Professional Documents
Culture Documents
Information contained in this work has been obtained by Group No.3(unique group). However neither of the group members guarantees the accuracy and completeness of any information
published herein. This work has been published with a command of our module tutor.
Copyright 2011, GCBS, BBA III by group no. 3. All rights reserved. No part of this project may be reproduced or copied without the prior permission of the group members in written
Acknowledgements
We the group members would like to acknowledge to module tutor Mr. Sangay Rinzin for guiding us and to college management for granting us leave to visit a company within a national territory and take a chance to meet those people who acts as a backbone of the company.
As our group had visited Bhutan Polythene Co. Ltd. we would like to pay our gratitude to the following persons: Mr. Kinley S. Dendup (Managing Director), Mr. Tshewang Dorji (HR manager & Mkt.), and Mr. S.Mukerjee (Finance manager), Mr. D. Pradhan (Production Manager), and Mr. N. Subba (Quality control manager). We are also thankful to them for taking their time to respond to our extensive questions and their responses assisted us to complete our project successfully.
Group members: Yogesh Thara (901) Sumpa Norbu (890) Dechen Dema(827) Sonam Tashi (611) Sacha Gyeltshen (898) Bhakta Bdr. Gurung (906)
CONTENTS
Chapter one
Introduction
The need for information Types of Accounting Information Management Functions
Chapter Two
Background of the company
History Companys mission and vision Location of the company and Policies Objective of the company
Chapter Three
Financial management and HRM
Importance of Finance and Financial management Relationship of Finance with different departments Financial Decisions in BPCL Policies and strategies for recruitment Techniques for recruitment
Chapter Four
Marketing and Production- BPCL
Objective of marketing Market scenario of BPCL Relationship with accounting Marketing strategies used by BPCL Types of product Criteria for Supply
Chapter Five
Picture Descriptions
Introduction
In the world today most of the works are done through organizations-groups of people who work together to accomplish one or more objectives. In doing its work an organization needs resources-labor, raw materials, various services, land & building, and equipments. These resources need to be financed or paid for. To work efficiently and effectively, people in an organization need to know about the amounts of these resources, the means of financing them and the results achieved through using them. Parties outside the organization need to know the about the similar information to make judgments about the organization. This information can be provided by a system known as Accounting. It is defined as Art of recording, classifying and summarizing in a significant manner in terms of money & money transactions which are in part at least of a financial character thereof Organization can be broadly classified into two- for-profit or nonprofit. As these name suggest, a dominant purpose of organizations in the former category is to earn profit, whereas organizations in the later have other objectives, such as governing, providing social services, and providing education. Accounting serves as similar in both type of organizations. Through the use of these accounting information, profit oriented organizations can evaluate and pour the views into one vessel for decision making. Similarly we chose to visit Bhutan Polythene Company ltd. to gather information on Accounting as an informative decisional factor in the organization. The need for information In its depth, information differs greatly among the organization of various types. But in broader sense the information needs in most organizations are almost similar. We shall outline and illustrate these information needs by referring to Bhutan Polythene Co. Ltd., a pipe manufacturing company.
Bhutan Polythene situated at Phuntsholing seeks to earn profit by selling polythene pipes in different sizes and shapes. It is an organization of 48 employees headed by Mr. Kinley S. Drukpa, its managing director. Illustration 1.1 Types of accounting information
Accounting information
Consists of
Operating Information
Financial Accounting
Management Accounting
Accounting is one of several type of quantitative information. Quantitative information is information that is expressed in numbers. Accounting information is distinguished from other types in the fact that it is usually expressed in monetary terms. What information is needed about the amounts and financing of the resources used in Bhutan Polythene and the results achieved by the use of these information? This information can be classified into three categories: (1) operating information, (2) financial accounting information, and (3) management accounting information
polythene keep a record in his book and at the end of the day its invoice copy is sent to the office. The stores manager needs to know how much the stock is on hand and if it becomes depleted, this fact needs to be known so that additional quantity can be ordered. Amount owed by the debtors to the company need to be known; and if the debtor do not pay the bill on time, necessary action can be taken. The company also needs to know about their creditors, when these amounts are to be paid and how much money it has in the bank. Despite of companys known facts its operating information provides largest quantity of accounting information. Operating information provides much of the basic data for management accounting and financial accounting.
Management Accounting Information The managers of Bhutan Polythene Co. Ltd use
operating information together with other information, to carry out their management responsibilities. The accounting information specifically prepared to facilitate managers to hold their responsibilities is known as management accounting information. For Bhutan Polythene this information is used in three management functions: (1) planning, (2) implementation, and (3) controlling.
