MANAGEMENT PLANNING AND CONTROL

MANAGEMENT PLANNING AND CONTROL

1. Four-dimensional states in the modeling business

The model is a simplification (abstraction) of something. The model represents the number of objects or activities referred to the entity (entity). Managers use models to solve problems.
The types of models.

There are four basic models, namely:

1. Physical model,

2. Models of narrative,

3. Graph model,

4. Mathematical Model

1. Physical Model

Is a depiction of an entity in the form of dimensions. Physical models used in the world shopping center business includes mockups, or prototypes of new models.
Physical models to help a cause that can not be fulfilled by the real object. For example shopping center investors and auto makers can make some changes to be cheaper through the design of the physical model were compared with the final product.

2. Narrative Model

Describe the entity either orally or in writing. All business communications is a model of narrative, so the model of narrative is the most popular models. This model is often used by managers, but rarely recognized as a model.

3. Graph Model

Describe entities with line number, symbol or shape. Graphical models used in business to communicate information. Many company's annual report to shareholders contains color graphics to convey the company's financial condition. Graphs are also used to communicate information to managers.

Graph model is also used in the design of information systems. Many tools used by programmers and system analysis is the chart. An example flow chart (flowchart) and data flow diagrams (data flow diagram - DFD).

The three types of basic models have their uses as follows:

1. Facilitate understanding (comprehension)

A model would be simpler than the entity. Entity is more easily understood if the elements and presented in a simple relationship. In the physical model can only describe the shape of the object to be studied. In the model of narrative, the narrative can be processed into an overview. In the model graphs, charts can only show the main relationships, and on mathematical models, mathematical equations contain only the primary elements. But in any case, made an attempt to present a model in a simple form. After the simple models are understood, the model can be gradually made more complex so it can more accurately describe the entity. In any case, the model still only describe the entity and is never exactly the same as the entity.

2. Facilitate communication

After solving the problem (problem) understand the entity, meaning it often needs to be communicated to others. Perhaps the analysis of the system must communicate with the manager or programmer. Or maybe a manager must communicate with other of team problem-solver.

2. GENERAL MODEL SYSTEM

1. Material Flow

Input materials received from suppliers of raw materials and component assemblies. This material is stored in storage until needed in the transformation process. Then, the material is included in the manufacturing activity. At the end of the transformation process, the material is now in its finished form, kept in storage until shipped to customers.

In manufacturing companies, two functional areas involved in the material flow. Manufacturing functions to change raw materials into finished goods, and the marketing function is to distribute the finished products to customers. Both of these fields must work together to facilitate the flow of material.

2. Flow Personnel

Personnel input from the environment. Prospective employees from the local community and possibly from rival unions. Personnel input is normally processed by the human resources function, and then assigned to various functional areas. When in the field, the employees involved in the process of transformation, either directly or indirectly. Human resources function also processes employee dismissal (resignation, severance, or retirement), and these resources are returned to the environment.

3. Flow Machines

Machines obtained from the supplier, and is usually in the company for long-term (3-20 years or more). However, eventually all the machines are returned to the environment in the form of trade up to new models, or as scrap. The machines are used continuously, rarely kept away. Due to the specific sources of supply, without storage, and disposal pathways khsusu well, so the current machine is a physical resource of the most direct. However, flow control machines scattered across various functional areas of the machine.

4. Money Flows

The money is mainly obtained from the owners, who provide investment capital, and from corporate customers who provide the sales revenue. Other sources include financial institutions, which provide loans and interest on an investment, as well as from of government, which provide money in loans and aid. Responsibility for controlling the flow of money just to be on the finance function. Tool that uses a feedback signal to evaluate the performance of the system and determine whether corrective action needs to be done.

A. Open Circle System

Is a loop system without feedback or control mechanism. show open systems and open loop system at the same time. Only a few companies that use business concept. These companies are using open systems, but the feedback and control not working properly. The company started on a path and never change direction. If the company loses control, nothing is done to control the balance. The result is the destruction of the system (bankruptcy).

2. Closed circle systems

Is a system that has a feedback loop and control mechanisms. The system can control its output by making adjustments in its input.

