschot, 2018). It also focuses on future expectations regarding its products and services.
Monitoring this non-financial data can help the business to evaluate the satisfaction level of its customers and based on that changes can be made as per the need of the company. As per the views of Wiyono et al. (2019), after the impact of Covid, most Airlines are facing difficulties in terms of revenue generation. As a result, improving the experience of the customer can help to retain the existing customers.
Service or product quality
It is important for a business to understand the need of changing and upgrading their product and services for business growth and improvement. Managing the product can help to bring better revenue generation for the business. Improving the course of action can also develop a strong base of customer satisfaction.
The use of technology has played a vital role in providing an emerging experience to the customers of the company (Mamabolo and Myres, 2020). It is beneficial for the company to understand the role and influence of the business environment and understanding this business action can help to develop more business requirements.
2. Discussion about the pricing strategy for launching a new product
There are different types of pricing strategies that are followed in the hospitality sector of the UK such as “revenue-oriented objective, competition-oriented pricing and Demand oriented pricing”. However, among them, Price per segment is considered the most common strategy that is used in the hospitality sector.
The role of implementing this strategy helps to segregate the entire customer base and based on their preference and buying ability the pricing is made. This provides better clarity about segregating the customers.
Figure 1: Pricing strategy (Source: Hatefi and Haeri, 2019)
The other mode of pricing such as competition-oriented strategy is used in the hospitality sector. The market of the UK is vast; it is capable of providing overall employment to 2.53 million and provides 7.1 % of the GDP of the company. It is able to generate revenue of $ 59.3 billion for 2021. It represents the business for 3 to 5 % so that the response of the country can be maintained in a proper way (Hatefi and Haeri, 2019).
This industry is able to make a market value of 8.4 % of the market share of the country (Fedex.com, 2022). In the case of competitive strategy, the main company for example FedEx will compare the pricing of other companies such as British Airways and Eastern airways. As per the pricing of other airlines the parent company will try to fix their price in such a way so that it can be more value for money.
Implementation of strategy during new product launch
Before launching a new product in the hospitality industry the utility of that product undergoes certain steps such as:
Skimming, in the case of this strategy the pricing of the newly launched product is kept high so that in the initial stage it can generate more revenue. This strategy fasters the recovery rate of the invested capital of the company.
Penetrative, under this strategy when a new product is launched then the main goal is to grab the most market share possible. During this time range, the price of the product is sent very low so that the maintenance of activities can be done as per the needs of the consumers.
Freemium pricing, under this strategy the consumers aim to provide some of their services free of cost as a sample. This helps in gathering new customers and fresh leads (Rafiq et al. 2020). Later these leads can help to build networking for the company. Providing this type of facility helps to spread advertising of a product.
In dynamic pricing, under this type of pricing the demand of the customer always matters. If the demand is high for a product at this point the pricing of the product gets high (Tuan, 2020). The implementation of resources can bring productivity to the organization.
Utilizing this type of pricing model can bring different forms of business functions. It can help the companies to segregate their product lineups and also help to provide specific advertisements. The need of estimating different types of products can help to bring business actions (Pecha et al. 2021). Considering the source of activity can also help to bring business activities and as a result, the marketing segmentation can be done in a smooth way.
Impact of pricing strategy on profitability and sales, cost of Tourism Company after Covid 19
After the impact of Covid, most hospitality-based companies in the United Kingdom faced a drastic change in their revenue generation. It can be estimated that the role of different types of actions had impacted the profit-generating ability of the companies (Vavae et al. 2018). In this type of situation, most companies had followed a comparative pricing strategy for maintaining their activities.
As a result of this, maintaining this operating cost can evaluate the role of industrial development in the countries (Peterman et al. 2019). The profitability of the companies is decreasing due to not getting enough customers. In this type of situation, the organizations changed their pricing strategy. On the other side, the need for different types of strategy had helped them to estimate the need for values.
The hospitality industry of the company had faced different types of downfalls regarding the decrease in their product demand. In order to cope with this situation the cost of the raw materials had been revised (Urtubia et al. 2018). On the other side, the sales of the products had decreased thus marketing activity has been applied. Hotels and industries had adopted the rules and regulations of the government of the UK.
It has contributed to different forms of activities and improved the working environment. The entire workforce is divided into different groups. So that one part can stay quarantined and the other part can perform and vice versa (Abdel-Basset et al. 2019). This is how the hospitality sector engaged its workforce and managed to continue its business operation during the pandemic situation.