Planning
Controlling feedback
Implementation
Planning- it is performed by all managers at all levels in all organizations. Planning is the process of deciding what actions should be taken in the future. In Bhutan Polythene production manager decides what amount of raw materials is required and in case of heavy orders who are to be placed where. HR manager and Finance manager are engaged in planning for recruitment and financing respectively. Planning involves budgeting. It is the process of planning the overall activities of organization for a specified period of time, usually a year. A primary intention of budgeting is to coordinate the separate plans made for various segments of the organization so as to ensure that these plans harmonize with one another. Implementation- After planning all the managers in Bhutan polythene are required to implement those formulated plans. The implementation of these specific plans requires supervision on the
part of the managers. For any circumstances arises in the mean time of implementation, managers has to coordinate their responses. Controlling- In Bhutan Polythene production manager is responsible for manufacturing pipes and not for marketing and financing. It is not the responsibility of Mr. Kinley S. Dendup too; rather it is his duty to see that the works are carried in a proper manner by the employees of the organization. The process they use to ensure their employees performance is called controlling. Accounting information is used in controlling for communication, motivation, feedback, and appraisal. As a means of communication, accounting information assist in informing the employees of their plans (especially budgets) and in general about the types of action management wishes to implement. As a means of motivation, accounting information can induce employees to work efficiently towards the organizational goals and objectives. As a means of feedback, accounting information informs about the threats that requires investigation and possibly actions. Finally as a means of appraisal, accounting information helps show how well the managers are performing particularly with respect to budgeted performance of departments for which they are responsible. This provides a basis for salary increase, promotion, corrective actions and in extreme cases dismissal. We will come to know on the later part of the project that how BPCL use accounting information in decision making and management, how the company finance the business and their effective allocation.
The company enjoys a high reputation of consistently supplying pipes of the highest quality to all its customers and maintaining a very high level of customer satisfaction. The management is committed to ensuring total quality in all its activities and is continually making efforts to upgrade the quality level of its products. As a quantum initiative in this direction and create higher focus on quality throughout the company, the management has embarked upon the initiative to upgrade the company quality management system to meet the requirements of the international standard ISO 9001:2008. The Standard and Quality Control Authority (SQCA) under the Ministry of Works and Human Settlements, The Royal Government of Bhutan are receiving technical assistance from the UNIDO to select two Companies for establishing ISO 9001:2008 Quality Management System as a Pilot Project. BPCL has been selected as one of them.
The system shall enable every employee of the company to maintain customer focus, continually improve the product and processes and enhance customer satisfaction.
Companys Policy
Bhutan Polythene Company Limited is committed to consistently manufacture and supply high and medium density polythene (HDPE & MDPE) water and gas pipes of the required quality using the international standards and technology to meet the expectations of our customers through teamwork. We commit ourselves to continually improve our product and processes to achieve enhanced customer satisfaction.
Companys Objective
TO ENHANCE CUSTOMER SATISFACTION. TO ACHIEVE IMPROVEMENT IN DELIVERY TIME. TO ADD NEW CUSTOMERS.
Organizational Chart
BPCL
BOD
Finance Manager
Asst. Manager (ACCTS)
Production Manager
HRM
Marketing Manager
Relationship to marketing- marketing function involves selection of distribution channel and promotion strategies. These two functions requires huge amount of cash. Therefore finance and marketing need to work closely with coordination to maximize the firms value. Bhutan Polythene Company Ltd. oversees to make decisions on various fields viz. (i) investment decisions, (ii) Financing decision and (iii) Dividend decisions. Diagrammatically it is given below. Illustration 1.3 Financial Decisions in BPCL Financial Decisions
Investment decision
Financing Decision
Dividend Decision
Investment Decision- it involves the selection of either long-term or short-term assets in which a firm will invest funds. Investment in long-term assets yields a return over a period of time and popularly known as capital budgeting and investment in short-term assets is popularly termed as working capital management because assets can be converted into cash within a short period of time and it is used for day-to-day management of the business. Financing Decision- it is concerned with determination of proportion of debt and equity of capital structure. Here financial manager is responsible for equalizing the proportion between debt and equity of capital structure. Debt involves fixed cost which helps in increasing the return on equity but also increases risk. Rising of funds through equity shares is a permanent source, but the shareholders will aspect high rate of return. Dividend Decision- dividend is an interest on shareholders investment. It determines the portion of earning per share (EPS) to be declared as dividend per share. Here there are two aspects which affects the net profit of the company; distribution of profits as dividends without retention or retain all the profits or retain part of it and distribute the rest. The ratio of retaining the profit is known as retention ratio and distributing as a