2. Understanding the difference between standard cost concept and kaizen
 In 1950, an international business world was startled by the emergence of Japan as an advanced industrial countries through their international trading system that continues to soar. Especially from their car sector, when Toyota began to explore the European market and displacing American dominance of the West. After introducing the concept of Just in Time, Total Quality Control, Zero Defect & Activity Based Costing  that make the eyes of the world to Japan, now Japan introduced the concept of Kaizen Costing a satirical United States with his concept of standard costing.

KAIZEN

Kaizen in Japanese means change for the better. This concept is further defined as continuous improvement through changes in the small things. The company can be realized by making the working atmosphere is more effective and efficient by creating a team atmosphire, repair procedures every day, give confidence to employees and job satisfaction will make the job more enjoyable. The word "zen" in Kaizen means learning by doing (learn by doing) as a result of an ongoing process. Philosopy kaizen includes making changes and monitoring results, then adjust the results with little advance planning through the experiment. And if successful, the result is then applied. Some of the goals of kaizen which this is to reduce waste in business processes, quality control is accurate, Just in Time Delivery, standardized work, and use the equipment efficiently. Kaizen can only be run in three principles: (1) concern the processes and outcomes (not on the course), (2) Thinking  like to think global, not merely in a narrow only, and (3) does not accuse or blame, because the charges can only be causing waste .. In order Philosopy kaizen can run well applied to all levels of the organization, from CEO down to the lowest employee. Philosophy is what makes the Japanese to be great right now, and no doubt that  can apply.

CALCULATION OF KAIZEN Costing

Mathematically simple can be done to increase profit by increasing revenue or reducing costs. Kaizen costing application is started from the plan targets an increase in sales. Increased sales target of this course is expected to achieve profit contribution pre-planned. Increased sales can be done in two ways (1) increasing the selling price and (2) raise the volume of sales. It seems that the first option is not favored by potential customers, especially in a climate of competitive telecommunications companies today are more sensitive to price. If companies choose to increase sales volume variable cost must also be influential. Here is a word of caution in the management process of this influence.

This calculation can be mathematically described as follows:

Kaizen Costing Target = Actual cost of last year cost reduction ratio of the target x
In preparing the budget, the company first determine how large a percentage of cost efficiency compared with the year ago period. The percentage is what we call the ratio of cost reduction. When the budget has been running - as described above, kaizen serves as a control, the shape may be how much tolerance the ratio of cost reductions that can be accepted. If the application has gone well, and every employee has understood the philosophy of kaizen, we can see how big an impact in the performance appraisal division.

STRENGTHS AND WEAKNESSES KAIZEN Costing

Japan's success in implementing kaizen costing deserved thumbs raised, especially when Japanese products such as Toyota and Daihatsu have been competing to get rid of American dominance in world markets. Kaizen is the Japanese implemented in phases since the planning and development of products, so successful in this phase - the next phase. But Japan has successfully applied this system in a long production process. Learning from the movement of charge each year so that Japan can conclude that they can do anything from moving expenses if a new company first once stood. The concept of kaizen is impossible to be implemented, because no fees could be used as a reference standard of cost reduction.

3. Measure estimates the return of foreign investment

Investment is one of the important variables in an investment factors influencing factors in the economy of a country.

Factor stability of the country's economy

Factor of economic stability, is one of the important considerations in making investments. The good news is that Indonesia, according to DBS Bank's Chief Economist David Carbon, now become one of the country an ideal investment target because it has a stable economic structure.
Factor changes and technological developments

While technological advances are also important factors in improving production efficiency and reduce production costs. With advances in technology that is owned by the state will provide greater opportunities also encourage the entry of more investments.

 Interest rate factor

Regarding interest rates. This factor is also important in determining the level of investment is happening in a country. When in a state of low interest rates, the level of investment going to be high due to the credit of the bank is still profitable to invest. Conversely, when interest rates high, the investment of bank loans would be unprofitable.

 Factor in future economic prospects

Factor in the economic outlook came a factor that most affects the level of investment in the economy of a country. Undeniably, there is a hope for increased economic activity in the future is one determining factor for the investor in making an investment or not. If it is expected to increase economic activity in the foreseeable future, investors likely will not waste the opportunities that allow for greater profit in the future.

