Electronic Board Plc is an organization established by an electrical engineer, John Watsons in the early 1970s as a sole proprietorship venture. The main business of the company is the production of electronic circuit boards. The company later on through dint of hard-work, developed into a public limited liability company. It maintained remarkable business success which climaxed in 1990, when it recorded an appreciable sales margin of £26 million and a profit after tax of £1.9m, using staff strength of 200 employees. The good business records of this company truncated in 1992, when it started experiencing heavy dwindling fortunes by recording abysmal drop in total sales turnover of £21.5m and a colossal total loss of £1.7m.
This report assesses the internal and external causative agents of the decline in the success of the electronic board plc, using the SWOT analysis method and critically evaluates the ways through which management accounting and control can contribute to the successful management of the company.
INTERNAL ENVIRONMENTAL FACTORS
The organizational structure of the company is heavily lopsided around Directors who have no management accounting regard and skill required to achieve the profit maximization objectives of the company. In the Board of Directors structure, no management accountant was appointed to advise the company on the cost implications of their expenditures. There was no budget guidelines to expenditures incurred. The up-coming financial advice proffered by the lone qualified accountant appointed only in 1990 was disregarded. A case in point was the statement attributed to one Senior Manager, berating the accounting profession, saying that accountants were not professional electronic engineers: “they know nothing about the industry and the decisions we have to take”. They also have no idea of proper cost of production per unit. In addition to this is
References: Brealey, A, Myers S.C and Allen F (2011). Principles of Corporate Finance. McGraw-Hill, Irwin. CIMA (2005) Operating and Financial Annual Review demonstrates success. http://www.cimaglobal.com:80/annualreview2005retrieved October 23, 2011. Frank, W and Alan, S (2008). Business Accounting 1. Prentice Hall, Pearson Education Limited, Edinburgh Gate, Harlow Essex CM20 2JE, England Hill, T. & R. Westbrook (1997). "SWOT Analysis: It’s Time for a Product Recall". Long Range Planning 30 (1): 46–52. Melville, A. (2011). International Financial Reporting, A Practical Guide 3rd Edition., Prentice Hall Pearson Education Limited, Edinburgh Gate, Harlow Essex CM20 2JE, England Will S, Ray H, & Eric E.N. (2009). Management Accounting 3rd edition., McGraw-Hill, Higher Education, Bershire, SL6 2QL, England.