dividend is known as dividend ratio. In dividend decision, financial manager is concerned with determining optimum dividend policy, which maximizes the market value of the share thereby market value of the firm. Its been a many years that Bhutan Polythene Co. ltd. has not issued dividends to its equity shareholders. The main two reasons as mentioned by DGM and HR Manager are: 1. Because their profit is only in figures; not in cash. 2. Increase in no. of creditors Regarding Bhutan Polythenes financial statements they prepare every after one year. They follow the approved method of preparation in collaboration with government policies. BPCL after preparation of various statements after their evaluation by the audits and BOD they make a print out and submitted a copy to the government. As about the companys auditors, they are usually from the neighboring country India. BPCL place a proposal for inviting audits from Calcutta. In this process audits place their own demands in case of payments but before them company has to place their offer. Then after the negotiations the concerned person for auditing will be the member audit for the next three years. All the expenses incurred by auditors have to
be borne by the company and is recorded by the accounting personnel. An expense of audit includes their fees, living expenses, travelling expenses and other necessary expenses. BPCL financial statement includes Cash Flow Statement, Fund Flow Statement, Balance Sheet, and Income statement. From these financial reports the company makes various decisions as mentioned in the above paragraphs. The company is enjoying monopoly market and it is the only dominant company which produces polythene pipes in Bhutan. Because of this fact the company does not allow outsiders to steal a look into their financial report except to the authorized concerns only.
Following are some of the policies and strategies that human resource manager of Bhutan Polythene company (BPC), has being implementing. 1. To develop and retain employees- in order to develop and retain employees this company has being providing internal training to 10-15 employees every year. If these employees perform well in the internal training, they are send to external training (outside the country), for developing and building interpersonal skill, which is very important to every individual and it really them (employees), as well as company.
2. Job evaluation- This Company has being doing job evaluation based on the jobs that have similar demands in term of knowledge, skill, and abilities are placed in common compensation group. And also the amount of compensation paid is proportionate to the amount of effort put in carrying out a task successfully. Human resource manager of this company said that the job evaluation will helps in reaching an equitable compensation program. 3. Utilization of human resources- since this company is not very big, therefore this company is finding easy to utilize human resources. As they said that there are around 45-50 employees, who are working under production, so every time they are busy with the work assign to them.
The techniques use by Bhutan Polythene Company for requiting new employees, are as follows; This company basically looks into: 1. Knowledge. 2. Skills. 3. Abilities. 4. Qualification/ training/ education. 5. Job related experience. 6. Physical requirements. This company never sees whether employees are science or commerce back grounds. As of now, in this company almost 50% of the employees are science background and 50% commerce background. The saddest part of this company is that they are not able to get suitable new employees. Since this company requires, the employees who are physically feed and able to work physically. Though this company find very difficult to get desire employees, but still dont go for hiring new employees from outside countries.
A marketer at Bhutan Polythene Co. Ltd. has done the same job in understanding their prospective customers needs and wants. The company has placed many choices for their customers on demand for HDPE and MDPE pipes in different shapes, sizes and useable for different purposes like irrigation channels, drinking waters supply and many more. Bhutan Polythene Company limited is only one manufacturing company who produces polythene pipes. The company has full market coverage in Bhutan. Despite marketing their products in domestic markets the company has exported their products to Sikkim and also has an opportunity to market their products in other parts of the regions.
Present market scenario of BPCL BPCL believes that being only the dominant company of pipe manufacturer in Bhutan there has been threats on their way always. Threats for the company is the entrance of the Indian company who deals in similar products and about the nearest trading place at Phuntsholing selling polythene pipes at cheaper rates. BPCL has its outlets in some parts of the region like in Thimphu, Gelephu and Phuntsholing (head office).
Relationships with accounting Every organization has divided its functions into different heads; financing, HR, Marketing, R&D, and IT. Now the question is how marketing has a relationship to accounting and its information? Marketing involves selection of distribution channels and promotion strategies. It requires huge amount of funds for executing the job. So the initial step for marketing is to evaluate the adequate budgets and obviously aiming at increasing firms value. For example at BPCL the marketing manager always keeps a track on accounting information for seeking budgets for promotion and distribution of the products. In BPCL if a marketer wants to propose for any marketing jobs he/she has to go through step by step in the following manner: Illustration 1.4 Process of work appraisal and approval
Job Proposal
Managing Director
Approval by BOD
If the above proposal is approved then a marketer has all at his place to execute the proposed job. If his job is out of station then he will be getting travelling allowance and day allowance. At BPCL, marketer has advantage of doing his job if the job is for increasing firms value.
