FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

ACEDEMIC YEAR 2014/2015

BACHELOR OF COMMERCE (HONOURS)
GROUP COURSEWORK
BBFA3124 FINANCIAL & CONTROLLING APPLICATION

GROUP:

RPA 6

TUTOR:

MS YONG CHEOW LING

SUBMISSION DATE:

13 APRIL 2015

NAME

STUDENT ID

DANIEL LOW BOON KYEAT

13WBR12511

CHIAM TOW YEE

13WBR13120

HENG SIANG KIN

13WRB13123

LAW KHA CHU

13WBR12779

Plagiarism Statement

We, the undersigned, confirm that the submitted work are all our own and are in our own
words.
Name

Registration

(Alphabetical Order and Capital

Number

Letters)
1. DANIEL LOW BOON KYEAT
2. CHIAM TOW YEE
3. HENG SIANG KIN
4. LAW KHA CHU

Tutorial Group: 3 RPA 6

Date: 13 April 2015

13WBR12511
13WBR13120
13WBR13123
13WBR12779

Signature

Form A
Assessment criteria and grid for group assignment (25%)
Criteria

(a) Technical MA

(b
)

(c)

(d
)

knowledge:
comprehension
and numerate
skills
15% of total
assessment
Report writing:
Layout
(structure,
organization
and
presentation of
issues) and
fluency of the
language used
(sentence
construction,
grammar, etc)
2.5% of total
assessment
Evidence of
research and
reference
2.5% of total
assessment
Peer Review
5% of total
assessment

039%
Very
poor

4049%
Poo
r

50-59%

6069%
Goo
d

70-79%

>80%

Excellen
t

Exceptionall
y outstanding

Very
poor

Poo
r

Average

Goo
d

Excellen
t

Exceptionall
y outstanding

Very
poor

Poo
r

Average

Goo
d

Excellen
t

Exceptionall
y outstanding

Very
poor

Poo
r

Average

Goo
d

Excellen
t

Exceptionall
y outstanding

Average

Marks
awarded

QUESTION:
Prepare a REPORT to the management of GBI on this proposal. Your report must
include the following:

1. The advantages and disadvantages of SAP software and the likely problem
encountered if GBI Asia decided to buy SAP software for office use.

2. Discuss the advantages of using non-financial performance indicator (NFPI) to

evaluate staff performance and recommend three NFPI performance measures that
is suitable for GBI Asia. Justify your recommendation.

To:

GBIs Board of Directors

From:

Management Consultant

Date:

1 April 2015

Subject:

The Financial Impact for GBI Asia

Introduction
Background
GBI expansion plan to venture into South East Asia region and had decided in Malaysia to set up
a GBI Asia Sdn. Bhd. (GBI Asia), a wholly owned subsidiary as the regional office.
The Subsidiary
The GBI Asia is expected to commence business from its rented office cum shop at the heart of
Kuala Lumpur and is expected inject a paid up capital of RM1, 000,000 by GBI.
Business Operation
All the bicycles sold by GBI US will be imported and the Asia region sales orders and enquiries
will be handled by GBI Asia
Analysis
We had been appointed to carry out a details study on the financial impact on GBI Asia on:
1. The advantages and disadvantages of using SAP software in GBI Asia,
2. The likely problem encountered if GBI Asia decided to buy SAP software for office use,
3. The advantages and disadvantages of using non-financial performance indicator (NFPI)
to evaluate staff performance, and
4. Recommend 3 NFPI performance measures that are suitable for GBI Asia.

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SAP System
An enterprise resource planning system, or ERP, gives businesses an information
technology tool that combines and integrates the various information systems it uses into
one comprehensive system to manage operations. An ERP typically includes finance and
accounting, human resources, supply chain and inventory, and manufacturing information
systems. Its purpose is to facilitate the flow of information among all departments in an
organization, and manage data sharing with outside systems, such as suppliers, business
partners, clients and regulatory agencies.

1. The advantages and disadvantages of using SAP software in GBI Asia

1.1

Advantages

A global solution
SAP supports global functionality with 45 standard country versions and eight add-on
country editions. The application is also scalable to support thousands of concurrent users
across multiple locations.
Flexibility
One advantage of SAP is its flexibility. SAP allows GBI Asia to create their own rules
within the SAP structure. These rules set the parameters for acceptable and unacceptable
transactions. For example, the system will not allow a journal entry to process if it doesn't
balance. GBI Asia can determine which employees access each area in the SAP
environment. Only qualified personnel receive access to personnel data, such as wage
rates.
Cost reduction
It reduces cost only if GBI Asia took accounting and reporting seriously even before
implementation and had put a lot of manual effort in it. If they didn't care about it, if they
just did some simple accounting to fill mandatory statements and if internal reporting did
not exists of has not been financially-oriented, then no cost is reduced.
Features
SAP allows businesses to manage financial transactions, product life cycles and supply
chain activities. The software has various analytical features, such as evaluating
performance, reporting and decision making. SAP can analyze data from any source and
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conduct collaborative decision making. By all these features, it allows GBI Asia to meet
the needs of many complex businesses and government organizations.

