Introduction
Management accounting can offer significant advantages, which explains the fact that a growing number of organizations have introduced this practice in their operations. Management accountants have many responsibilities because they provide information for decision-making, help managers control activities, measure performance, and motivate employees and others (Hilton and Platt 2020). Simultaneously, this area of knowledge is essential because it helps managers solve existing problems by identifying, analyzing, and preferring possible alternatives. That is why it is challenging to overestimate the role of management accountants for organizations. This report will demonstrate how the area under analysis can be advantageous for Tri-Hull Marine Inc. In particular, theoretical evidence will support that quarterly equipment maintenance, letting Mia Sucahya go, and having a code of conduct are suitable for the business under consideration.
Choosing Maintenance Schedule
Since Tri-Hull Marine Inc. currently experiences problems finding additional cash flows, a production manager’s solution seems logical. Frankie Lee offers to reduce maintenance costs by checking equipment once a year rather than quarterly. This suggestion implies that the business will spend four times less money on equipment maintenance. An additional argument behind this solution is that machines are currently working fine and far away from their maximum capacity.
However, a closer analysis of management accounting theoretical evidence demonstrates that the suggestion above may not be an optimal choice. As indicated, quarterly maintenance is the business’s current schedule. This statement allows for supposing that the period was chosen according to the equipment manuals (MaintainX 2021). As a rule, equipment manufacturers perfectly understand the technical properties and life cycle features of their machines, tools, and so on. These producers typically organize tests to determine the most appropriate periods when their appliances require maintenance procedures. That is why it could be unwise and against the technical specifications to change the maintenance schedule in an attempt to save money.
In addition to that, one can state that relying on annual maintenance instead of quarterly one can result in some disadvantages for the business. According to Datar and Rajan (2018), longer intervals between maintenance sessions increase the probability of equipment failures. This statement denotes that the desire to save money will result in additional problems with machines. Furthermore, some evidence demonstrates that regular preventive maintenance is preferred because it helps avoid expensive repairs and equipment purchases (Datar and Rajan 2018). This information demonstrates that quarterly maintenance offers significant advantages.
In addition to that, one should clarify that an adequate maintenance approach bears the same significance as the proper schedule. For example, Datar and Rajan (2018) admit that it is necessary to ensure that all the machines and tools are subject to regular preventive check-ups. In other words, an attempt to save money can make managers believe that drawing attention to a few equipment pieces can demonstrate the machines’ conditions. This approach is expected to reveal whether repairing is needed for the entire set of machinery. However, a closer look at this approach allows for supposing that selective maintenance can imply certain challenges. For example, this approach does not exclude the opportunity that problematic tools or machines will not be subject to maintenance when they need it, meaning that they will eventually break down and require costly repair. That is why it is impossible to state that selective maintenance is an effective way to solve Tri-Hull Marine Inc.’s issue with its cash flow.
The analysis of the three alternatives reveals that one of them, regular quarterly maintenance, is preferred. This approach is better because it ensures that equipment is adequately operating and helps prevent machines from failure. The literature findings demonstrate that preventing breakdowns is less costly than repairing them. Furthermore, it was supposed that the selected schedule was chosen because it was highlighted in equipment manuals, meaning that deviating from the recommendation can be a violation of operating requirements. That is why it is possible to conclude that Frankie Lee’s suggestion to save on equipment maintenance is not appropriate for Tri-Hull Marine Inc. because this decision can bring additional challenges. This statement denotes that the business should look for a different way to find financial resources and improve its cash flows.
Ethical Issue with Mia
The following aspect that is covered in this report refers to Mia Sucahya, a software manager. She was expected to attend a conference in Bali to discover more about a specific software package. Everything was arranged, but Xavier McCelland, a company owner, received an anonymous letter stating that Mia had personal interests in attending the conference and preferred a specific software firm. Direct conversation with Mia did not clarify the given situation. Thus, it is reasonable to look at theoretical basics to decide on whether it is reasonable to allow Mia to go to the event and what consequences alternatives can bring.
On the one hand, letting Mia visit the conference can have a few essential advantages. Firstly, the software manager will become happy and satisfied with her manager. This scenario will allow Mia to understand that Xavier does not have any objections to her performance and professional qualities. In this case, it is possible to expect that her morale and motivation will be high, which will be beneficial for the company. Secondly, if Mia is allowed to attend the conference, Tri-Hull Marine Inc. will benefit from higher trust within the organization. This information demonstrates that the internal environment will be better and more productive, which is likely to affect the organization positively. Thirdly, Mia’s visit to the conference can result in her finding a substitute for a required software program. Simultaneously, there exists an opportunity that Mia will obtain helpful information about Vectric CNC from its current partners. This information demonstrates that the decision to let Mia attend the conference implies mainly relationship advantages, but one should not ignore the opportunity to find the required software product.
On the other hand, the decision to prevent Mia from going can lead to particular drawbacks. Firstly, this scenario is expected to bring tension and dissatisfaction to the working environment. If this decision is made, it will denote that Xavier trusts the letter from an anonymous source rather than his subordinates. As a result, other employees and managers can think that Xavier does not trust them, which can adversely affect their performance and motivation. Secondly, a negative consequence relates to the fact that Mia’s failure to communicate with partners can denote that Tri-Hull Marine Inc. will lose an opportunity to find a suitable software program. However, it is necessary not to overvalue this aspect because the business has received bids from five more software firms. Thus, these examples are the leading potential disadvantages that can arise if Mia is not allowed to go to the conference.