What is a marketing strategy? A marketing strategy defines objectives and describes the way you're going to satisfy customers in your chosen markets. It does not have to be written down but it is easier to communicate to outsiders, like your bank manager or other investors and consumer in the market. We have asked some question based on market strategies and they are: Do company need a marketing strategy? Yes, the marketing manager said that making and using a marketing strategy has a strong positive impact on profitability. This is because firms that employ a marketing strategy tend to focus on their customers and markets, integrate their marketing responses and work out in advance where their profits will come from. Isn't this just business strategy? The marketing strategy focuses on markets and customers and is just one part of business strategy. Business strategy takes a broader view that includes other business functions such as manufacturing and operations, finance, quality, purchasing and supply chain, and information and communication technology. For example, a business objective may be to increase sales. Marketing objectives to achieve this would be to reach new customers, promote repeat buying among existing customers and launch new products. Is there any marketing plan in Polythene Company? Yes, when we have developed our marketing strategy, it is usually written down in a marketing plan. The plan usually goes further than the strategy, including detail such as budgets. We need to have a marketing strategy before we can write a marketing plan. Our marketing strategy may serve us well for a number of years but the details, such as budgets for marketing activities, of the marketing plan may need to be updated every year.
So, our group asked question again that what should your marketing strategy consist? They said that marketing strategy is based on details of the company marketing pipes and objective understanding of the current situation in the market. We usually include:
The scope of the business: The customer groups we serve and the benefits they are seeking and which we deliver, and the technology we are use. This may provide us with what some companies call a 'vision' or 'mission statement', a set of words explaining what our business is about and where it is going.
Marketing objectives: We usually focus on the market share; we also increase awareness of our polythene company in the market, so as to increase our sale in the market. From that we can increase our product sale with the help of new consumer.
Target segments and positioning: they said that there are group of customers that helps in segmenting our product and targeting for a maximum sale and reputation of our company. And from that segmenting, our business gets position in the market. As of now there is only one polythene company in Bhutan but in near future there may be many polythene company.
Marketing mix: we also use 4 Ps like products, price, place (distribution) and promotion are the basic 'marketing tools' to deliver benefits to our customers and beat competitors in third country.
So, marketing strategy will not going to help us if we cannot implement it. When we have finished your marketing strategy, it is worth checking the operational capacity and processes capable of fulfilling the extra orders, delivering on time and providing any extra services reliably and efficiently.
Picture Descriptions
Following are the pictures taken during the visit. The plant manufacturing pipe is located near Dhamdara in Phuntsholing. In factory there is always a presence of production manager Mr. D Pradhan and under him there are 40 labors including 20 non-permanent workers. It produces pipes of different quality and shapes & sizes. Inside the factory it has three machines. In heavy orders all of three machines are utilized to produce pipes. It produces 118 tons of pipes per month.
Caution In factory BPCL has placed a sign board with prohibitions inside its factory. A person new to enter the factory is hoped to read at least once before entering into the main plant. Some of the cautions are as 1. Strictly No Smoking please 2. Please Dont Touch Machines 3. Machines are all controlled by Automatic Switches for ON and OFF Operation hence Please DO NOT stand close to it.
The pipes are produced from a raw material called Marlex which is exported from Qatar chemical company Ltd. The production manager always be aware of the stock and if needed reports it to the head office. The stocks of raw materials are recorded manually. The responsibility of store manager is to keep record of the raw materials used in manufacturing in a day in his book.
The picture shows the process of producing and inserting those Marlex into the machine. They pour several sacks of Marlex into a huge container. Machine automatically sucks the materials and the process begins. Marlex is white in color; so it has to be mixed with black color flavor which is the crushed pieces of the damaged pipes.
After marlex is sucked into the machine the heat up process begins as shown in the picture below. One or two persons are required to watch carefully whether the process going well.
While someone takes care of the process one has to be always be there to look and control the switches.
This is the machine where the rolling of the pipes begins. After pipe is been produced the machine automatically pushes the pipes to the rolling machine. This is the final process. After it is finished rolling it has to be taken to its place.
Conclusion
Doing business without accounting information has no space of survival in todays business world. Today almost every business in the world uses accounting information as a basic tool for developing and promoting their business. BPCL uses accounting information very efficiently to promote and for growth of the company.
In conclusion we the group members would like to share our views on the overall performance of the company; taking accounting information as decision making and other informative suggestions that our group has found after evaluating the information that we have fetched from BPCLs managers.