1.2

Disadvantages

Expensive
SAP is the high cost of purchasing and implementing this program. The company must
purchase the software and hardware necessary to run the programs company-wide. Costs
include labor costs of internal information technology (IT) employees or external
consultants overseeing the process. Once GBI Asia implements the software, employees
need to be trained. This involves training each employee in the functions they have access
to. Ongoing costs include software maintenance and periodic upgrades.
Complexity
Another disadvantage of SAP is the complexity built into the software. GBI Asia
implements one feature or function of the software at a time, allowing employees to gain
familiarity with the software before moving forward. The complete implementation
process may take several months or years.
Hard to customize
One of the biggest problems with the system is that it is hard to customize. Some
customization may involve changing of the software structure which is usually not
allowed. Very few companies can effectively use the system right out of the box. It must
be modified to suit their needs, and this process can be both expensive and tedious. Even
when GBI Asia does begin changing the system, they may limit in what they can do.

2. The likely problem encountered if GBI Asia decided to buy SAP software for office
use
There are several potential problems that may arise when GBI Asia purchases
SAP software for office use. Problems may arise due to the mistakes made by SAP or
GBI Asia. The potential problems of buying SAP office software are mainly due to the
fact that SAP software needs to be tailor made before implemented. There are many past
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incidents that give us a glimpse of the potential failures of SAP software such as Hershey,
Nike and Waste Management Inc.
SAP software is very costly to begin with. Moreover, Software modifications are
well known to lead to project failures in accounting software implementations. SAP has a
bad record in attempt to curb this problem. There has been evidence that SAP allegedly
attempted to avoid software customization to reduce the risk of implementation failures
in the case of Waste Management Inc. Failure in accounting software implementations
could lead to further implications as it is a complicated task to correct specific errors.
Effort to rewriting codes may not provide a solution, it may even backfire, and causing
the problems exacerbated and contributes to further failures. Problems are usually
identified during the pilot project carried out by the company. In worse scenarios, GBI
Asia may fail to identify potential problems during the pilot stage and the problem could
lead to serious financial impacts since it is presumably that GBI Asia uses SAP software
for back office accounting, receivables processing, payables processing, inventory
management, etc. Some errors may be left undetected that may create a trail of
undetected mistakes.

SAP software is notoriously well known for their high total cost of ownership it
consists of high acquisition costs, very high deployment costs, recurring maintenance
costs and very high internal support costs. GBI Asia must carefully analyze each option
before making a purchase decision; otherwise it is unlikely that GBI Asia will achieve
their software investment objectives and exceed their software investment budgets. GBI
Asia must be prepared to face deployment risk as SAP software is complex, it has been
historically proven that on time budget SAP implementations are extremely rare. As for
recurring maintenance cost. GBI Asia should take into consideration the nature of
recurring new updates. New updates often exceed the purchase price of original SAP
software. SAP upgrade cost can sky rocket based on the extend of software
4 | Page

customization, business process design, and system integration. Most SAP users will not
upgrade to the newer updates before the prior version is retired as they are fearful of the
huge cost and the complexity involved in upgrading the SAP software. GBI Asia may
face a dilemma as to upgrade to the latest software or not. If GBI Asia opts to forfeit the
upgrades to defer the short term costs, further additional cost will ultimately catch up
with them.

5 | Page

3. The advantages and disadvantages of using non-financial performance indicator

(NFPI) to evaluate staff performance

4. Recommend 3 NFPI performance measures that are suitable for GBI Asia.
Choosing non-performance measures are challenging. They are becoming
important in evaluating performance or making decision. Besides, they are leading
indicators which provide useful information for future performance purpose not
contained financial measures. Apart from that, NFPI is used to evaluate staff
performance. Thus, GBI Asia carefully choosing the right measures and should not
simply copy the measures used by others. There are three NFPI performance measures
that suits GBI Asia.
First of all, absenteeism rates. In short term, it refers to the staffs who arrive late.
If it is a serious problem, it refers to the number of unexpected absence days of staffs for
6 | Page

a particular period. On the other hand, it means that they are still in working conditions
but not around the workplace to work. When this condition occurs, it indicates that
company is losing the commitment of staffs. Management need to spend more hours in
resolving the absenteeism among the staffs on asking the reasons of absenteeism. If
absenteeism does not solved effectively, it will affect the whole workforce.
On top of that, staff turnover is another measure for NFPI. This measure can
help GBI Asia to evaluate staff performance based on their satisfaction level on their job
scopes. A high level of staff turnover indicates that the staffs are not happy at work. It
requires the company to incur costs to hire and train new staffs. Subsequently, it will
affect the financial performance of GBI Asia. Thus, by attempting to concern the issues, it
will help GBI Asia to reduce the time taken and effort to hire and train new staffs.
The last measure is competency. It is used to test the staffs ability to use their
knowledge and skills to handle their jobs efficiently and effectively. There is a
relationship between competency and staff performance. Staffs play important role in
achieving the performance of the organization in short term or long term view. Time
taken to complete a task is depending on staffs productivities. By reviewing the time
period, GBI Asia can evaluate its staffs performance on the completed tasks. In order to
maintain maintaining staff productivity, GBI Asia should address their satisfaction levels.

Adam Lambert
Management consultant

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Reference
Text Book:

Amir, E. and Lev, B. (1996). Value-relevance of nonfinancial information: The wireless

communications industry. Journal of Accounting and Economics, 22(1-3):330.

C. Jayan (2006), Emotional Competence, Personality and Job Attitudes as Predictors of
Job Performance, Journal of the Indian Academy of Applied Psychology, February 2006,
Vol.32, No. 2, 153-144.

Website:
8 | Page

http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Non

%20Performance%20Indicators%20%28NFPIs%29.aspx
http://www.academia.edu/3480967/Job_Performance_Relationship_between_Competenc

y_and_Attitude_towards_Achieving_Tnb_s_Vision
http://hqasia.org/insights/can-performance-appraisal-help-reduce-turnover-and-

Financial

absenteeism

9 | Page