Strategic Business Management And Planning A Swot Analysis Of Pepsico Business Essay

Strategic Business Management And Planning A Swot Analysis Of Pepsico Business Essay The greatest rival of Pepsi is Coca Cola. Coca Cola is an international recognized brand. Its brand name is its basic strength. But Pepsi is successfully maintaining its No.1 position in India as with its aggressive marketing planning and quick diversification in creating and developing more ideas and product packaging. Pepsi is operating in India, through 36 bottlers all over India. These bottlers are Pepsis strength. Pepsi has given franchise to these bottlers. Bottlers distribute, produce and help in promoting the brand. Pepsi also launched its fast food chain KFC i.e. Kentucky Fried Chicken. Pepsi is a very well organized multinational company, which operates almost all over the world even in India it has also proved to be the No.1 soft drink. The purpose of this assignment is study the strategies which Pepsi has applied in India market for its product Pepsi Cola. Pepsi International is a world renowned brand. Also did analysis of the soft drink industry in India and worldwide. The worlds leading beverage sector are soft drinks. Global consumption of soft drinks is rising by 7-9% a year and soft drink consumption increased by almost 500% during last 50 years (Putnam and allshouse 1999). Contents Index Page No. Introduction Pepsi operates almost all over the world and it is a very well organized multinational company. Pepsi International is world renowned brand. One of the best carbonated drink producers is Pepsi. It is best in quality, hygiene and serving all over the world. The production of Cola by Pepsi is more than 100 years and it has controlled the world market for over a century now, its head office is situated in New York. About PepsiCo in India PepsiCo arrived in India in 1989 and has become the countrys largest selling food and beverages Company. PepsiCo has created a business which serves the long term dynamic needs of consumers in India and it is one of the largest multinational investors in the country. Soft drinks observe healthy growth in India. The group has developed an expansive beverage and foods business. There are 36 bottling plants in India of which 13 are owned by the company and 12 are owned by the franchisee, to support its operations. In expansion to this, PepsiCos Frito Lay foods division has 3 state-of-the-art plants. PepsiCos vision is to make tomorrow better than today as it business is based on sustainability. Its commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers. Mission Every business starts with mission and vision. A mission statement is an approved, short, written statement of the purpose of the company or organization. The mission statement should teach the activity of the organization, give out its overall goal, and guide the sense of direction and decision making. It arranges the framework or context within which companys strategies are designed. (hughes K 2005) According to the companys official site, PepsiCo Incorporateds mission is to make it: the worlds chair consumer products company, focusing on benefitted foods and beverages. PepsiCo contest to produce healthier financial rewards to investors as it provides chances for growth and enhancement to its employees. So the overall mission of PepsiCo is to expand the value of shareholders investments. This is resulted through growth of sales, cost controls and wise investments of resources. PepsiCo believes in providing products that are safe, wholesome, economically efficient and environmentally sound and also believes that their commercial success depends upon offering quality and value to their customers and consumers. Vision PepsiCo is one of the largest companies in the world. It is the worlds largest consumer products companies. PepsiCo initiates in focusing various strategies and believes that they will drive growth and ensure the companys success. When planning any change in mission and objectives it is important to consider their result of such a change on the companys long term strategies. Whatever PepsiCo is doing, it seems to be doing well. The biggest exposure combined in changing mission and objectives would be a loss of focus and loss of momentum. (PepsiCo Vision and Strategy) SWOT Analysis Strength-Weakness-Opportunities-Threats A SWOT analysis summarizes the key issues from the business environment and the strategic capability of an organization. SWOT helps the company to look itself for better and for worse. SWOT is a mean by which the company can better understand what it does very well and where its shortcomings are. It helps company size up the competitive landscape and gets some insight into the vagaries of market place. SWOT is centered to make an internal analysis effective and accurate so that specific strengths and weaknesses of the company with the sound strategy can be built. Source: www.scribd.com/doc/30755295/swot-analysis-pepsi Porter Five Forces Strengths One of PepsiCos top brands i.e. Pepsi is one of the most acknowledgeable brands of the world, ranked according to Interbrand. It was ranked 26th amongst top 100 global brands since 2008. The strength of the brands of PepsiCo is distinct in PepsiCos presence in over 200 countries. It has the largest market share at 39% in the US beverage and at 25% in snack food. It is a multinational company which is very strong and has strong and vast distribution channels. It has a very good relation with Franchise. This company is quality conscious and provides good quality products. Technological Factor Technology is used in manufacturing and packaging of the product, transportation of raw material or delivery of product. Technology affects the transportation costs, production costs and unskilled labor. It also plays an important role in packing of product. The market need to study several important topics to make the best use of modern information technology and marketing information system as strategic asset. The company has a tag line Ye Hi Hai Right Choice Baby. Technology is shaping peoples lives as the most dramatic forces. PESTEL Framework relates this factor. PESTEL Framework Weakness By using weakness analysis we can know about the companys weaknesses and shortcomings so that the profit can be rebuilt. PepsiCo is reliant upon particular carbonated drinks and there is a saturation of carbonated soft