The managers of BPCL provided us the information regarding accounting which consists of operating information, financial accounting and management accounting. They gave us information of how their management function is and it is of three major factors used to function well and that are planning, implementation and controlling. As we began our conversation with the questions regarding their company background, policy and objectives, they (managers) friendly responded with detailed information to us. BPCL has their own unique organization chart and works are distributed according to it. We had questions and answers session regarding how financial decision is made, about marketing system and present market scenario and HR management of the BPCL. They explained about how accounting is related to other department like with marketing, human resource management, and financing. Lastly our group would like thank the module tutor for giving us with a productive project where we could learn new thesis regarding the management system of the company and it could be beneficial to us in present and future as well.
Recommendations:
1. So far BPCL has not employed more educated and experienced labors. So in this case we recommend that the company has to focus on training and employing educated personnel.
2. This company has few numbers of employees working under production. Therefore, some time they have to do the work more then what they are suppose to do. We see company is under developing phrases. So we think this company has to recruit more employees.
3. And also we didnt see any computer in production manager office. He said that he has keep inventory record manually. So this company has to look into this matter and need to facilitate production manager by providing computer, which will makes his task easier, effective, and accurate. In return this wills benefits to the company to get the record whenever they needed.
4. When asking questions to production manager about accounting information. He has little idea about it. So we suggest that he should also have excess information on accounting.
5.
Since the company has no profits in cash rather only in figure, which increases credit sales. So we suggest that the company should try to sell more in cash for development and growth.
6. We found that one person taking responsibility for two departments, for example DGM is controlling both Finance and Marketing Department. We suggest that company should have different Managers for different departments or for separate responsibilities so as to minimize the working efforts and to manage effectively.
References:
The McGraw. Hill companies, 12th Edition Accounting Text and Cases- Robert N Anthony, David F Hawkins and Kenneth A Merchant Financial Management-Principle and Practices by G. Sudarsana Reddy First Edition-2008; ( Himalaya Publishing House) Canadian Human Resource Management, THIRD EDITION. William B. Werther, JR (University of
Miami), Keith Davis (Arizona State University, Emeritus), Hermann F. Schwind (Saint Marys University) and Hari Das (Saint Marys University).
GLOSSARY
Accounting Is the Art of recording, classifying and summarizing they are true Audits An official examination of business and financial records to see that and correct
Appraisal A meeting in which an employee discusses with their manager how well they have been doing their job; the system of holding such meetings Bankrupt When a person or firm has no cash in the bank is called bankruptcy or bankrupt. Capital Budgeting The firms decision to invest its current funds most efficiently in fixed assets with an expected flow of benefits over a series of years. Capital Structure The manner in which the firms assets are financed. The composition of a firms financing consisting of debt and equity source of finance. Credit An informal arrangement in which a bank agrees to lend up to a specified maximum amount of funds during a designated period
Creditors A person or an organization who gives credits to the firm Cash Flow Statement Is a statement which is prepared to know only the cash company. transactions of the
Dividend The portion of companys net earnings that are paid out to the equity shareholders. Dismissal The act of dismissing somebody from the job or a termination. Financial Statements Financial report prepared at the end every year by an organization to know position and the future of the firm. Fund Flow Statement Fund Flow Statement is a statement which is prepares to know about from where funds are coming and where being invested. HDPE- High Density Pipes MDPE- Medium density Pipes Monopoly The complete control of trade in particular goods or the supply of a particular service; a type of goods or a service that is controlled in this way Recruit To employ a person in an organization or to give a job to somebody.
Working Capital An amount of capital required by a firm to carry out the day-to-day activities of the firm.
APPENDIX
Set of questionnaires asked to the different managers of Bhutan Polythene Co. Ltd.
How this company came into existing? When it was established? Who are the board of directors? What is the quantity of shares held by each of them? Which type of shares your company has issued? What is the rate of return? How many employees are there currently working at your company? What are the functions of finance manager? How do they keep record of the business transactions? When does your company prepare financial statements? Do your company prepare as recommended by RGOB? During the time of preparing financial reports from where do you invite audits to evaluate? How do you compensate? What are the decisions taken by the finance manager after going through the reports? How this accounting information does helps in Marketing? What do you foresee after looking at the report? How do you think that marketing is closely related to accounting? What is the view of HR Manager on the report? Do you find any importance to your department? How this report does help in production? How production, marketing and HR managers do makes possible use of accounting information in the company? How does the manager in production department keep record of the products being produced and supplied out of the factory go-down? What is the maximum hours do they have to work in the factory?