 Factors influence the exchange rate

The factors influence the exchange rate, theoretically have an impact on changes in the level / exchange rate uncertainty to the investment is (not sure). Effect of exchange rate changes on investment can be directly through multiple channels, changes in exchange rates will affect the two channels, the demand and domestic supply side. In the short term, the decline in exchange rate will reduce investment through their negative effect on domestic absorption, known as expenditure reducing effect. Because the decline in exchange rate will cause the real value of assets due to the increase in the level of prices in general and will further reduce domestic demand for the community.

Inflation Factor

The inflation rate negatively affects the level of investment this was due to the high inflation rate would increase the risk of investment projects in the long term and high inflation can reduce the average time to fall and loan capital and cause distortions of information about relative prices. Besides, according to Greene and Pillanueva (1991), high inflation is often expressed as a measure of macroeconomic instability wheels and an inability of the government's macroeconomic control policy.

Increase in the inflation rate in Indonesia is quite a big will usually be followed by rising interest rates. Can be understood, in an attempt to reduce the soaring rate of inflation, governments often use the money tight monetary policy (Tigh money policy). Thus the domestic inflation rate also affects investment indirectly through its effect on domestic interest rates.

Factor - Determinants of Growth and Change of Economic Structure in Indonesia
Factors Affecting Economic Growth:

A. Factors Human Resources

Similar to the process of development, economic growth is also affected by the SDM. Human resources is an important factor in the development process, how quickly the development process depends on the extent of human resource development as the subject has sufficient competence to  development.

2. Factors Natural Resources

Most developing countries relying on natural resources in carrying out the construction process. However, natural resources alone does not guarantee the success of the process of economic development, if not supported by human resources in managing natural resources that are available. Natural resources is soil fertility, mineral wealth, mining, forest products and the wealth of marine resources.

3. Science and Technology Factors

Development of science and technology is rapidly increasing encourage development, change of work patterns that originally uses the human hand is replaced by sophisticated machines have an impact on aspects of efficiency, quality and quantity of a series of economic development activities undertaken and eventually result in accelerating the pace of economic growth .

 4. Cultural Factors

Cultural factors provide a disparate impact on economic development that is done, these factors may function as a generator or driver of the development process but can also become an obstacle to development. Culture that may encourage the development of which the attitude of hard work and smart work, honest, hard working and so on. The culture that can hinder the development process including the anarchist attitude, selfish, wasteful, corrupt, and so forth.

5. Capital Resources

Human capital resources needed to process natural resources and improve the quality of science and technology. Capital resources in the form of capital goods is essential for the smooth development and economic development for capital goods may also increase productivity
 Factors determining Economic Structure Changes:

A. human nature in their consumption activities

ie when income rises, the elasticity of demand caused by changes in income (income elasticity of demand) is low for food consumption while demand for clothing, housing, and consumer goods industry is the opposite result. The nature of the request in accordance with the laws of Engels, in which the theory of Engels said that, the higher the income of the people the less the proportion of income used to purchase agricultural materials, otherwise the proportion of income used to purchase the production of industrial goods to be getting bigger.

2. Technological changes that constantly take place

Advances in technology will enhance the productivity of economic activities, ultimately leading to the expansion of markets and trading activities. Thus creating a new product that is not only intended to meet the consumption needs of rural communities but also to the needs of urban communities.

3. The increase in income and standard of living

Through changes in economic structure, the government can increase the income and standard of living, for both the sector developments bring more job opportunities

 4. Government intervention

policies that directly influence the economic structure changes are incentives for industry sectors or indirectly through the provision of infrastructure

5. Conditions and the initial structure of the domestic economy (economic basis)

An initial state of economic development / industrialization already have the basic industries, such as machinery, iron and steel will experience relatively strong industrialization process is more rapid than the countries that have only light industries such as textiles, apparel, footwear, food, and drink.

4. Understanding the process of calculation of capital costs of multinational companies

 multinational is different from the desired rate of return by purely domestic firms,  pricing model (CAPM) can be applied. CAPM defines the desired level.