drink segment. The company has centralized making factor. One of the strongest weaknesses of this company is that the products it produces target only the young customers. The Franchises are political. Not all products bear the company name. Overdependence on Wal-Mart The largest customer of PepsiCo is Wal-Mart. Therefore the business strategy of Wal-Mart influenced the PepsiCos fortunes. PepsiCo is in pressure to hold down its prices because of Wal-Marts low price themes. Bargaining Power of Customers The power of buyers is the force that customers have on a producing industry. In general, when buyer power is strong the relationship to the producing industry is near to what economist terms- a market in which there are many suppliers and one buyer. Under such market conditions the buyer sets the price. In India the bargaining power is low as the products produces the company is accepted by the consumers. There is no participation of consumers in deciding the taste of soft drink. (Porters Five Forces) Bargaining Power of Suppliers For carbonated soft drink industry there are few suppliers. Every producing industry requires raw materials- components, labor and other supplies. This enhances the buyer-supplier relationship between the industry and the firms that provide it the raw materials used to create products. Also, it is safe to assume that Pepsi and Coke sales account for a large percentage of the suppliers total revenues. The overall bargaining power of suppliers is resulted to be low. Porters Five Forces model can be applied from the above. Today the people are very trendy sensitive towards the advertisement. Therefore people drink Dew on fashionable and trendy. Considering this PepsiCo targeted new generation people and they are able to differentiate between them, few people are conscious about caffeine so they might have negative anticipation about soft drink. Also some people think that in manufacturing process soft drink companies spreading the pollution. We can relate this above statement by applying PESTEL analysis as the social factor is affected because of above point. Opportunities By the increasing population in India it increases the opportunities to the company. As more people keep more demands and also the continuous shifting trend of population also increases the opportunities for the company. For instance, people will exchange to soft drinks from juice and fast foods as the effect from changing social trends. One of the most potential weaknesses seeking by PepsiCo is dependency on US Markets by acquiring Russias leading Juice Company, Lebedyansky in the United Kingdom. By introducing TrueNorth Nut Snacks and increasing its Lipton Tea venture with Unilever, it continues to expand its product based. These recent initiatives enable PepsiCo to regulate in changing lifestyles of its consumers. The demand of Pepsi is over the competitor. PepsiCo can join with major showrooms restaurants with more opportunities. New products can easily penetrate in the market and the most benefitted chance for this company is that non-carbonated is fast growing industry in the world. With increasing opportunities the company does internet promotions and ordering processes. Threats New Entrants Any firm can enter or exit in a market and if free entry or exit exists, then profits always could e nominal. As the raw materials, machinery, labors are easily available in the country there are no barriers to entry in the soft drink processing industry. Because of the generations of loyal customers, the retaliation level of the companies in the industry is very low. According to Porters Five Forces model a new entrant to an industry brings new competence a wish to gain market share position and rather new approaches to serving customer. New player means price will be decreased and margin squeezes which results in low profitability in long run. (Michael Porter, competitive strategy 1980 pp7- 33). The challenge to Pepsi is to build further the brand loyalty in their core cola products so that the consumers will not switch to the cheaper, private label imitations products. Pepsi must maintain the good relations with large retailers as the access to distribution channels is currently one of the largest barriers to entry. Rivalries can also affect the threats of the company. From the model of Porters Five Forces rivalry refers to the actions taken by the firms in the industry to improve their position and gain advantage over each other. All the companies are charging the same prices against their products in the industry. If Pepsi increases the prices of the soft drink, all the companies follow the same path. In a maturing market such as the domestic carbonated sodas, the only way to gain market share is to steal from ones rivals. Substitutes- Substitute products refer to the products in other industries. A threat of substitutes occurs in the change of prices and the product demand is affected of a substitute product. If the more substitute products become available of Pepsi, the demand becomes stretchier since customers have more alternatives. (Michael E Porter Competitive Strategy 1980 pp7-33) Pepsi has a substitute available in the market so that the cola consumption decreases it increases the consumption of bottled water, juices, teas and energy drinks of Pepsi. Conclusion From the above discussion on PepsiCo should increase its market share by tie up with different restaurants and clubs as well as continue or go up with already adopted strategies increase its share through huge advertisement and through sponsoring different events such as it continuously sponsoring cricket matches at national and international levels. It is concluded that the strategies bought up by PepsiCo is not making any effect on the sale of Cola, whereas one is cannibalizing others market only. It is also found that Pepsi brand is behind the Coke especially in Muslim dominated area, which makes a major difference in the market. Pepsi should also focus on increasing pricing advantage. This can be done by one of the ways by giving reverse quantity discounts on new packaging. Another strategy can be used y providing bundled products to convenience stores and restaurants. It can be said that although lagging behind in different products or different areas Pepsi has been able to market their products and increase market share and market growth by applying different strategies and approaches.

