Due Date
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Reflective Writing
Financial techniques are used widely in all businesses because no business could be run properly without measuring its financial activities properly. Being the student of hotel management I have learned this subject the finance to learn the basic concepts which will help me to manage the activities of the organisation. It allows a manager to keep the business on track and maintain its growth and profitability (Kayathiri and Buvaneshwaran, 2015, n.p). Hotel industry includes all the private sector businesses with small or large budgets. So to run all its activities smoothly, its management requires to keep all the accounts accurate and take decisions by its accounts and financial reports. I learned that finance is not only limited to the statistical reports, but it also measures the performance of employees, satisfaction level of the customers, and the overall performance of the business. I learned that the aim of the business is not only the earnings of money, and maximisation of profit, but it aims to maximise its share price in the financial market. I learned how to fix the price of a product or a service, and how much it could influence the demand. I initially believed that lower price could boost the sales of the business, however learning the pricing techniques in this course changed my perspective. According to (Zervas et al., 2017, p.690) pricing is the only factor that has some level of influence on the demand. However, demand could be changed by quality, on-time delivery, the peak season, competitors products and market strategies, and the set of services provided by the company. Moreover, I learned about how to provide value to customers and the shareholders of the business. Budgeting techniques are the essential perspective of the business. Without proper calculations of the budgeting through its formulas, we dont even know that the running project is profitable or will incur a loss for the organisation.
In the first unit of this subject, I learned different principles and methods about how to manage the business activities. First of all, I learned about the management control system, which includes the business structure, hierarchy of the business, and the role, power, and authorities associated with a specific position. The management control system limits the role of a position to avoid the mismanagement, and every employee knows clearly about his role in the organisation (Scafarto et al., 2016, p.532). Further, I learned about the responsibility accounting, which means to classify the data based on the area of activity, departments, and units, which measure their costs, sales, and utilisation of their resources. I learned in this unit about the management accounting, as there are two types of accounting the management accounting, and the cost accounting. Moreover, it deals with the total cost incurred by the production process, cost of goods sold, income statements of the business, and the inventory management (Dogru, 2017, n.p). Besides these, I learned the technique of measuring and assessing the performance of the business. There are many tools used for measurement of performance, however balanced scorecard is the most efficient among them. The balanced scorecard is a solid technique of measuring the overall performance against certain parameters, such as the customer satisfaction level, financial perspective, internal business process, and the learning and growth of employees. I learned how to investigate and improve the performance of the business, and what standards could be followed to measure the performance of the business. Finally, I learned about how to maintain the control of the business objectives and internal control management. These are the set of actions to avoid the chances of frauds and strictly control all the activities.
In the second unit, I learned the techniques how to decide and fix the price. I learned about the calculation of the net profit extracted from the total revenue and deducted all the operational and administrative costs. Pricing has different strategies, and it could also influence the demand, and sales of the business. Then I learned about the yield management which provides information about the statistical reports to enhance the revenue of a hotel by soaring the satisfaction level of the potential customers.
In the third unit of this subject, we learned about the techniques of calculating budgeting for the new startup business or the new project a business want to invest in. Budgeting is the process of planning the profitability of the company, through the invested capital for a specific period (Haddad, 2015, p.1793). I learned five different techniques of budgeting during this course, and I found the NPV as the most reliable methods. It provides a clear picture of the future outcomes of the present investment, with the discounting of the value of money. For calculating budgeting, the concept of time value of money is essential, which means the value of money constantly diminishes with time. According to Tang et al., (2017, p. 1103) Budgeting also forecasts the overall profit, returns, and expenses of the business. It helps to develop the action plan for the project. It also helps a manager to allocate funds to each segment and activity of the future project. There could be a difference between the budgeted amount of expenses and the actual amount of expenses, and the profits. This difference is referred to as the variance in the financial terms. The variance could be in the labour costs, or the material costs (Shkurkin et al., 2016, p.103). If the variance is higher than the forecasted amount, it means that we either have certain bottlenecks in the management functions. Which increases our costs, while the lower variance shows either our forecasting is wrong, or our management is efficient to reduce the cost. Moreover, I learned about the inventory management which involves maintaining the right amount of inventory and handle the level of stock which is required by the customers. Having more inventory than demand is also a cost because its the additional investment of money. Inventory needs proper storage and security. In financial terms, inventory related decisions could be taken by Economic Order Quantity (EOQ) method, LIFO, FIFO, and Average method, and Inventory turnover ratios (Masruroh, 2015, p.552 Puig et al., 2017, p.245).