Risk-free rate of return

Market rate of return B = Beta of CAPM implies that the desired rate of return of shares of a company is a positive function of

 represents the sensitivity of return against market returns (stock price index is usually used as a substitute for market returns). A multinational company not any of the risk-free interest rate or market rate of return, affect beta

Multinational companies are able to increase sales volume overseas will be able to lower the beta of the shares, thus, reducing the required return by investors

So the cost of multinational capital will decrease if the volume of sales rose

 Supporters argued that the CAPM beta of the project can use to determine required rate of return of the project

A project that isolated from market conditions will have a lower beta for a highly diversified multinational corporation, which receives flow generated by several projects, each project contains two types of risk

CAPM theory that non-systematic risk of the project can be ignored, because , systematic risk can not be diversified,  all projects in a way that low-beta  of the project, the lower the systematic risk of the project, and the lower the rate of return from such a project  multinational project showed a lower beta than a purely domestic enterprise project, then there quired return of the project should have been more  MNC desired rate of return is low, meaning the cost of capital is also low

 The theory of capital asset pricing (CAP)

thus supporting the assumption that the cost multinationals in general lower than the cost of capital , for reasons that have  so, it must be stressed here that the non-systematic risk of the project remains as relevant by a number of companies if the risk is also taken into account in assessing risks of the project, the required return of MNC project is not necessarily more desirable rate of return  project purely domestic firms. In fact, a large-scale projects in developing countries where political conditions are very have
high country would be considered too risky by many , even though the cash flow to be generated by this project to market AS not imply that multinational companies non-systematic risk as an important factor when determining the required return from overseas projects If it is assumed that markets are segmented from each other, can be justified to use the U.S. market while measuring the project's beta of MNC AS U.S. investors to invest some of those in the U.S., they are  investment by multinational market AS implement her project beta low-beta may be able to lower their own (ie, sensitivity their share of the market index has a beta of a company that more attractive to U.S. investors because it offers many benefits of diversification. As markets increasingly integrated over time, believes that the market a global market that is more permanent than the U.S. AS if investors buy stock from many countries, the be strongly influenced by global market conditions, not just the U.S. market conditions

Consequently, they prefer to invest in companies that have low  to global market conditions to get more are able to implement the project  insulated from global market conditions will be considered as an investment vehicle for investors Despite increasingly integrated markets, investor The U.S. still tends to focus-U.S. stocks, perhaps due to lower transaction costs and expenses their investments are systematically influenced by U.S. market conditions; it are concerned with the factors that affect the U.S. market In conclusion, we can not state with certainty that the company lower capital costs than purely domestic firms that operate in an industry that, we can use this discussion to understand why a multinational corporation trying to take full advantage of aspect-aspect which will lower the cost of capital and vice versa, to minimize exposure to the aspect- aspects that will raise the cost of capital

5. Understand the problems and complexities in designing information systems and financial control of multinational corporations

Accounting plays a crucial role in society. The purpose of accounting is to provide information that can be used by decision makers to make decisions ekonomi.Dalam business world, accounting is an information tool, which provide accurate accounting for decision provide information about the company and the transaction is to facilitate resource allocation decisions by the user. If a reliable and useful information, so that limited resources can be allocated optimally.

International accounting has a role similar to the larger context, where the scope of reporting is for multinational companies with cross-border transactions and operations of the state or companies with reporting obligations to users in the country .Proces report was not different accounting and reporting standards with specific qualifications regulated internationally and locally in the country .But important to know about the international dimension of accounting processes in different countries. Where differences include, cultural differences, business practices, political structures, legal systems, currencies, local inflation rate, business risk, as well as rules and regulations affect how multinational companies conduct their operations and deliver its financial statements.

Accounting includes several broad processes:

A. Measurement

Provide in-depth feedback on the probability of a company's operations and financial position of strength.

2. Disclosure

The process by which accounting measurement is communicated to the users of financial statements and used in decision making.

3. Auditing

The process by which the special accounting professionals (auditors) perform attestation ((test) on the reliability of the measurement process and communication.

Development of accounting systems is driven by the growth of international trade in Northern Italy during the late Middle Ages and the government's desire to find ways to impose taxes on commercial transactions.