Business Finance

Multinational Business Finance, 12e (Eiteman, et al) Chapter 1 Globalization and the Multinational Enterprise 1. 1 Globalization and Creating Value in the Multinational Enterprise Multiple Choice 1) Which of the following are critical to a firm trying to reach the top of the â€Å"firm value pyramid†? A) An open market place. B) High quality strategic management. C) Access to capital. D) all of the above Answer: A Diff: 2 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 2) A well-established, large U.S. -based MNE will probably NOT be able to overcome which of the following obstacles to maximizing firm value? A) An open market place. B) High quality strategic management. C) Access to capital. D) none of the above Answer: D Diff: 2 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Recognition 3) A well-established, large China-based MNE will probably be most adversely affected by which of the follow ing elements of firm value? A) An open marketplace. B) High-quality strategic management. C) Access to capital.D) Access to qualified labor pool. Answer: A Diff: 2 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 4) A well-established, large, Brazil-based MNE will probably be most adversely affected by which of the following elements of firm value? A) An open marketplace. B) High-quality strategic management. C) Access to capital. D) Access to qualified labor pool. Answer: C Diff: 2 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual True/False ) Three necessary conditions for a firm to reach the top of the â€Å"firm value pyramid† are an open market place, high quality strategic management, and access to capital. Answer: TRUE Diff: 1 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 2) Comparative advantage is one of the underlying principles driving the growth of global business. Answer: TRUE Diff: 1 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Recognition Essay 1) List and explain three strategic motives why firms become multinationals and give an example of each.Answer: The authors provide 5 strategic motives for firms to become multinationals: market seekers, raw materials seekers, production efficiency seekers, knowledge seekers, and political safety seekers. Market seekers are looking for more consumers for their products such as automobiles or steel. Knowledge seekers may be looking for an educated work force similar to the way firms seeking R and D set up shop in university towns. Raw materials seekers may be after commodities such as oil or copper. Production efficiencies may occur in countries like Mexico that have capable workers and lower wages.Political safety seekers are looking for countries that will not expropriate their assets, so they may stay away from countries that in the post have engaged in such activities. Diff: 3 Topic: 1. 1 Globalization and Creating Value in the Multinational Enterprise Skill: Conceptual 1. 2 The Theory of Comparative Advantage Multiple Choice 1) The theory that suggests specialization by country can increase worldwide production is ________. A) the theory of comparative advantage B) the theory of foreign direct investment C) the international Fisher effect D) the theory of working capital managementAnswer: A Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition 2) Which of the following is NOT a reason governments interfere with comparative advantage? A) Governments attempt to achieve full employment. B) Governments promote economic development. C) National self-sufficiency in defense-related industries. D) All are reasons governments interfere with comparative advantage. Answer: D Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition 3) Which of the following factors of p roduction DO NOT flow freely between countries? A) Raw materialsB) Financial capital C) (Non-military) Technology D) All of the above factors of production flow freely among countries. Answer: A Diff: 1 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition 4) Which of the following would NOT be a way to implement comparative advantage? A) IBM exports computers to Egypt. B) Computer hardware is designed in the United States but manufactured and assembled in Korea. C) Water of the greatest purity is obtained from wells in Oregon, bottled, and exported worldwide. D) All of the above are examples of ways to implement comparative advantage.Answer: D Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Conceptual 5) Of the following, which would NOT be considered a way that government interferes with comparative advantage? A) Tariffs. B) Managerial skills. C) Quotas. D) Other non-tariff restrictions. Answer: B Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition True/False 1) The theory of comparative advantage owes it origins to Ben Bernanke as described in his book The Wealth of Bankers. Answer: FALSE Diff: 1 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition ) International trade might have approached the comparative advantage model in the 19th century, and it does so even more today. Answer: FALSE Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Conceptual 3) Comparative advantage shifts over time as less developed countries become more developed and realize their latent opportunities. Answer: TRUE Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition 4) Comparative advantage in the 21st century is based more on services and their cross border facilitation by telecommunications and the Internet.Answer: TRUE Diff: 1 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition 5) Comparative advantage was once the cornerstone of international trade theory, but tod ay it is archaic, simplistic, and irrelevant for explaining investment choices made by MNEs. Answer: FALSE Diff: 2 Topic: 1. 2 The Theory of Comparative Advantage Skill: Recognition 1. 3 What Is Different about Global Financial Management? Multiple Choice 1) Which of the following domestic financial instruments have NOT been modified for use in international financial management? A) Currency options and futures.B) Interest rate and currency swaps. C) Letters of credit. D) All of the above are domestic financial instruments that have also been modified for use in international financial markets. Answer: D Diff: 2 Topic: 1. 