It is worth admitting that one cannot state for sure which option is better. In this case, it is reasonable to rely on specific frameworks, and moral philosophies used in business decisions seem appropriate. Thus, the task is to find a suitable approach to guide decision-making. Utilitarianism can be considered the best choice because this approach “defines right or acceptable actions as those that maximize the total utility of the greatest good for the greatest number of people” (Ferrell, Fraerich, and Ferrell 2019, 141). In other words, the given philosophy stipulates that it is possible to ignore individual desires when making a decision. Considering the example of Mia, utilitarianism denotes that the most appropriate choice is the one that offers more benefits to the company. Consequently, it is reasonable to let the software manager attend the conference because she can find a software program for the business there. In addition to that, Xavier admits that he believes Mia, which is another argument for letting her go.
Code of Conduct Issue
Finally, the given report will comment on whether Tri-Hull Marine Inc. needs its own code of conduct. This information can be presented by looking at what advantages and disadvantages this document can bring to an organization. For this purpose, an overview of the reliable literature should be conducted. In addition to that, it will be considered how businesses operate when they do not have a code of conduct.
To begin with, one should comment on what benefits a code of conduct can bring. Strategically, this document is significant because it highlights the organization’s mission statement, values, and leading goals (Ethics and Compliance Initiative 2021). Consequently, businesses require such a code to formulate their strategic directions and ensure that all the employees understand and share them. The presence of an ethical code also results in reputational advantages because it reveals that the organization professionally and attentively approaches its business. This document is also necessary to set specific benchmarks that will be further used to assess organizational performance and goal meeting. One can conclude that a code of conduct is a strategic piece of writing.
In addition to that, it is impossible to ignore the fact that codes of conduct are typically created to reveal employees’ expected behavior and professional performance. In particular, such documents demonstrate how individuals should respond to ethical dilemmas, what additional resources can help them make moral decisions, and many others (Ethics and Compliance Initiative 2021). One should also stipulate that codes of conduct help organizations prevent unlawful behaviors, including bribery, side payments, absenteeism, and others, among employees (Datar and Rajan 2018). In addition to that, having an ethical code in an organization denotes that employees “are less accepting of potential misconduct toward stakeholders” (Ferrell, Fraerich, and Ferrell 2019, 34). These findings demonstrate that ethical codes are significant for organizations and their employees.
Now, it is rational to comment on what disadvantages can arise from having a code of conduct. Firstly, every manager should understand that creating an ethical code is a time and effort-consuming process. In other words, an organization should allocate many resources to ensure that it can write a high-quality document that will highlight its strategic plans, values, and others. Secondly, one should bear in mind that improperly created codes of conduct can result in significant challenges for a company. For example, if insufficient attention is drawn to diversity, such a document can be considered to be discriminating against particular groups of people. Finally, some ethical codes can result in a worsened reputation of a company because these documents can demonstrate that a business does not value its employees or customers.
According to the information above, it is necessary to describe a hypothetical scenario if Tri-Hull Marine Inc. does not have its own code of conduct. Firstly, the organization will not have a clear mission, values, and objectives to be achieved in the future. This fact denotes that both the business and its employees will not understand where the company goes and what its objectives are. Secondly, since there will be no document highlighting employees’ expected behavior, it is possible to suppose that some individuals inappropriately respond to ethical dilemmas. For example, one can suppose that a majority of employees will use conflict of interest situations to gain personal benefits rather than preferring company values, as requested by many ethical codes. Thirdly, the absence of an ethical code denotes that Tri-Hull Marine Inc. will not need to make much effort to create such a document. This statement denotes that the company will economically use its financial and human resources.
In conclusion, it is necessary to summarize all the findings and state whether Tri-Hull Marine Inc. needs a code of conduct. My opinion is that the company needs its own ethical code, and all the advantages of this document are supporting arguments. Since Tri-Hull Marine Inc. is a start-up company, it should invest some efforts in creating a good image, and a code of ethics is an effective way to achieve this goal. If the company has one, its partners and customers will believe that the company is professional and responsible. In addition to that, the document is likely to ensure that the company will not suffer from many ethical dilemmas. That is why Tri-Hull Marine Inc. should have its own code of ethics, irrespective of the potential challenges that are associated with creating this document.
Conclusion
Management accounting is a sphere that is gathering increased attention and application in the modern world. This area of knowledge is significant for every business since it helps address important issues and answer topic questions. In particular, management accounting allows managers to make decisions, control activities, measure performance, and motivate subordinates and others. That is why it is reasonable to rely on this area when it comes to addressing crucial issues.
Tri-Hull Marine Inc. is a start-up company that faced three challenges and required professional assistance. A scientific approach allowed for addressing them and offering suitable solutions. Firstly, the company should check its equipment quarterly because an annual schedule can imply essential drawbacks causing financial losses. Secondly, a suitable decision is to let Mia Sucahya attend the conference, irrespective of an anonymous letter. The utilitarian philosophical approach advocates for this scenario because it can significantly benefit the entire company. Finally, Tri-Hull Marine Inc. should invest its efforts in creating its own code of conduct. This document will demonstrate that the organization is professional and attentively approaches its business activities, which will create a good image among customers and partners.
References
Ethics and Compliance Initiative. 2021. “Developing an Organizational Code of Conduct.” Web.
Datar, Srikant M., and Madhav V. Rajan. 2018. Cost Accounting: A Managerial Emphasis. 16th ed. London: Pearson Education, Inc.
Ferrell, O. C., John Fraerich, and Linda Ferrell. 2019. Business Ethics: Ethical Decision Making and Cases. 12th ed. Boston: Cengage Learning, Inc.
Hilton, Ronald W., and David E. Platt. 2020. Managerial Accounting: Creating Value in a Dynamic Business Environment. 12th ed. New York: McGraw-Hill Education.
MaintainX. 2021. “What is Preventive Maintenance? The Beginner’s Guide to Running PMs.” Web.