1850's double-entry bookkeeping reached the British Isles that causes the growth of public accounting and public accounting profession is organized in Scotland and England in the 1870s. UK accounting practice spread throughout North America and throughout the British Commonwealth. Besides the Dutch accounting model exported to Indonesia, among others, the French accounting system in Polynesia and Africa regions under French rule. Reporting framework of the German system is influential in Japan, Sweden, and the Russian Empire.

First half of the 20th century, as the growing strength of the U.S. economy, the complexity of accounting issues arise simultaneously. Accounting then recognized as a separate academic discipline. After World War II, the influence of Accountancy increasingly felt in the Western World.

CONTEMPORARY PERSPECTIVE

There are a number of additional factors that add to the importance of studying international accounting. These factors and the significant reduction  of persistent trade barriers and capital controls national happens as technology advances national information of capital flows, foreign exchange, foreign direct investment and related transactions have been liberalized dramatically in recent years, so barriers to international business information technology  cause radical changes in economic production and distribution.

GROWTH AND SPREAD OF MULTINATIONAL OPERATIONS

International business has traditionally been associated with foreign trade. This activity is rooted in the past, will continue  major accounting related to export and import activities are accounting for foreign currency transactions. International business are increasingly associated with foreign direct investment, which include the establishment manufacturing or distribution system from abroad by establishing a wholly owned affiliates, joint ventures or alliances  conducted abroad make financial managers and accountants face the risk of all kinds of problems they are not companies face when operating in the territory of the country implemented.

GLOBAL COMPETITION

Other factors also contributed the growing importance of international accounting is the phenomenon of global competition. Determination of reference (benchmarking), to compare the performance of an act of the parties with a reasonable standard is nothing new, but the standard of comparison used is now beyond national borders is nothing new.

MERGERS AND ACQUISITIONS TRANSBOUNDARY

Mergers are generally summarized by the term operating synergies or economies of scale, accounting plays an important role in this mega consolidation because the numbers generated fundamental accounting firms in the assessment process. National measurement differences can complicate the process of appraisal firms.

FINANCIAL INNOVATION

Risk has become a popular term in the corporate environment and management. With the deregulation of financial markets and capital controls continue to be made, in commodity prices, foreign currency loans and equity become commonplace today. today's world financial managers need to be aware of the risks they face, decide which risks need to be protected and evaluate risk management strategies are executed. Although advances in technology allow the shifting of financial risk to others, but to measure the burden of risk between the parties are not transferable and are now on the part of a large group of market participants in other countries.

6. Able to analyze the exchange rate variance

occurred mid-1997 the economy has led to disagreement about the application of various exchange rate system that is right for the national economy. Of these developments as well as referring to previous experiences, including experiences of other countries, this paper will review the exchange rate system that can reduce the various upheavals in the economy. Theoretically and has been widely demonstrated in numerous empirical studies, the application of the optimal exchange rate system in a country among others depends on the turbulence characteristics (disturbance) is the most dominant in the economy is concerned.
By using fleming Mundell through the variance decomposition analysis on the model of vector auto regessive (VAR) that direstriksi as argued by Blanchard Quah (1994) that structurally will be able to capture and separate the influence of long-term and short-range shock to the endogenous variables in the model indicates that flexible exchange rate system that is used is still relevant. This conclusion is obtained by considering the shock that comes from the real sector appear more dominant in influencing the development of the exchange rate than the shock of the monetary sector. This conclusion is consistent with several previous studies of the stability of money demand which shows the demand for money is still quite stable both before and after the crisis.

To complete variance decomposition approach is used also means a more structural analysis is the method of probit and neural network. Although Mundell Fleming models that underlie the use variance decomposition analysis is a cornerstone of economic theory is quite robust and has been widely used policy makers in other countries but it is felt that such an approach can not fully answer the criticism raised by Lucas (1976) on the application of empirical economic model.

7. Understand the special difficulties in designing and implementing performance evaluation systems of multinational companies

In tax planning, multinational companies have certain advantages over a purely domestic firm because it has greater flexibility in determining the geographic location of production and distribution system. This flexibility provides the opportunity to utilize their own national tax differences so as to lower the overall corporate tax burden. Shift the burden and revenue through the company's bonds also provide additional opportunities for MNCs to minimize global tax paid. In response to this, the national government borne in designing the rule of law to minimize the opportunities for arbitrage that involves several different national tax jurisdictions:

Consideration of the issue of tax planning starts with the dual basis:
 ØTax considerations should never have control of their business strategy.