3 What Is Different about Global Financial Management? Skill: Recognition True/False 1) MNEs must modify finance theories like cost of capital and capital budgeting because of foreign complexities. Answer: TRUE Diff: 2 Topic: 1. 3 What Is Different about Global Financial Management? Skill: Recognition 1. 4 Market Imperfections: A Rationale for the Existence of the Multinational FirmMultiple Choice 1) In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker. Which of the following is NOT a reason why market seeking firms produce in foreign countries? A) Satisfaction of local demand in the foreign country. B) Satisfaction of local demand in the domestic markets. C) Political safely and small likelihood of government expropriation of assets. D) All of the above are market-seeking activities. Answer: C Diff: 2 Topic: 1. 4 Market Imperfections: A Rationale for the Existence of the Multinational Firm Skill: Recognition ) ________ investments are designed to promote and enhance the growth and profitability of the firm. ________ investments are designed to deny those same opportunities to the firm's competitors. A) Conservative; Aggressive B) Defensive; Proactive C) Proactive; Defensive D) Aggressive; Proactive Answer: C Diff: 2 Topic: 1. 4 Market Imperfections: A Rationale for the Existen ce of the Multinational Firm Skill: Recognition True/False 1) For firms competing in a world characterized by oligopolistic competition, strategic motives can be subdivided into proactive and defensive investments. Answer: TRUEDiff: 1 Topic: 1. 4 Market Imperfections: A Rationale for the Existence of the Multinational Firm Skill: Recognition 2) Defensive measures are designed to enhance growth and profitability of the firm itself. Answer: FALSE Diff: 1 Topic: 1. 4 Market Imperfections: A Rationale for the Existence of the Multinational Firm Skill: Recognition 1. 5 The Globalization Process Multiple Choice 1) The phase of the globalization process characterized by imports from foreign suppliers and exports to foreign buyers is called the A) domestic phase. B) multinational phase. C) international trade phase.D) import-export banking phase. Answer: C Diff: 2 Topic: 1. 5 The Globalization Process Skill: Recognition 2) The authors describe the multinational phase of globalization for a firm as one characterized by the A) ownership of assets and enterprises in foreign countries. B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars. C) imports from foreign suppliers and exports to foreign buyers. D) requirement that all employees be multilingual. Answer: A Diff: 2 Topic: 1. 5 The Globalization Process Skill: Recognition ) A firm in the International Trade Phase of Globalization A) makes all foreign payments in foreign currency units and all foreign receipts in domestic currency units. B) receives all foreign receipts in foreign currency units and makes all foreign payments in domestic currency units. C) bears direct foreign exchange risk. D) none of the above Answer: C Diff: 2 Topic: 1. 5 The Globalization Process Skill: Conceptual 4) Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization b y the firm?A) Evaluation of the credit quality of foreign buyers and sellers. B) Foreign consumer method of payment preferences. C) Credit risk management. D) Evaluation of foreign exchange risk. Answer: B Diff: 2 Topic: 1. 5 The Globalization Process Skill: Recognition 5) Of the following, which was NOT mentioned by the authors as an increase in the demands of financial management services due to increased globalization by the firm? A) Evaluation of the credit quality of foreign buyers and sellers. B) Foreign consumer method of payment preferences. C) Credit risk management.D) Evaluation of foreign exchange risk. Answer: B Diff: 2 Topic: 1. 5 The Globalization Process Skill: Recognition 6) The authors describe the multinational phase of globalization for a firm as one characterized by the A) ownership of assets and enterprises in foreign countries. B) potential for international competitors or suppliers even though all accounts are with domestic firms and are denominated in dollars . C) imports from foreign suppliers and exports to foreign buyers. D) requirement that all employees be multilingual. Answer: A Diff: 2 Topic: 1. 5 The Globalization ProcessSkill: Recognition 7) The twin agency problems limiting financial globalization are caused by these two groups acting in their own self-interests rather than the interests of the firm. A) Rulers of sovereign states and unsavory customs officials. B) Corporate insiders and attorneys. C) Corporate insiders and rulers of sovereign states. D) Attorneys and unsavory customs officials. Answer: C Diff: 2 Topic: 1. 5 The Globalization Process Skill: Recognition True/False 1) Typically, a firm in its domestic stage of globalization has all financial transactions in its domestic currency.Answer: TRUE Diff: 1 Topic: 1. 5 The Globalization Process Skill: Conceptual 2) Typically, a â€Å"greenfield† investment abroad is considered a greater foreign investment having a greater foreign presence than a joint venture with a foreign firm. Answer: TRUE Diff: 1 Topic: 1. 5 The Globalization Process Skill: Recognition 3) The authors argue that financial inefficiency caused by influential insiders may prove to be an increasingly troublesome barrier to international finance. Answer: TRUE Diff: 2 Topic: 1. 5 The Globalization Process Skill: Conceptual

Accounting Principles and Practices Performed by Small Businesses in the Philippines

