Internally Focused Business Research Assignment Answers


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  • Subject Name : Accounting and Finance

In What Ways Could the Current Account Practices of Rio Tinto Be Improved to Make a More Effective Contribution to Developing the Business Strategy?

Contents

Introduction.

Problem..

Research Aim..

Research objective.

Research Question.

Literature Review..

Summary from the insights.

Methodology.

Data Analysis.

Budget.

Conclusion.

References.

Introduction to Internally Focused Business Research

Accounting practices refer to a process or activity that is undertaken for the recording of day to day financial operations that are carried out in the business entity. Various standards are followed in the preparation of accounting statements for the company. IFRS i.e. International Financial Reporting Standards are the rules that are set common for the financial statements and are consistent, comparable, and transparent. These rules are issued by the International Accounting Standard Board and depicts how companies are required to maintain and report the accounts by defining the transactions and also the other events concerning the financial impact (Messner, 2016). Companies around the globe follow the standard. One such company is Rio Tinto.

Rio Tinto is a multinational Anglo-Australian company that is the second-largest company in the world for mining and Metals Corporation. The company was formed in the year 1873 and has grown through a series of mergers and acquisitions. The company produces various commodities that include aluminum, uranium, iron ore, copper, diamonds, etc. The company also has operations that are significant in refining especially bauxite and iron ore. The company has its headquarters in London and Melbourne. The company prepares its financial statements according to the IFRS and the treatment of expenditure and revenue is done according to that. The company has a scope of devising or improving the accounting standard by following a strategy tool for effective management. The company comes into the category of winners and strategy for the business helps in devising and maintain the focus on business. According to a 4+2 formula winners form a strategy that is clear, engaging, and also has a set of shared goals (Joyce, 2005). The company might operate extensively but the focus should be clear

In the report, the accounting standard for research and development will be strategized. Research and development is one major area that helps the company grow. The more innovative ways a company design to stay ahead of the market, the more profitable it will be. Rio Tinto is a major company in its field but the weakness of the company lies in its research strategies. The company is not able to research and develop appropriately as the other firms in the market are doing. Research and development expenditure as per the IAS 38 standard. All the research costs are expensed while the development expenses are capitalized. There is no specific standard for Research and Development. With that mining industry is developing. Digitalization technology is bringing the Industrial Internet of Things. This technology will help in making mining more productive, safer, profitable, and sustainable. Rio Tinto needs to form a strategy to research the technology and bring better results for the company. Research and development expenditure should be considered here in a new method of accounting. When the company will spend money on this research the expense won't be generalized, it will bring returns. Showing it as an expense will not justify the time and efforts put in by the people. IFRS standards do not appropriately consider the research and development. The company should improve the treatment of expenses and the benefits that will be brought in. Research and development in this business strategy will bring in a technology that can be treated as Tangible assets that will be dealt with under IAS 16. This technology can be brought on lease too as per the requirement. Financing costs will incur that will be dealt with under IFRS 9. Also, the expenses incurred on production will reduce, which will be dealt with under IAS 39 (Laux & Stocken, 2018). All these standards will require improvement.

The research plan will work on improving the above-mentioned standards. Research and development expenditure will be cross verified with the benefits that will arise in the reduction of cost. This will affect 2 standards that are IAS 38 and IAS 39. With the research, technology will be enhanced. New technology will be devised, that should be treated under assets with research technology as that will help in understanding the development that has come from research and it can be treated as Assets under IAS 16. If for creating an asset technology has been borrowed than another standard that is IAS 9 will be impacted. The cost for research and development will create an impact on all these standards for the business strategy and they need to be improved to get a true position of the expense and benefit that has incurred from research and present a fair position of the business.

Problem

Businesses are developing and moving towards technology. They are spending huge amounts on research and then bringing in a technology that will help them in saving the cost for the company. Rio Tinto is one such company whose research and development expenditure are to be increased but for that, it is also required that the company's standard is improved to depict the cost and the benefits appropriately.

