{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

A life cycle cost assessment is different in that

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: aster results. There are two models that can be used here: • • Strategic Job Family Model Under this model, human resource programs mainly focus on the critical jobs identified in the Human Capital Readiness assessment. However, this means that the majority of the workforce apart from those in critical jobs are seen as non ­strategic; thus, ignoring them. Strategic Values Model This model is where the strategic goal is seen as everyone’s job, in contrast to the strategic job family model. It can be seen that these two models are at the extremes of the spectrum. A mix of these two is required for success in practice. Management Accounting 2 – Semester 2 2010 27 Managing Social and Environmental Stakeholders Managing Social and Environmental Stakeholders Background Firms are usually bounded by something that is called Corporate Social Responsibility (CSR). That is, firms must operate within a level of ethics towards society and the environment. The problem is defining exactly what these responsibilities are. Carroll’s Definition Carroll’s definition of CSR separates a corporate entity into 4 sections: • • • • Economic (to be profitable) Legal (to obey the law) Ethical (to do what is right/fair) Philanthropic (to be a good corporate citizen) Entities are required to satisfy economic and legal requirements. However, it is only expected that entities meet the requirements of being ethical and philanthropic, although it is desired that they are philanthropic. There are three concepts in this: • • • Responsibility – The obligation and accountability of the entity. Responsiveness – The actions and activities the entity takes and its timeliness. Performance – The outcomes and results of those actions taken. Accounting and Environmental Information With accounting, environmental costs can be calculated by using a cost of quality report. Under the Environmental Quality Cost Model, costs can be split into four categories: • • • • Prevention Costs Costs incurred to prevent environmental issues from happening in the first place. Detection Costs (as opposed to Appraisal Costs) These are costs that are incurred so that the entity can determine whether the products they are producing comply with applicable environmental standards. Internal Failure Costs These are costs incurred when produced waste needs to be stored/safely disposed etc. External Failure Costs These are costs incurred when waste is discharged into the environment and it needs to be cleaned up. These can further be split up into private and societal impacts. These are summed up into an Environmental Cost Report. Environmental costs tend to be overhead costs and these can be assigned to products either through a Functional ­based, Activity ­ based (ABC) or Life cycle costing approach. Functional and Activity based costing have been discussed before and will not be discussed here. Management Accounting 2 – Semester 2 2010 28 Managing Social and Environmental Stakeholders Total Environmental Costs It must be noted that environmental costs do not stop when the product is sold. There are also post ­purchase costs products such as proper disposal or recycling of products when the consumer is finished using it. Even though this part is entirely up to the consumer’s wishes, the manufacturer can educate customers on these processes and influence consumers’ behaviour. Environmental Benefits When a company undertakes environmentally friendly approaches, there are usually some cost savings such as savings from less packaging, less energy consumption and recycling. These can all be added up and included in the Environmental Financial Report, which includes both cost and benefits of environmental actions. Life Cycle Cost Assessment A life cycle assessment aims at identifying the consequences on the environment the product has over its entire life. It is aimed at looking for opportunities to improve upon. This is split into three parts: • • • Inventory Analysis Here, the entity asks itself questions such as what materials are required? How much energy will be required? Will it be easily recyclable? What kind of emissions will be produced? Impact Analysis This is where the questions in the inventory analysis are turned from numbers into meaning and compared with other alternatives. Improvement An...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online