College of Business Administration Abstract: This research aims to gain the knowledge and awareness on the accounting practices done by small businesses. It aims to inform and learn about small businesses’ and their compliance to the standard practices of accounting in the Philippines, whether or not these businesses are following the basic accounting principles and what alternatives of accounting do they perform.And lastly, to provide recommendations to the businesses owners and other persons involved, on what accounting practice is more suitable for small businesses. Through the use a variety of reference materials, such as reference books, text books and internet sources, information related to the study has been compiled and put together to form the appropriate knowledge needed for the study.Through the findings, the researchers classified two types of accounting practices performed by small businesses: Formal Accounting, this accounting practice is based on the actual Phi lippine accounting standard provided by the IFRS, and a Semi-Formal Accounting, a combination of the IFRS accounting and the Single entry record system. Keywords: Accounting, Accounting Principles, Accounting Practices, Small Business, Small Business Accounting Introduction There are more than a million businesses spread throughout the Philippines.From high rising commercial entities in the big cities, to the smallest businesses found in the front yard of residential homes in rural or urban areas. Business can be defined as a person, partnership, or corporation that seeks to provide goods and services to others at a profit (Dias and Shah, 2009) Businesses are among one of the factors affecting the economic growth in the country. Generally, taxes and investments earned by these businesses, through the purchases of their consumers, are paid to the Government. Small and medium-scale enterprises (SMEs) play a significant role in developing economies.Among their contributions are as foll ows: (a) they address poverty by creating jobs and by increasing incomes; (b) they disperse economic activities in the countryside, and provide broad-based sources of growth; (c) they serve as suppliers and providers of support services for large enterprises; (d) they stimulate entrepreneurial skills among the populace; and (e) they act as incubators for developing domestic enterprises into large corporations. SMEs typically comprise the bulk of business enterprises in both developed and developing countries.They also employ a large segment of a country's workforce, and contribute significantly to national output (Habaradas, 2008) However, not all businesses contribute to the economic growth of the country especially for small independent businesses in private homes. Such examples are self-employed proprietors and street vendors whose businesses are not registered to the Bureau of Internal Revenue (BIR). Legally registered businesses (small businesses) on the other hand, contribute to the economic growth through payments of taxes collected by the Bureau of Internal Revenue.Such businesses record transactions or accounting information to keep track and allocate assets, liabilities and the owner’s equity. Through this accounting information, the owners will be able to allocate their assets for the expenses of tax payments. It may be said that the accounting practice is for formalities and usually performed by large business entities. However it is important for small businesses to apply the accounting practices in order to easily keep track and record important transactions especially those which concern large amounts of money.Accounting is important in achieving success in any business, especially a small one. Accounting is tied to the business’ financial well bing, without it, it will be hard to determine whether there is a positive or negative increase to the profit of the business. Accounting records must accurately reflect the changes occurrin g in the firm’s assets, liabilities, income, expenses and equity. The continued operation of a business depends on maintaining the proper balance among its investments, revenues, expenses and profit.Because profit margins are so critical to the success of a business, any decline should trigger an immediate search for the cause. Thus, the owner must rely on the accounting information to search this cause (Byrd and Megginson, 2009) The purpose of a business is to make a profit; proper business accounting helps determine how well the business runs. Accounting is the general process of tracking income and expenses and then using that data to examine the financial status of a business. (Strauss, 2005) The accounting practices performed by larger businesses are usually formal, specific and detailed and done by certified accountants.Small business accounting may be performed in various styles, with no formality and proper structure, and usually done by the owners themselves. A varie ty of accounting styles maybe derived from the informal accounting performed by small businesses. Some styles may have the same structure, making it similar to other businesses thus having slight uniformity. Review of Related Literature Small Businesses A small Business is any business that is independently owned and independently owned and operated, is not dominant in its field, and does not engage in many new or innovative practices.It may never grow large, and the owners may not want it to, as they usually prefer a more relaxed and less aggressive approach to running the business. They manage their business in a normal way, expecting normal sales, profits, and growth. In other words, they seek a certain degree of freedom and ideally a certain degree of financial independence. (Byrd ;amp; Megginson, 2009) Accounting Accounting is a service activity; Its function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be us eful in making economic decision.Accounting includes several branches, for example, financial accounting, managerial accounting, and government accounting. This statement deals with financial accounting for business enterprises, the branch of accounting that focuses on the general-purpose reports on financial position and results of operations known as financial statements. This Statement has two broad purposes: (A) to provide a basis for enhanced understanding of the broad fundamentals of financial accounting, and (B) to provide a basis for guiding the future development of financial accounting. n. d. , 1998) Financial statements are prepared and presented for external users by many entities around the world. Although such financial statements may appear similar from country to country, there are differences which have probably been caused by a variety of social, economic and legal circumstances and by different countries having in mind the needs of different users of financial sta tements when setting national requirements.The accounting conceptual framework, formerly known as the Framework for the Presentation of financial Statements by the IASC, serves as the foundation for the development of