Research Aim

The research aims to find the improvements in the current accounting standards that are being followed in the company according to the business strategy of researching and developing IOT technology in the business for improvement in the functioning of mining.

Research Objective

The research objective for a study refers to the points that will be understood or highlighted by the author or researcher in its research plan (Doody & Bailey, 2016). In the mentioned plan of research, the objectives will be as follows:

  • To understand the importance of business strategy.
  • To identify the accounting standards that can be improved through the business strategy.
  • To analyze the improvements in accounting standard for better strategy

Research Question

The research question for the plan of research defines the aim for which the research is being conducted. The primary question for the study is:

“In what ways could the current account practices of Rio Tinto be improved to make a more effective contribution to developing the business strategy?”

Sub-Questions

  1. What is a business strategy to be followed?
  2. What is the treatment of Research and development?
  3. What is the value of relevance for the accounting information?
  4. What are the treatment of accounting standards for research and accounting?

Literature Review of Internally Focused Business Research

According to a paper by William F. Joyce in the year 2005, titled: What works: Building the 4+2 organization, depicts what works well for the organizations to ensure that organization grows continuously. In the research paper, certain winning practices have been devised and also the 4+2 formula. The foundation practices include strategy. Under this practice, it is required by the organization to devise and maintain a strategy that is focused and engaging. The organization that comes out as winners have a strategy that has engaging goals. If the organization is not focused strategically it leads to confusion among the employees and customers. Another principle is execution. As per this practice, it is required that a flawless operation and focus related to customer is developed and managed. Winners are required to focus on cost reduction and improvements in productivity. Another practice is culture that is to develop and maintain a performance-oriented culture. A culture is built in an organization that is meaningful for all the employees. It helps them in treating fairly and also rewarding the essential contributions. Another important practice that is being stated in the paper is structure. For the organization to improve a flat and flexible method is to build and maintained. Structures that facilitate execution and strategy should be chosen. Certain practices have been described which serve as complementary, these include talent in which employees possessing the skills should behold on to. Human resources that help in the development of the company should be kept and that skill should be used in building a strong culture. Another feature is leadership where leaders and also the directors are to be kept committed. Innovation is another key feature where winners anticipate changes in the industry and make innovations according to it. The last is mergers and partnership which helps the company in making the growth in the market.

In the same manner in the article: What works by Noharia, Joyce & Robinson in the year 2003, the same points have been described as the main practices that should be followed in the organization to achieve a strategy. Primary practices include strategy, execution, Culture, and Structure while secondary practices include Talent, Leadership, Innovation, and Mergers and Partnership.

The research plan is most connected to the strategy section. Strategy according to the paper is stated as a target that is built on the deep knowledge for customers who are targeted and also the capabilities of the company. It is required that strategy is communicated to the employees and customers and it should be refined concerning the changes in the marketplace that includes new technologies or the regulations that are to be followed. In the research paper a business strategy is created for technological development for the company, while when the technology will be developed through research and development, expenses will incur for which accounting treatment is required. In the current accounting standard, there is no appropriate treatment that has been declared. It required improvement so that the proper position of the business can be determined by the company. This requires research as it will require improvement in various standards like IAS 9, IAS 38, and IAS 16. So, strategy is the most connected area with the company's strategy.

In the research paper Transforming Business purposes and practices: The need for system approach written by Sandra Waddock in the year 2020, the business today requires constant transformation and changes that bring a change in business models of the businesses. The changes in eh practices are being called by the policymakers, activists, etc. The transformation of a system that is purposeful is guided through the change towards a goal that has been accepted generally. Transformation is required by the business to meet the changing demand patterns and the transformation that takes place is hard and complex. The changes that are required should be strategical, require vision, and also the leadership to attain the value that is being derived through strategical change. Various efforts are to be made and then standards are to be formed to bring changes. The business practices require changes because of the changing times and policies are to be formed accordingly. The era signifies the global change and for the organization to sustain in the environment it is required that they bring in innovation and changes in policies to meet the demands and accept the required changes. Organizations that do not strategize and change concerning the transformations that are happening will lag and won’t be able to succeed. So, it is required that transformation in the business and practices are brought in from time to time to sustain the changes appropriately.

