The organization chosen for the purpose of this assignment is Mars Inc. The reason for choosing this organization is that my relative Mrs. Rachna Kapoor have been working as an accounting professional for 5 years in their Cost Accounting and Budget Management department in London, United Kingdom.
About Mars Inc.
Mars Inc. has been initiated in 1911, when Frank C. Mars prepared candies and started the Mars confectionary. The story of success began with the launch of many Mars chocolate brands, namely Milky Way in 1920, and continuing the similar story to register twenty nine chocolate brands as in 2014 .
The winning theme for Mars since its inception has been “mutuality of benefits for all stakeholders" which has been upheld by its five principles. These five principles roots their decision making in areas like brands, supply chain, quality management, and their operations.
Planning and Controlling at Mars Inc.
The interaction highlighted about the role of the hierarchy of the finance team and their relative importance in planning and controlling their assets. The finance team forms the basis for providing detailed financial analysis along with the other insights that helps them deciding their strategic moves.
The role of management accounting in Mars Inc. is planning the feasibility of launching of the new products in different countries, and in determining the scale of operations of its brands in different markets. For instance, as indicated in the interview as well as specific figures substantiated from the published resources, Mars Inc. reduced the advertisement expenditure on its brand Wrigley Gum in the United States of America by 38% in the year 2009 . When enquired about similar decisions at Mars Inc., it was revealed that such decisions are the planning and budgeting process. The strategic move to reduce the advertisement expenditure is the pay off the huge debt floated on its acquisition in the year 2008.
Mars Inc. rely a lot on quantifying its future planning. The decisions regarding the Mars products in different countries depends a lot on the detailed budgets not only at the functional level, but at regional and country specific levels. The accounting department collects details from several departments before quantifying, for instance, the accountants are supposed to even go in the factory to talk to supervisors and work in collaboration with them to formulate the production and purchase budgets. The discussion also revealed some key factors in preparing budgets such as labor hours plays an important role in formulating labor and production budgets.
The finance department is also responsible to determine the variances by comparing the actual results with the budgeted and suggest strategic control measures. At Mars Inc. the control function is not a onetime task, rather the budgets are compared with the actual results every quarter, or at the maximum time span of six months. The immediate supervisors of the respective departments are responsible to report about the variance and the possible reasons for the same. The reports provided by the immediate supervisors is analyzed by the 'Business Planning Department' to take strategic decisions.
Five Principles enhances the effectiveness of Managerial Accounting
The uniqueness assessed by the discussion about the planning and control function at Mars Ltd. is the involvement of each and every department in the process. For instance, supervisors give appropriate authority and responsibility to workers. This encourages the engagement and motivation to achieve the targets, and maintain quality. The five principles of Mars Inc. namely quality, responsibility, mutuality, efficiency and freedom has been truly incorporated within the organization structure as well in the management accounting activities and it brings in the sense of belongingness and engagement at all levels of management accounting say, planning and controlling as discussed above, or inventory control. This differentiates Mars Inc. with other organizations.
Mars. (2014, February 28). About Mars. Retrieved from Mars: http://www.mars.com/global/about.aspx
Sterrett, D. (2010, February 15). Mars Inc. cuts ad spending for Wrigley gum brands . Retrieved from Crain's Chicago Business: http://www.chicagobusiness.com/article/20100213/ISSUE01/100033018/mars-inc-cuts-ad-spending-for-wrigley-gum-brands