accounting standards by the International Accounting Standards board. It’s main objective is to narrow the differences in financial statements of different entities by harmonizing regulations, accounting standards and procedures relating to the preparation and presentation of financial statements. (Robles ;amp; Empleo, 2007) Structure of the Philippine AccountingThe Framework for the preparation and presentation of financial statements adopted in the Philippines is based on the International Accounting Standards Committee’s (IASC) Framework for the Preparation and presentation of Financial Statements. This was approved in the Philippines on January 26, 2000 by the unanimous vote of the members of the Accounting Standards Council (ASC). The ASC was the fun ctioning accounting standard setting body in the Philippines, when the Philippines decided to adopt the International Accounting Standards.The same Framework was upheld by the International Accounting Standards Board, when the latter succeeded the International Accounting Standards Committee in 2001. In the Philippines, the ASC was succeeded by the currently functioning Financial Reporting Standards Council (FRSC). The FRSC assists the Board of Accountancy in the latter’s function of adopting and promulgating the International Financial Reporting Standards. Thus, both the IASB and the locally functioning FRSC in the Philippines are guided by the same Framework. Robles ;amp; Empleo, 2007) The IFRS for SMEs The Philippine Institute for Public Accountants (PICPA) now recognizes the International Accounting Standards Board's (IASB) recently released International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs), as an official set of accounting sta ndards to be audited against. (Brozovsky, Christie & Hicks, 2010) The IFRS for SMEs was adopted in the Philippines effective January 1, 2010, and is known as the Philippine Financial Reporting Standards for Small-Medium Entities (PFRS for SMEs).The Philippine Securities and Exchange Commission (SEC) adopted a definition of â€Å"small and medium-sized entities† that includes a size criterion. As defined by SEC, an entity is an SME if: it is not in the process of filing its financial statements for the purpose of issuing any class of instruments in a public market and, it is not a holder of a secondary license issued by a regulatory agency, such as bank (all types of banks), an investment house, a finance company, an insurance company, a securities broker / dealer, a mutual fund and a pre-need company.The Philippines has been acknowledged by political scientists and economists as a newly industrialize nation. The country is experiencing rapid economic growth usually export -oriented and on-going industrialization. The Accounting Standards Council (ASC) is responsible for establishing and improving generally accepted accounting standards. Development of such standards are based on existing practices in the country, as well as statements and studies issued by other standard setting bodies like the International Accounting Standards Committee (IASC) and the Financial Accounting Standard Board (FASB).The ASC, which was renamed as the Financial Reporting Standards Council (FRSC) decided to replace its US-based standards with International Accounting Standards (IAS), later referred to as IFRS. The Philippines also adopted the International Financial Reporting Standards in 2005. It modified its accounting practices slightly to adjust to Philippine policies making the Philippine Financial Reporting Standard (PFRS), and the Philippine Accounting Standards (PAS).Businesses are fully aware of the changes from GAAP to IFRS, which now apply the new IFRS procedures , and modifications that were implemented taking effect in 2009. These companies are now preparing their financial statements in compliance with the PFRS. The Philippines has fully implemented the IFRS. In April 2010, The Philippines adopted IFRS for SMEs referred to as Philippine Financial Reporting Standard for SMEs. These standards can be used by an entity that is not a listed company, a large unlisted company, and a financial institution or public utility. (Ibarra & Suez-Sales, 2011)The International Accounting Standards Board ( IASB ) was established in 2001 as part of the International Accounting Standards Committee ( IASC ) Foundation. One of the objectives of the IASC foundation and of the IASB is: to develop, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that are require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions.The IASB also develops and publishes a separate standard intended to apply to the general purpose and other financial statements of, and other financial reporting by, entities that in many countries are referred to by a variety of terms, including small and medium-sized entities (SMEs), private entities, and non-publicly accountable entities. That standard is the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs).SMEs often produce financial statements only for the use of tax authorities or other governmental authorities. Financial statements produced solely for those purposes are not necessarily general purpose financial statements. (Alliance of Accounting and Auditing Researchers, n. d. ) Accounting Policies The IFRS for SMEs is indented for the use of small and medium sized entities (SMEs). Small and medium-sized entities are entities that do not have public account ability, and publish general purpose financial statements for external users.Examples of external users include owners who are not involved in managing the business, existing and potential creditors and credit rating agencies. Accounting policies are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements. If this IFRS specially addresses a transaction, other event or condition, an entity shall apply this IFRS. However, the entity need not to follow a requirement in this IFRS in the effect of doing so would not be material.If this IFRS specifically address a transaction, other event or condition, an entity’s management shall use its judgement in developing and applying an accounting policy that results in information that is relevant to the economic decision-making needs of users, and reliable, in that the financial statements represent