In the research paper Evolution in Value Relevance of Accounting Information by Barth, li & McClure in the year 2019, the relevance of accounting information will be addressed. It shows that the requirement for accounting information has evolved especially concerning intangible assets, growth opportunities, and whatever is important to the economy. The research founds that the value for the relevance of accounting information has increased and has also connected the amounts of accounting to the prices of a share of the company. In the present accounting format of accounting growth opportunities or the measures of performance namely earning has not been considered. The researchers have studied the relations of pricing of equity and the information of accounting from the year 1962 to 2014. The approach that has been employed is flexible and non-parametric. Value relevance was used out of the explanatory sample power. The results that were found suggested that there is no decline in the value of relevance for the information of accounting. Earnings have less relevance but the amounts of assets, the opportunities for growth, and also the measure of performance has become more relevant for the present times organization. The research also depicted that the accounting values has become more important and also more relevant in terms of business. The price for shares has connected more with the assets or the opportunities of growth that prevail for the company. The importance of assets, performance measures, and also opportunities of growth shows the relevance of information to the investor in the new economy that is developing. This suggests that practices for assets accounting and also statements of finances should depict the opportunities of growth and make the accounting information more relevant. So, the overall results depict that relevance of value accounting has evolved and the amounts in statements are more connected to the prices of the firm of the stock exchange.

In the paper country-level corruption and accounting choice: research and development capitalization under IFRS written by Mazzi et.al.in the year 2019 shows that research and development cost for the organization should be capitalized. Companies in the world invest in various research and development processes to compete in the environment of business that is continuously evolving. The effect of research and development is a long term for the company and helps in creating value for the assets of the company. Under International Financial Reporting Standard IAS3 38 depicts that expenditure that has been incurred on development should be capitalized. It is capitalized as it conveys that a future value has been created for the company. The issue of capitalization of research and development has remained controversial as under GAAP all the expenses that have incurred are expensed. This issue popped up majorly because it gives a chance to management to capitalize and misrepresent the statements for the organization. IAS 38 requires managers to interpret the benefits of the development research and gives power to them to interpret it according to their viewpoint. This creates an opportunity for corruption in the organization. The paper studies various companies under IFRS for 5 years. The results were not very clear. There were times that the corruption or misrepresentation happened while at times it was not conclusive. Future studies are required to understand the corruption that might occur with the capitalization of research and development.

Summary from the Insights

With the literature review, it can be concluded that there is a transformation that is happening in the business and organizations require to change with that. The research plan is based on a strategy to bring change in the technology for better results in the organization. With that, it has also been mentioned that the relevance of accounting information has become important for the investors and they like to have a fair view of the assets, performance, and growth. The main aim of the research is an improvement in accounting practices to provide better results. In the same manner, the third main part of the research is depicted. Research and development expenditure is mainly focused on and due to which various other standards that have been impacted. Research and development is not clearly defined in the standard. The research and development standard is not clearly defined in the accounting practices and when the expense on research creates a technology like in the present research scenario than the value of assets will also be impacted and if the technology requires financing than the standard for financial leasing will be impacted. Thus, the paper provides a base for the research plan.

Methodology of Internally Focused Business Research

Research Approach

The approaches that are available for conducting the plan of research and also to draw a reliable conclusion are two. Available approaches are inductive and deductive approach to research. The inductive approach for the research is a theoretical method and the researcher moves from an observation that is specific towards a theory that is broad and draws conclusions which are wide as well. While the other method of research that is the deductive research approach is the one where the course of study moves from a generalized theory to a specific conclusion. The inductive approach of the research uses the secondary method of data tools for collection (Alase, 2017). These data tools are commonly used with the inductive approach. While in other methods of study that is the deductive approach, the method of data collection is mixed. Data is quantitative and qualitative for analyzing the situation. In the above-mentioned plan of research, the deductive approach of research will be used. Specific conclusions are required to understand the improvements that are required instead of the generalized theory. Also, another reason for selecting this research approach is that it uses primary data tools that will help in providing the findings a more accurate and reliable view. Thus, the deductive approach will be utilized.