 ØConstant changes in tax laws limit the tax benefit in the long term planning.

A. Consideration Organization

The wearing of foreign tax sources, many tax authorities are focusing on the organizational form of foreign operations. A branch is generally regarded as an extension of the parent company. Its profits immediately consolidated with the parent company's profits and fully taxed in the year when income is generated, regardless of whether sent back to the parent company or not.

Earnings of foreign subsidiaries are generally not taxed until done repatriation. Exceptions to this general rule are described as follows:

a. If the overseas operations initially predicted to cause harm, it may be advantageous if the taxes are organized in a branch at an early stage. Once the operation is brought abroad, it will be more interesting to operate as a subsidiary.

b. For one thing, the parent company overhead can not be allocated as a branch, because the branch is seen as part of the parent company. Moreover, if the tax on foreign income is lower than the host country of the profit at the parent company's country of origin, the return on the subsidiary is not taxed by the parent company's home country repatriation done.

2. Controlled Foreign Company and the Sub Gain

Generally in the United States and other countries apply the principle of taxation of worldwide known as the principle of postponement (deferral), the earnings of foreign subsidiaries is not taxable to the parent companies to repatriate earnings in a dividend. Tax haven countries members opportunities to multinational corporations to avoid repatriation (home country tax) to fine tune the trade profits and the accumulation to the subsidiary "name plate". This transaction does not have a real job or related. Profits generated from this transaction are passive and not active. United States to close this vulnerability by:

a. Controlled foreign company (Controlled Foreign Corporation / CFC)

b. Profit Provision Subdivision F

 CFC  U.S. more§is a company owned directly or directly by the shareholders  than 50% of the total voting rights or fair market value. Only shareholders who own more than 10% of the voting rights are counted in determining the 50% provision. CFC shareholders are taxed on the profits of certain CFC earnings even before it is distributed

3. Parent Company Abroad

With certain circumstances, a multinational holding company based in the U.S. with operations in several foreign countries may have an advantage if it has a variety of foreign investment through a holding company in a third country. U.S. holding company directly owning shares of a holding company incorporated in a foreign jurisdiction and the parent company founded in turn has shares of one or more operating subsidiaries established other overseas territories are the main properties of this structure.

The advantage of the holding company form of organization is related to the tax include:

a. Maintaining the benefits of the tax rate levies on dividends, interest, royalties, nd other similar payments.

b. Defer U.S. taxes on overseas profits until those profits repatriated to the parent U.S. company.

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

The disclosure states that the disclosure is capable of qualitative aspects and can only be in value by experts in their fields. While the measurements was limited to pure information that has not been in if the information is ready to be used. so disclosure becomes more important, because without the disclosure of information would be no corporate disclosure practices  review and assess not only the effects of the company but from outside the company.

Not only as a provider accountability to capital providers but also to answer  desire of any material required to maintain the good name of the company. Publications and building a good image can attract potential investors  concept of consumer satisfaction is a going concern for the company

"Multinational companies looking at the trend towards more widespread and varied corporate disclosures differently. Discuss the nature of these views and present your evaluation of its validity.
Small countries tend to see multinational companies as a direct threat to their national sovereignty. Unions assert that the multinationals are able to "import" or "export" jobs. nature of society, especially to be worried because they were told that even the general living standards even in a country can be influenced by the collective influence of multinational business activities.

"Foreign companies that wish to issue securities in the domestic stock exchanges such as the United States should be required to reveal no less than their domestic disclosure." It clear whether you agree or disagree with the above argument and support your arguments with an example of a country.

More and more companies around the world who list their shares on foreign bourses. That motivated this practice is considered to be a number of advantages to be gained from such practices. By socializing the company to the local environment, listing overseas corporations improve the international image and simultaneously expand the bases of financing in the future.

For example: Novo Corporation (located in Denmark), Stonehill and Dullum demonstrate that the listing of overseas companies can reduce capital costs significantly, largely due to the disparity-the disparity in the information base of investors.