faithfully the financial position, financial performance and c ash flow of the entity; reflect the economic substance of transactions, other events and conditions, and not merely the legal form; are neutral, i. . free from bias; are prudent; and are complete in all materials respects. An entity shall select and apply its accounting policies consistently for similar transactions, other events and conditions, unless this IFRS specifically requires or permits categorisation of items for which different policies may be appropriate. If this IFRS requires or permits such categorisation, an appropriate accounting policy shall be selected and applied consistently to each category.An entity shall change an accounting policy only if the change is required by changes to this IFRS, or results in the financial statements providing reliable and more relevant information about the effects or transactions, other events or conditions on the entity’s financial position, financial performance or cash flows. (Alliance of Accounting and Auditing Researchers, n. d. ) Need of Accounting Information for Small Businesses In order to operate a business effectively, the owner should be informed as to the nature and amount of each asset, each liability, and the amount of owner’s equity.For purposes of planning and controlling business operations, the owner should also know when, why and how frequently changes occurs in the various assets, liabilities and the owner’s equity of the business. Without written records, business owners are not able to keep track of the nature and the amount of the assets, liabilities, and owner’s equity and the changes that occur in their composition. A good record keeping system is usually essential to provide the necessary information.This system of record keeping should show the effect of each transaction on the assets, liabilities and owner’s equity of the business. (Taylor, 2003) Proper Business Records There are several reasons (and advantages) for keeping good business records, an d many of them are a real a real advantage: (1) to show financial standings, (2) to help make important financial decisions, (3) to help control VAT – collecting it in and paying it out, (4) to help audit in certain cases, and keep the auditing costs down, (5) to discuss your financial position with other people.Unless the owners decide otherwise, there is no legal need for an annual audit of the records of a sole trader or a partnership. There is, however, a legal obligation for an annual audit of the accounts of most limited companies. There will be some expenses which are partly for business and partly for private purposes. Recording of business transactions also depends on the size of the business. There can be no hard and fast categories for size of a business. But obviously a national chain store will have a more sophisticated accounting system than a local trader with a market stall.The point at which more complicated records needed, will also depend partly on the type of trade. There are three types of entity commonly found running a business. These are: Sole traders, Partnerships and Limited Companies. Sole traders are persons owning the business which he is running in his own right. Since the person is trading in his own right he is personally responsible for any debts his business incurs. Partnerships are groups of people owning and running the business. It is the individuals in the partnership who are responsible for the partnership debts.Limited Companies are businesses which are owned by at least two people who may or may not also be involved in the day-to-day running of the business. The owners have a limited personal liability for the debts incurred by the company which is a separate legal ‘person’ or entity. The day-to-day running of a limited company is entrusted to its directors. The directors of a company may also be the shareholders. (Taylor, 2003) Businesses can also be classified into three broad categories: public co mpanies, private companies, and small businesses.The distinction between the latter two is the size of the company. Though small, these businesses are important in the aggregate as the major creator of new jobs. Small businesses also constitute a major source of clients for local and regional CPA firms. The need for accounting reports varies among the three classes of businesses. Accounting reports are used to comply with various government reporting requirements. Primary among these is the need to report a business's income, personal property, and payroll to the necessary tax authorities.The relative importance of different uses of accounting reports varies with the size of the business. (Brozovsky, Christie ;amp; Hicks, 2010) Accounting Principles and Practices Most businesses typically use one of two basic accounting methods in their bookkeeping systems: cash basis and accrual basis. While most businesses use the accrual basis, the most appropriate method for a company depends on the sales volume, whether or not you sell on credit, and your business structure. The cash method is the most simple in that the books are kept based on the actual flow of cash in and out of the business.Income is recorded when it is received, and expenses are reported when they are actually paid. The cash method is used by many sole proprietors and businesses with no inventory. From a tax standpoint, it is sometimes advantageous for a new business to use the cash method of accounting. That way, recording income can be put off until the next tax year, while expenses are counted right away. With the accrual method, income and expenses are recorded as they occur, regardless of whether or not cash has actually changed hands. An excellent example is a sale on credit.The sale is entered into the books when the invoice is generated rather than when the cash is collected. Likewise, an expense occurs when materials are ordered or when a workday has been logged in by an employee, not when t he check is actually written. The downside of this method is that payment of income taxes on revenue are made before actually receiving it. The accrual method is required if annual sales exceed $5 million and the venture is structured as a corporation. In addition, businesses with inventory must also use this method.It