Situational Example

In the given graph, Training Center 1 has started the business with an investment of $20 while Training Center 2 and 3 started off with an investment of $30 and $40 accordingly. It can be seen that in the 2nd quarter, Training Center 1 has gotten a $10 increase from the investment given as the same as with Training Center 2. On the 4th quarter, the three Training Centers has only gotten a profit that is the same as with their total investment.
With the application of the principle of managerial accounting, it can be seen that in the case of the Training Center of Wacker Consulting, there has been a failing level of profitability. It is said that the Training Center specializing in the diversification of the industry of information technology. The main expertise, hence, is the act of giving assistance to the various management groups with regard to their strategic management needs. Accordingly, the focus is to give such provision to the associate clients. With this kind of strategy, it has been noted that the revenue is good. This is particularly true in reference to the record set in the revenue by core area. When the business started in the year 2002, it can be seen that the provision for information technology is as high as 275 while the marketing management falls on almost 250 as shown in the graph below. The production management has also gained minimal revenue together with the strategic management.

It can be seen from the given graph that the revenue records of the training center for the year 2002 alone is very good. It has been able to meet the revenue requirements. The actual profitability on that year is considered to be above the standard set forth by the company. The core areas strategy of the consultation firm has given an edge for the company to perform better and meet the goals set forth. But then again, the profitability performance of the company has declined with the execution of the new strategy known as diversification in geographical areas.

With the diversification of the geographical areas as a process of targeting audience, it cannot be denied that there have been great losses in the profitability and revenue-generation of the company. As a result of which, the company is suffering from losses of income with the continuous shedding of investment. The return of investment of the company has not been expected with the diversification. It has to be noted that the reason why such diversification has been made is to enable the company to reach out for more clients that will lead to more profitability. But the current situation of Wacker Consulting is the other way around. With the launching of the revenue by geographic area in the year 2007, huge discrepancies were recorded up to this date.

It can be seen that when the business started in the year 2002 using the core area as the avenue for collecting profit, the profit attained a provision of 275 while the marketing management falls on almost 250. However, the production management has also gained minimal revenue together with the strategic management. But then again, there have been huge discrepancies when the Wacker Consulting used the geographical areas as the main and primary ways of providing services.

Even if it can be seen that in the 1st quarter of 2007 the geographical area has boomed and flourished, it cannot be denied that the core areas are suffering. Aside from the fact the 1st quarter of 2007 hit almost 800 percent of profitability, the core areas are deteriorating. The main principle applied in the execution of the geographical area is for the acquisition of new source of profitability and increase in income and wealth. But it did not happen. The actual profitability of the company deteriorated instead of being boosted to go up. With the simultaneous occurrences and processing of the core areas and geographical areas, the profitability of the company reached a plateau. It means that the management is no longer able to increase the share of profits that should be attained accordingly. In addition, a greater problem occurred when the former clients are no longer doing business with the company because the focus has been shifted into the geographical areas rather than the core areas. As a result, there is a decline in the profitability and the compensation of the employees and those that are related to the company are likewise affected.

There are many things that could explain the difference between the actual and budgeted plan. But the approach of the process of analyzing the several variances in existence and affecting the profit contribution is a sure way to arrive into a definite conclusion as to what explains the difference between actual and planned budget. It can be seen that on the budgeted plans, all things are being considered. From the minimal cost of supplies to other huge expenses, it is being incorporated to the proposed budget. However, there are some instances and events that could take place beyond the control of the management. For example, if the budgeted cost for the transportation allowances is fixed only to $3000 a month, there is a possibility that it could exceed such amount if the oil prices will rise or could be below the planned budget when the oil prices is stable. Hence, there will be a difference between the actual and budgeted profit.

Advice for Anne Regarding Compensation
Compensation is one of the primary reasons why people and employees are being encouraged to work on their tasks to the fullness of their abilities or the lack thereof. This only means that the most crucial part of employee-employer relation is the compensation of the people. It has the ability to break or make the company and the production of the same. It cannot be denied that in the situation of Anne and the Wacker Consultation, the compensation given to her and to the employees as assumed is merely based on the amount the will enter into the bank account of the company. It is more like commission basis compensation. The salary to be given to the employees should not be based only on the commission they could get for whatever successful transaction is made. The decline and the deterioration of the profitability of the people is simply the cause of the lack of the motivation of the people to work and contribute to the success of the company. When the employees are paid with what is due them, it will not be impossible that the company will gain whatever they have lost because of the wrong actions and lack of motivation of the employees.

It is a known fact that the actions to focus on the geographical areas aside from core areas, is not bad at all. This is because it can execute more actions that will lead to encouraging people to get the services from them. However, the lack of motivation will result to never ending whining and lack of determination among the employees. In this regard, it is but proper to compensate the employees the salary that will not just give them money to buy food but will also lead to the kind of life where they will no longer consider buying basic needs as problem. Compensation will only give the employees and the people the courage and the determination to make everything successful and in accordance to the goals and objectives that are set forth by the company.

Balanced Scorecard
Strategic planning is very important for the success of Wacker Consultation. Strategies in management are crucial in order to succeed in the business and industry. In addition to this, all corporation, government and offices are using strategic planning to guide them in the process of achieving all there is to achieve such as the goals and objectives of the company. It will enable the management to align the system and the organization into the highest form of performance whether internally or externally.
In order to meet the needs of the company, the focus should once again be given the vision of the company. If the company wants to be known in the whole world as the top consultation firm, such vision must be once again stirred into fulfillment. Next step must be the determination of various strategies to be used in the fulfillment of the vision. Such vision and strategies must be geared towards the realization of internal business process, learning and growth, customer orientation and financial stability. All these factors are inter-related with one another and must be fulfilled accordingly (Kaplan, 2004).