Accounting Assignment The business and financial performance

The business and financial performance of China Unicom Company over a three year period

1. Introduction
1.1. General statement of China Unicom
In June 1992, China Electronics Association, the Telecommunications Industry Association and "China Electronics News" jointly held a seminar aimed at accelerating the development of the telecommunications industry. The meeting participants are most not from the Ministry of Posts and Telecommunications, thus the basic tendency of the meeting is to reform China's telecommunications industry, the post and telecommunications sector should be separated from the government, breaking the monopoly and introducing competition, developing market, fully play to the role of private network. A few months later, Electronic Department, Ministry of Electric Power and the Ministry of Railways proposed to the State Council jointly aiming to set up Unicom to enter utility and telecommunications industry (http://baike.baidu.com/view/6561.htm).
 

1.2. The industry analysis of China Unicom
However, the beginning of the establishment of China Unicom seems to be decided on the fate of his future course of development which is not smooth. Because The State Council gives China Unicom public network to the franchise rights illustrated in No. 178 article of the State Council (1993) Such a limited business: “to transform, and perfect the Ministry of Railways, Ministry of the private network, under the premise of guarantee the railway, electricity demand the surplus capacity will provide long distance services to the community; If a public City Network coverage can not reach or if the city common is seriously shortage of capacity, so the city can conduct business.” It is the light of the above wording, Ministry of Posts and Telecommunications finds that the construction of telecommunications networks of China Unicom is not the second public network, but private network in the cities. Unicom's "long distance" services are restricted within "surplus capacity", and “the city service business” can only conducted when common network can not cover or "serious shortage of capacity". Therefore, as an industry manager, the Ministry of Posts and Telecommunications has dual roles to interpret these documents not only the power but also with authority to approve China Unicom’s business (http://baike.baidu.com/view/6561.htm).

In the beginning, China Unicom has faced a lot of obstructs from the Ministry of Posts and Telecommunications. Major are reflected in the following aspects:
(1) set restrictions for China Unicom. During the period from the establishment to1996, China Unicom began its long-distance network and the city network investment, totaled more than 300 million Yuan, but the Ministry of Posts and Telecommunications according to the relevant provisions of the text of 178 documents denied that China Unicom has the right to operate in it. Unicom had submitted inquiry report to the Ministry of Posts and Telecommunications to build in 27 cities for long and City Council interface, but the Ministry of Posts and Telecommunications all denied that. #p#分页标题#e#
(2) Set restrictions to its interoperability to the city. Firstly delaying in processing time on the interface running time, such as Unicom establishes GSM mobile phone network prior to the Ministry of Posts and Telecommunications, but as a result of delays in processing time postpone the date of opening and missing opportunities. Secondly, to limit the technical arrangements of interface and cost arrangements, such as China Unicom's mobile switches of GBS can only cover a local network, and the Ministry of Posts and Telecommunications’ can cover several local networks. Not only that, it also provides Unicom’s 130 phones can not dial 119,120,110 and other special services.
 

 

(3) Within the network China Unicom is charged respect monopoly prices, in the two docking calls between networks, implement an unequal principle. If Unicom GSM mobile Telephone gets access to telecommunications, Unicom has to pay 80% of income to the telecommunications, on the contrast the network of telecommunications just will be required to pay 10% of income.
(4) Use low-cost dumping and cross-subsidization or other unfair competition means to exclude Unicom, such as lower mobile calls and increase the city cross-subsidies, and exclude Unicom which only has mobile service.http://www.ukassignment.org/Accounting_Essay/

This is a large-scale enterprise which rises to the monopolistic behavior of charge ministry, and the government supervises the sector, the establishment of China Unicom although enabled people to see the hope to break monopoly of the telecommunications industry. It has failed to shake the huge body, and one can imagine the effect. In fact it has been made pitiful progress (by the end of 1998, China Unicom only occupies 1% of all telecom operators market share, 5% of mobile communications services), local, long-distance markets have been closed to it (http://www.chinaunicom-a.com/report/index.html).

Unicom entering the telecommunications sector breaks the exclusive monopoly of the Ministry of Posts and Telecommunications, but China's telecommunications market’s duopoly is not asymmetry. First, the Ministry of Post and Telecommunications in the telecommunications business absolutely occupies the dominant position; second, Ministry of Posts and Telecommunications are both the operator and the manager, both athlete and rules-maker or referee. In other words, a small, new oligarch company must accept the management of another larger and monopolistic oligarchy "Enterprise", such a situation is impossible to guarantee fair competition. It should be noted that, in form, before Unicom entering the telecommunications industry, there is only one to operate telecommunications, which is China Telecommunications Bureau, Ministry of Posts and Telecommunications is only charge of it (http://www.chinaunicom-a.com/report/index.html). But in fact, China's Ministry of Posts and Telecommunications is the owner of China Telecommunication Bureau, directly managing its funding and personnel, and, Ministry of Posts and Telecommunications and China Telecommunications Bureau interplay in terms of functions and institutions, so it is a system related with the government. In fact, even the Ministry of Posts and Telecommunications itself does not dare say it separates from the government.#p#分页标题#e#

2. Methodology and information gathering
 

 

2.1. Sources of the information
This is the plan of the study, which guides the collection and analysis of data. The methodology adopted in this work was as a result of the nature and purpose of the work and data analysis. It is the study of research method and ways of achieving set objective. This includes research designs, sample design, method of data collection and method of data presentation and analysis.

