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Any company or an organization with a dream of succeeding in the world of business should consider managerial accounting as a critical element of propelling its objectives. Managerial accounting is essential in the business operations because it helps in handling challenges and tasks to achieve the company goals and vision (Albitar et al.). Administrative accounting is mandated to audit and monitor the present and the future of any business. Management requires a visionary person who is able to make critical financial decisions in the business. In the period of COVID-19 (Coronavirus) pandemic, proper management is required to help enterprises in countering the current economic challenges. Decision-making, monitoring, strategizing, and positioning are paramount considerations in dealing with the impact of coronavirus on managerial accounting (Albitar et al.). This essay aims at discussing how business management applies to the challenges that have been presented by the COVID-19 pandemic.
The majority of businesses have made necessary adjustments to ensure that they follow the regulations which have been placed by the World Health Organization (WHO). The WHO has introduced measures such as wearing masks, and protective gloves, and frequent handwashing. WHO has also initiated the social distancing of the one-meter rule which applies to the interactions between staff and clients and limitation of social gatherings and public events (Gursoy and Chi 528). However, businesses must find the ways to continue operating by applying appropriate managerial skills.
Most organizations have been affected by the Coronavirus pandemic forcing sectors such as the hospitality industry to make crucial adjustments to remain afloat. Accounting experts are important in helping businesses to make informed decisions based on current trends (Gursoy and Chi 527). However, adhering to WHO regulations such as controlling the number of people entering and exiting business premises, catering for take-away services, and offering training for employees on sanitization will help the industry to slowly resume activities. Therefore, adhering to the above guidelines will help hotels to safely resume their operations.
Most importantly, critical decisions must be made on budget re-allocations. As guided by the WHO, the managers must plan for protective gear such as masks and gloves for the employees (Boyd and Pitre 334). Besides, other necessities such as enough soap and detergent must be included in the budget as a form of response measure to the pandemic. Businesses should also reduce labor costs due to the lack of customers and stable income. Thus, a managerial accountant must be well informed of the changes done on budget planning and operational methods.
During the Covid-19 pandemic, a manager’s important decision is to change the business strategy when hotel business operations have been interrupted. The administrator must devise a mechanism to instil new cultures in the workers through better practices which will create a safe environment for both employees and clients. Furthermore, supervisors should ensure that services meet the required standards, and price adjustments should be undertaken. Other hotel services offered include room service delivery of food and drinks, and reducing the transportation cost. Practically, during this COVID-19 pandemic, the hospitality industry has reduced its production volume, for instance, the preparation of foods and drinks. Though the number of clients has reduced significantly, hotels can stay in operation by studying the market behavior and applying new business strategies which can lead to profit-making
The manager’s plan should be driven by the motivation to meet the organization’s visions. Careful gathering and analysis of data is vital to make decisions and achieve the goals despite facing challenges (Boyd and Pitre 333). The consideration of patterns of costs, such as activity-based costing (ABC) enables a manager to understand the business’s profitability (Gursoy and Chi 527). In the case of the hospitality industry, modifications have been made on ABC (expenses on, for example, training employees and customers on sanitization), operational cost (purchasing of masks, gloves, and soap), and quantity of purchase (due to the decrease in the number of customers). Accounting managers must calculate the business’s profitability by adding the ABC, cost of operation, and the production cost (Albitar et al.). Thus, the determination of the expected company expenditures can help many enterprises to re-strategize better.
Apart from creating new strategic plans, companies should also integrate business ethics as a fundamental characteristic of attaining success. Morals act as a guideline for the employees’ conduct in the workplace (Albitar et al.). Despite the coronavirus pandemic situation, organizations should ensure high discipline levels, which determines business success through the operational efficiency, full commitment, product-quality, excellent customer service, among others (Gursoy and Chi 528). For any enterprise to realize profits, it must have efficient employees that exhibit positive attitude towards its operations. For example, the misuse of sanitization equipment and protective gear such as masks should not be allowed to reduce unnecessary expenditures. Thus, to prevent such behaviors, accounting managers should be directed by the management to ensure non-wastage of resources.
Another primary consideration is corporate governance, whereby administrators need to show integrity, accountability, and transparency, especially in the season of COVID-19. Maintaining the trust of shareholders and stakeholders must always be paramount (Albitar et al.). As such, managers must always be ready to present a concrete plan to the shareholders and investors on the needed changes to adjust to the present COVID-19 situation. Disclosing crucial information helps to promote trust among business management, shareholders, stakeholders, and investors.
In conclusion, managerial accounting is an essential department in the business since it ensures the undertaking of unsurpassed operations through decision-making, monitoring, strategizing, planning, budgeting, positioning, ensuring business ethics are adhered to, and corporate governance is employed. Moreover, in case of an outbreak of a pandemic, managerial accounting is responsible for gathering information and planning for the necessary adjustments to ensure the ultimate business success.
Works Cited
Albitar, Khaldoon, et al. Auditing in Times of Social Distancing: The Effect of COVID-19 on Auditing Quality. Emerald, 2020. Emerald Insight. Web.
Boyd, Joseph, and Richard Pitre. “Creating Relevance in Managerial Accounting.” Journal of Education for Business, vol. 95, no. 5, 2020, pp. 331–334. Web.
Gursoy, Dogan, and Christina G. Chi. “Effects of COVID-19 Pandemic on Hospitality Industry: Review of the Current Situations and a Research Agenda.” Journal of Hospitality Marketing & Management, vol. 29, no. 5, 2020, pp. 527–529. Web.
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