Research Method

The method for the research includes the design and philosophy of the research. The research design that is available for the plan is an exploratory design of research and the other once in a descriptive design of research. The descriptive method of study is the one where the data that is used is qualitative. This particular design of research makes an event understandable by character identification but this design of research does not answer the questions that are specific and are event-related. The other method of research design is exploratory. Under this method of research, a particular event is understood through the questions that are related to it. Also with this, the design of research helps in drawing the conclusion that is specific for the research. The descriptive design of research uses the tools that are qualitative and secondary for the collection of data while the exploratory design of research uses both the qualitative and quantitative tools (ten Ham-Baloyi & Jordan, 2016). The exploratory design of research uses a mixed-method where both primary and secondary tools are used. Quantitative and qualitative analysis are both included in the exploratory design. In the research plan, both the methods of data collection will be used, thus it will follow the exploratory method of research.

With research design insight, research philosophy is another important paradigm that has to be defined in the plan of research. The philosophy of research refers to the paradigm that has to be defined while carrying out the research plan. It is a system that is followed by the researcher to approach a topic of research for collecting the data and also analyzing it. The two types of philosophies of research are interpretive and positivist. The positivist philosophy of research promotes the idea that by using quantitative data tools for collection results will be more reliable while the theory of interpretivism prefers the using of data that is qualitative like library resources etc. in the plan of research both the philosophies will be included as the data method that will be used is mixed. Both the quantitative and qualitative methods will be used in the plan of research. So, both the philosophy of research will be mixed, and accordingly, research will be carried forward.

Data Collection plan

The chapter of methodology for the research includes various research segments that include design, philosophy, approach, etc. However, the main segment of the chapter is the collection of data or selecting the tools for collecting the data. It is an important part of the research plan as the outcomes or the results are dependent on the data results. Also, if the data collection tool is not utilized properly that the right and relevant amount of data will not be collected. The data collection tools that are available to the researcher include the survey questionnaire, journal articles, interview method, books, resources of library, case studies etc. The method of survey questionnaire helps in collecting the data that is quantifiable and also provides results that are accurate for a particular study (Wang et al, 2020).

However, the survey questionnaire helps in collecting the data that is quantifiable but to collect the information in a detailed manner is not possible in the survey method. For collecting the data in a detailed manner interview method is used. Here fixed answers are not provided by the respondents and they are free to provide their opinion on the topic. These two methods together help in collecting the data and also the information that is detailed on the topic. Both the method that is the survey questionnaire and interview method are the primary method for data collection. A survey questionnaire for the research plan will help in understanding whether people want improvement and whether they think that improvement is necessary in the current accounting practices of research and development. While in the interview method for the research plan, the respondents can provide the opinion or the method through which changes can be undertaken and whether the plan of research is appropriate or not. The survey questionnaire is a quantitative primary method of data collection while the interview method is a qualitative primary data collection method.

In the research plan, secondary data collection tools are also used that is journals, articles etc. These are the library resources that were used to create a theoretical framework for the topic of research and make it in line with the question of research. So, the plan of research survey questionnaire will be used to understand the reliability of the research and theoretical aspects will be covered with the secondary sources of data collection method. Both the methods of data collection merged will help in increasing the credibility of the findings.

Data Analysis of Internally Focused Business Research

Data analysis refers to the technique through which meaningful information can be derived from the raw data that has been collected through various sources. Analysis of data helps in developing an appropriate opinion for the research or drawing the conclusion for the research. The primary data that has been collected through the survey questionnaire can be analyzed using the tool SPSS. For analyzing the secondary data descriptive techniques of analysis will be used. This will help the plan of research be more reliable and also credible for the purpose.