Calculation of net profit of ABC Hotel before Covid 19
| Items | Amount ($) | Amount ($) |
| Revenue | 25000 | |
| The cost required for sales | 17500 | |
| Gross profit | 7500 | |
| Expenses | ||
| Salaries | 2000 | |
| Wages | 700 | |
| Electricity | 450 | |
| Rent | 200 | |
| Total expenses | 3350 | |
| Net profit | 4150 |
Table 2: Calculation of Net profit (Source: Ms Excel)
Analysis
In this following segment, it can be seen that the revenue of this hotel was $25000. Value of $17500 is deducted and gross profit is left for $7500. After that, the gross profit needs to be deducted of $ 3350 and the result is considered as Net profit. This is the situation of ABC hotel before Covid had impacted.
Calculation of net profit of ABC Hotel after Covid 19
| Post Covid | Amount ($) | Amount ($) |
| Revenue | 17000 | |
| The cost required for sales | 12000 | |
| Gross profit | 5000 | |
| Expenses | ||
| Salaries | 4000 | |
| Wages | 700 | |
| Electricity | 450 | |
| Rent | 200 | |
| Total expenses | 5350 | |
| Net Loss | -350 |
Table 3: Calculator of Net profit after Covid (Source: Self-made)
Analysis
After the impact of Covid, the primary factor that is noticeable is the drop in the revenue. It was $25000 before Covid and it had dropped to $17000. On the other side, the expenses of the company had also increased from $3350 to $5350. It is because the estimated need.
Figure 2: Pricing graph post Covid (Source: Elhidaoui et al. 2020)
3. Discussion on the role of contribution technique for making a decision and providing suitable illustration
It can be seen that the changes in the Profitability are different. In post Covid scenario the profit of the company is negative, which means the expenses are comparatively more than that of its income. This highlights the condition of the company in terms of maintaining its form of activities (Elhidaoui et al. 2020). This is the result the net profit had reduced to – 350. It is because the demand for the product and services had reduced with the reduction of buying capacity.
The contribution technique is used so that the relation between direct and indirect costs can be justified. It helps the business to understand the role of each product and it’s pricing. This type of matrix helps to evaluate the marginal cost of the organization and based on that the decisions are made (Athanasies et al. 2021). Understanding the marginal cost of a product can help the organization to estimate its value of monetary gains. Contributing factors reflect how much the organization has to contribute so that its activities get fulfilled.
It is helpful in terms of making decisions as it provides an idea about the expenses that the companies had to bear so that their course of action gets fulfilled. On the other side providing an illustration is also necessary for maintaining the transparency of the business. Considering the source of action can help to grow the business in an estimated way and maintaining different forms of business activities can grow the business structure (Sierra et al. 2018). Illustrating the business action brings more transparency and reliability as most of the factors get fulfilled.
Figure 3: The cycle of decision making (Source: Cook et al. 2020)
Maintaining the margin for contribution can help to maintain the selling price and the volume of sales in a proper way. Estimating different forms of actions can also evaluate the role of business activities and their inhabitants. The cost price is also considered as a value of action which is estimated for the need of maintaining its course of activities.
It is helpful in form of making decisions as it is capable of estimating different types of activities (Cook et al. 2020). Evaluating the course of business activities is essential for maintaining the course of action. Thus it is estimated by the company that the need of maintaining different types of business activities can be impacted.
Evaluating the course of business activities is always helpful for considering the course of action. Due to the impact of Covid the hospitality industry needs to improve its growth rate. This is the reason why contribution techniques have helped them to understand the key areas which need to be rectified.
Conclusion
It can be concluded that the role of understanding the balanced scorecard is essential. Discussion about the concept of a balanced scorecard is portrayed and its impact on the airline industry is also evaluated. The issues that the hospitality industry and airline companies faced during the time of the pandemic are also portrayed. Different types of pricing models are estimated and the impact on the pricing of products is considered. The impact of sales and profitability on the hospitality sector is mentioned.
It also evaluates the role of estimation so that the evaluation can be done effectively. The objective of the contribution technique is also mentioned and its positive side for recovering from the issues of Covid is also discussed. The main objective of this project is to highlight the condition of the hospitality industry post Covid and it is portrayed through this project.
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