also is highly recommended for any business that sells on credit, as it more accurately matches income and expenses during a given time period. The cash method may be appropriate for a small, cash-based business or a small service company. (Leonsky, 1998) Accounting is the general process of tracking your income and expenses and then using that data to examine the financial status of your business. The basic accounting tool is the general ledger. It is the place where you keep track of all the business’ financial transactions.That information is then used to create financial statements such as balance sheets and income statements. (Strauss, 2007) An accounting system structures the flow of financial information to provide a complete picture of a firm’s financial activities. There are two types of accounting systems performed by small businesses: (1) the single-entry system and (2) the double-entry system. The single-entry record-keeping system is occasionally still found in the very small business. It is not, however, a system recommended for firms that are striving to grow and achieve effective financial planning.A single entry-system neither incorporates a balance sheet nor directly generates and income statement. A single-entry system is a check book system of accounting reflecting only receipts and disbursements. A double-entry system is a type of accounting system that provides a self-balancing mechanism in the form of two counterbalancing entries for each transaction recorded. It can be done with the record-keeping journals and ledgers found in most office supply retail stores. However, the relatively simple accounting softwa re programs designed for small firms are preferable. Longenecker, 2006) Conclusion Based on the information gathered by the researchers, the researchers have come up with a conclusion to the stated problem. The researcher has classified two types of accounting practice/principles performed by small businesses namely: Formal Accounting and Semi-Formal Accounting. Formal Accounting practice are based on the standards of the International Financial Reporting Standard for Small and Medium-Sized Entities (IFRS for SMEs) The IFRS for SMEs is indented for the use of small and medium sized entities (SMEs).Small and medium-sized entities are entities that are defined as not having public accountability, and do not publish general purpose financial statements for external users. The Semi-Formal Accounting practice is a combination of the Formal Accounting Practice (based on the IFRS for SMEs), and the Single-entry record keeping or booking keeping system. In the Single-Entry system, mostly pe rformed by small businesses, business owners record only the most important or essential transactions for the business which usually contain only the following: cash, accounts receivable, accounts payable and taxes.However, by performing this system, the owners still apply some of the standards given by the IFRS for SMEs. Most businesses however, perform only the Single-entry system. It is a much easier and convenient accounting practice that is preferable by the owners of small businesses because of its comprehensiveness in storing only the important accounting information needed by such businesses. Recommendation The Single-entry system, for most business owners, is mostly performed for its convenience and completeness. The researcher recommends, however, for the owners to apply the Formal accounting practice.The IFRS for SMEs, established by the IASB, was made specifically for small businesses to use. This accounting standard is best recommended for small businesses to attain uni formity among all other businesses alike. This will not only provide advantage to the owners but also to the users of the accounting information. It is still reminded that smaller businesses; such as vendors, sari-sari stores, restaurants or eateries; are not recommended to perform such complicated accounting practice but, they are still advised to record accounting information.The recommended accounting practice for such businesses is the Single-entry system. The researchers provide further recommendations toward the persons involved: 1. To the Business Owners of small businesses, they must obey and follow the accounting standards of the International Financial Reporting Standard for Small-Medium Entities (IFRS for SMEs), mentioned in this research, to attain uniformity among other small businesses which practice the accounting standard of the IFRS. 2.To the College of Business Administration and its faculty members, in which they can use this research as an instructional material or instrument in teaching their students about topics relating to the research. 3. To the Graduates of the College of Business Administration, who plans to have their own business or put up a small business; that this research may serve as a reference and as a guide for their first steps in being entrepreneurs. 4. To the Students of the College of Business Administration, in which they can use this research as a reference material to their academic studies.Bibliography 1. Alliance of Accounting and Auditing Researchers. (n. d. ). International / Philippine Financial Reporting Standard for Small and medium-sized entities (IFRS / PFRS for SME’s). n. d. 2. Brozovsky, John, Nancy Christie, ;amp; Sam Hicks. (2010, July). Accounting for small businesses: the role of IFRS. Academic OneFile. Retrieved July 17, 2012, http://go. galegroup. com/ps/i. do? id=GALE%7CA234140898;amp;v=2. 1;amp;u=lyceumph;amp;it=r;amp;p=AONE;amp;sw=w 3. Byrd, Mary Jane ;amp; Megginson, L. C. (2009).Small Bus iness Management An Entrepreneur’s Guidebook. (Seventh Edition). New York: McGraw-Hill. 4. Dias, Laura ;amp; Shah, A. J. (2009). Introduction to Business. New York: McGraw-Hill. 5. Habaradas, Raymund B. (2008, March). SME development and technology upgrading in Malaysia: lessons for the Philippines. Academic OneFile. Retireved July 17, 2012, http://go. galegroup. com/ps/i. do? id=GALE%7CA204419292;amp;v=2. 1;amp;u=lyceumph;amp;it=r;amp;p=AONE;amp;sw=w 6. Ibarra, Venus and Suez-Sales, M. G. (2011, December). A comparison of the International

A Multi-Disciplinary Approach to Teaching Cross-Cultural...

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