University of Twente Student Theses


Increase the contribution of Maars China to Maars Holding by improving the overall performance of Maars China : developing a new organization structure and an accounting system to improve the performance of Maars China

Ates, Ertan and Huang, Jack (2009) Increase the contribution of Maars China to Maars Holding by improving the overall performance of Maars China : developing a new organization structure and an accounting system to improve the performance of Maars China.

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Abstract:This thesis is written with the intention to improve the performance of Maars China for delivering a greater overall contribution to Maars Holding. We focused our research on the development of a new organizational structure and the improvement of the accounting system of Maars China. The main objectives of this research are to close the accounting gap between Maars Holding and Maars China, and to develop an organizational structure that fits Maars China. With this in our mind, we started with a preliminary research. The goal of this preliminary research was to identify the problem and analyze the current situation of the organization. The research consists of an analysis of the current situation, an overview of the desired situation and a proposal for improvement. The analysis of the current situation describes both the problems of the organizational structure and the accounting system. The data from the current situation is gathered by an in-depth interview (formal and informal), an observation, an internal document review, a desk and a field research. The overview of the desired situation describes the gap between the current situation and how the situation could theoretically be. In the section “proposal for improvement”, we discuss and analyze the gap between the current situation and the desired situation and propose suggestions for improvement. In the chapter “implementation” we present a plan on how to translate the research results into practical improvements. The results of our research reveal that there is room for organizational improvement. The organizational structure of Maars China does not fit the organization’s complexity, size, culture, environment and goals. As a result, we observe an organization adrift; the organization’s capabilities do not match the performance and the goals. The financial targets, for example, are not achieved, due to a lack of control and planning. The job descriptions (unclear and incomplete) are not adapted to Chinese employees, who have no initiative what so ever. The bottleneck can be traced to the low formalization and standardization, the extremely high centralization of decision making, unclear hierarchy and authority, hardly any collaboration between departments and individuals, indirect and sparse internal communications, not well defined goals and also limited resources and knowledge. The pressure for change can be explained both internally and externally. The internal pressure for change is growth pressure, integration and collaboration pressure, identity pressure and new-broom pressure. For the external change pressure we recognize international pressure, bench marking pressure, market pressure, competition pressure and reputation and credibility pressure. In the section “suggestions for improvement” we propose an organizational structure based on the divide and rule model. This organizational structure is characterized by formalization, standardization, a limited degree of decentralization, clear hierarchy and authority, encourages interdepartmental communication and collaboration and clear job descriptions. This organizational structure should provide the top management with a better control of the whole organization and should help to develop and adjust the planning to achieve the targets. The organization will become more efficient and effective. This will enable Maars China to improve the overall performance and make a better contribution to Maars Holding. The conclusion of our accounting research is that the problem of accounting is caused by the different characteristics of the specific accounting systems of each country and a lack of knowledge and experience of both GAAP systems. According to the accounting theory there is a distinction between management accounting and financial accounting. The problem of management accounting is unreliable financial information which causes errors in accountability, control and decision making. The problem of unreliable financial Organization and accounting improvement - 5 - 20-5-2009 information is caused by a lack of Dutch GAAP knowledge, a lack of cost price calculation, communication and collaboration and a lack of financial policies and procedures. The differences of financial accounting between Maars Holding and Maars China are caused by the external environment. The country specific accounting system is dictated by the government, by law and economic needs. The International Accounting Standard Board tries to set up an international accounting system which can model as a bench mark for every country specific accounting system. This international accounting system is also adopted by the Chinese government, with adaptations for the Chinese circumstances. The gap in financial accounting between the Maars Holding and Maars China accounting systems will always exist. Our suggestions for improvement are based on the improvement of the current accounting system. The implementation of the International Accounting System (IAS) as the standard system is not feasible for Maars Holding and Maars China because country specific circumstances are not included in IAS. We focus our suggestions on the financial knowledge transfer between Maars China and Maars Holding. We strive to implement the Dutch GAAP in Maars China as management accounting for Maars Holding, next to the financial accounting for the Chinese government based on the Chinese GAAP. Therefore the financial department of Maars China must be familiar with and be able to report financial information based on the Dutch GAAP. On the other hand, the financial department of Maars Holding has to learn the Chinese financial and tax rules, so that they can make wellconsidered decisions about Maars China, like decisions on investment, financial aid, and etcetera. To produce reliable input for financial reports the cost price has been calculated; interdepartmental communication has been intensified and financial policies and procedures have been established for the whole organization. Reliable financial information will increase the accountability, control and decision making. Reliable financial information will indirectly improve the performance of Maars China. The suggestions for an organizational structure and an accounting system are combined in the implementation plan. The implementation plan will function as a guide to implement the proposal and evaluate the results. Our contribution to solving the general problem is limited to solving the organizational and accounting problem. To increase the overall performance of Maars China and to contribute to Maars Holding, we propose to do further research on other topics, like collaboration, cultural differences, insourcing and outsourcing, marketing and quality control.
Item Type:Essay (Master)
Maarsgroup BV
Maars China
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
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