The next learning outcome of this subject is the cash flows management, and risk of frauds. The cash flow of the business provides a complete set of information regarding the investments, expenses, and operations of the business (Gemar et al., 2016, p.430). Besides, it provides information regarding the cash inflows and outflow, and the final negative values show the losses and positive value shows the profit of the firm. The cash budget provides information regarding the cash receipts, and cash payments details during the project. The next learning during this chapter was how to minimise the risk of fraud. It needs a proper audit and control of activities in the organisation. According to Parte-Esteban and Alberca-Oliver (2016, p.59), the audit could either be done by internal auditors, or by the external auditors to fix all the fraudulent activities. Certain steps are recommended to the business to reduce the chances of frauds such as job rotation, control the access of unauthorized persons to use the computer software, safety and security of the confidential documents of the organization, insurance of the valuable assets, and the restitution of unnecessary use of the resources.
I learned about the accounting techniques, such as creating the balance sheet for the business, which shows the total worth of the business. Overall, I found this course very useful, and it will help me in my future, during my career in the hotel industry. I need to learn more about how to implement it, and how top management takes decisions from these statistical values.
List of terms used
Balance Sheet A statement shows the worth of the business.
Balanced Scorecard A process of measuring the performance of the business.
Budgeting The process of forecasting the profit and loss of the business
Cash Flow The inward and outward flow of the cash due to business activities
Income statement The statement shows the net income after all costs deductions.
Stakeholder The owners of the business
EOQ A technique used for inventory management
NPV A method of budgeting
Time value of money Devaluation of cash with time.
References
Dogru, T., 2017. C-corporation Hotels vs. Hotel-REITs A theoretical and practical comparison. Boston Hospitality Review, 5(1).
Gmar, G., Moniche, L. and Morales, A.J., 2016. Survival analysis of the Spanish hotel industry. Tourism Management, 54, pp.428-438.
Haddad, R., 2015. Exploration of revenue management practicesa case of an upscale budget hotel chain. International Journal of Contemporary Hospitality Management,27(8), pp.1791-1813.
Kayathiri Bai, B. and Buvaneshwaran, V., 2015. A comparative study of profitability analysis of selected hotel industries.
Masruroh, N.A., 2015. Combining Balanced Scorecard and Data Envelopment Analysis to Design Performance Measurement for Supply Chain Actor and Regulator A Case Study in Innovative Product in Indonesia. In Industrial Engineering, Management Science and Applications 2015 (pp. 551-562). Springer, Berlin, Heidelberg.
Puig, R., Kili, E., Navarro, A., Albert, J., Chacn, L. and Fullana-i-Palmer, P., 2017. Inventory analysis and carbon footprint of coastland-hotel services A Spanish case study. The science of the total environment, 595, pp.244-254.
Scafarto, V., Ricci, F. and Scafarto, F., 2016. Intellectual capital and firm performance in the global agribusiness industry The moderating role of human capital. Journal of Intellectual Capital, 17(3), pp.530-552.
Shkurkin, D.V., Sogacheva, O.V., Logvencheva, E.S. and Khramova, M.N., 2016. Modernisation of the sphere of tourism and hospitality industry of the south of Russia as a growth factor of socio-economic stability of the region. International Journal of Economics and Financial Issues, 6(1S), pp.101-106.
Tang, C.M.F., King, B. and Pratt, S., 2017. Predicting hotel occupancies with public data An application of OECD indices as leading indicators. Tourism Economics, 23(5), pp.1096-1113.
Zervas, G., Proserpio, D. and Byers, J.W., 2017. The rise of the sharing economy Estimating the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), pp.687-705.
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