Reporting Method

The findings that will be drawn from the analysis i.e. by the result of the survey will be presented through the graphs and pie chart and the description will be provided in the discussion chapter to maintain the research plan's quality.

Budget of Internally Focused Business Research

Budget is the amount that is to be incurred in the plan of research for carrying out the research plan. The following will be the cost that may occur for the interview and survey:

Item Required

Cost

Traveling expenses

$1000

Accommodation expenses

$700

Research Assistant

$10,000

Travel Insurance

$200

Printing of Questionnaire

$50

Contacting Respondents

$500

Analysis Process

$200

Conclusion on Internally Focused Business Research

The research plan will study the improvement in the accounting practices for research and development. The company that has been undertaken for the study is Rio Tinto. Rio Tinto is into a mining industry and does not carry out sufficient research for its development. Internet of Things has attained more power in the industry. The company can dwell into the research and devise a strategy for that. The company follows IFRS standards. In the standards, Research and Development has not been clearly defined. Also, between US GAAP and IFRS, there is a difference in the treatment of the expenses. The former justifies it as a normal expenditure while the latter classifies it as capitalization. But, with the strategy of technological improvement, research and development will bring in an asset for the company that will affect the accounting standard for assets. Also, when an asset will be brought in on the own expenses the benefits should be compensated, and also if any financing or lease is taken for the purpose than Research and development item will be leased too. So, the research plan will help in clarifying all the ambiguity regarding the expenses and the accounting treatment by improving the standards of accounting. This will help the company in presenting a better and clear position of their statements and they will be able to provide a fair estimation of value for their assets and other expenses.

References for Internally Focused Business Research

Alase, A. (2017). The Interpretative Phenomenological Analysis (IPA): A Guide to a Good Qualitative Research Approach. International Journal of Education and Literacy Studies5(2), 9-19.

Barth, M. E., Li, K., & McClure, C. (2019). Evolution in value relevance of accounting information. Retrieved from: https://www.hbs.edu/faculty/conferences/2018-imo/Documents/Barth.Li.McClure.May.2018.pdf 

Doody, O., & Bailey, M. E. (2016). Setting a research question, aim, and objective. Nurse researcher23(4).

Joyce, W. (2005). "What Works: Building the 4+2 Organization", Organizational Dynamics, Vol. 34, No. 2, pp. 118-129.

Laux, V., & Stocken, P. C. (2018). Accounting standards, regulatory enforcement, and innovation. Journal of Accounting and Economics65(2-3), 221-236.

Mazzi, F., Slack, R., Tsalavoutas, I., & Tsoligkas, F. (2019). Country-level corruption and accounting choice: Research & development capitalization under IFRS. The British Accounting Review51(5).

Messner, M. (2016). Does industry matter? How industry context shapes management accounting practice. Management Accounting Research31, 103-111.

Nohria, N., Joyce, W. F., and Roberson, B. (2003). “What Really Works”, Harvard Business Review, Vol. 81, No. 7, pp. 42-52.

ten Ham-Baloyi, W., & Jordan, P. (2016). Systematic review as a research method in postgraduate nursing education. health sa gesondheid21, 120-128.

Waddock, S. (2020). Transforming Business Purposes and Practices: The Need for a Systems Approach. Rutgers Business Review5(2), 194-202.

Wang, Y., Meng, Q., Jing, S., Lv, R., & Peng, J. (2020, June). Research on Multi-source Data Collection and Management Methods for Cement Enterprises. In 2020 IEEE 4th Information Technology, Networking, Electronic and Automation Control Conference (ITNEC) (Vol. 1, pp. 2457-2460).

Remember, at the center of any academic work, lies clarity and evidence. Should you need further assistance, do look up to our Accounting and Finance Assignment Help


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