The research requires collecting both secondary and primary data. Malhotra & Birks (2006) indicate that primary data is originates by the researcher specifically to address the research problem. The secondary data which is collected for some purpose is an essential component of a successful research design. Secondary data can help to ensure reliability of the research and laying foundation to the primary research.

This research includes primary and secondary research. Secondary research includes relative literature review, which aims to get the documentary data. Most of these data are collected through relevant books and journals. The primary research is to use questionnaire, which is a good way of collecting certain types of financial information quickly and relatively cheaply as long as subjects are sufficiently disciplined to abandon questions that are superfluous to the main task. The thesis aims to examine the different characteristics of China Unicom’ financial statement and to analysis its influences on the performance management practices.

There are too many literatures on theoretical research or practical research of financial statements, in this paper the author uses generally standardized deduction theory and empirical research quantitative analysis. This method will be based on secondary research and questionnaires. The source of secondary research will be the research published in various journals and management publications. In this chapter the whole research process is explained. It emphasized that the research is based on empirical analysis. Therefore, the collection of data is described and the process of analyzing the structure along the model is explained.

2.2. Methods
 

 

Methodology can be viewed as a general research strategy which is used to achieve set objectives. It is the study of research method and ways of achieving set objective. This includes research designs, sample design, method of data collection and method of data presentation and analysis. To achieve the desired objectives of this study, an ambitious study was designed and executed, which took more than twelve months of intensive field work. Also, an intensive investigation of related financial statement was carried out. This can be characterized as a multi-method, in-depth field research study.

When research is conducted, it is essential to decide which type of research strategy will be followed. Commonly used strategies include experiment, survey and case Study. These strategies can be conducted using the quantitative or the qualitative approach. The quantitative approach is usually applied to scientific inquiry. It is characterized by deductive reasoning, objective investigation and precise and statistical measurement. The quantitative approach is easier to evaluate critically than the qualitative approach because it deals with measurements and numbers.#p#分页标题#e#

(1) Reliability Analysis
Reliability refers to the reliability degree of measuring data (information) and the conclusions, which is to say whether the measurement tools can stably measure the matters. That is to say that reliability is the stability, consistency and accuracy of the measure tools. The same groups’ scores must be consistent in the same measurement for several times.

As for the study described in the same indicators, only when they are the same as or similar to the answers, and its measurement is reliable. The measuring methods of reliability include retest reliability, duplicate reliability, half reliability, and so on. To ensure that the questionnaire with a high degree of reliability and consistency, this study uses coefficient to test the reliability of the questionnaire because it is common used in the application the enterprises.

(2) The validity of the analysis
In other words, the validity refers to the right degree, which is the degree for measure tools can really measure. That is to say validity means whether measurement tools can really measure this question the researchers want to judge. Validity can be divided into three categories: content validity, criterion-related validity, construct validity, in which construct validity is the most important validity indicator. This study mainly uses construct validity to carry out the financial analysis.

2.3. Limitations
In this chapter the whole research process is explained. It emphasized that the research is based on empirical analysis. Therefore, the collection of data is described and the process of analyzing the financial structure along the model is explained. When research is conducted, it is essential to decide which type of research strategy will be followed. Commonly used strategies include experiment, survey and case Study. These strategies can be conducted using the quantitative or the qualitative approach. The quantitative approach is usually applied to scientific inquiry. It is characterized by deductive reasoning, objective investigation and precise and statistical measurement. The quantitative approach is easier to evaluate critically than the qualitative approach because it deals with measurements and numbers. http://www.ukassignment.org/Accounting_Essay/
The qualitative approach is defined as a systematic collection and analysis of subjective narrative material. It is more complex and difficult to evaluate ‘results’ than those gained from the quantitative approach. In this study, the author uses quantitative analysis because the author uses financial data to do the research because the formulation of the conclusions based on the financial statement of China Unicom. And the questionnaires results have something objective. The author seeks study accuracy data, so quantitative analysis is suitable in the study.
The study still has some limitations:  (1) because of time, energy and funds limitations, this empirical evidence is limited to China Unicom. After all, it is not comprehensive enough for representation. (2) Although China Unicom’ characteristics are reprehensive, other enterprises’ stakeholders would have impact on financial statements that will be affecting the performance of the China Unicom’ development, however, in the course of the study, owing to the other stakeholders are in a large number and complex, and the author does not do empirical analysis of the stakeholders’ mechanism. #p#分页标题#e#
2.4. Ethical
 

 

Accounting information is generated by means of accounting specific treatment after processing data. And it is demanded by the accounting and financial management which is a part of economic information. As in the economic management accounting information plays an extremely important role, accurate and timely accounting information is the basic requirements. Accounting information is the original financial material in accounting work from different sources and channels and is recorded in the various account tables.

Accounting information has the following features: Firstly, the sources of accounting data are extensively wide, which are both from internal production and management activities of the enterprise and external enterprises’ various economic activities, related a variety of information. Secondly, the number of accounting data is numerous. The number of accounting data is not only because that each accounting period to deal with a large quantity of data. More importantly, with enterprise production and business activities continue, accounting data continuously generates and processes. As the characteristics of the accounting business processing, accounting data has continuous, systematic and cyclical characteristics.

The benefit of cross periods research is that it can be done relatively quickly as the research data is all gathered at the same company. In addition, it is more economical in cost than other research designs. Nonetheless, a drawback of this approach is that it only tests the strength of relationships you think exist but it does not test the actual causality. In this study it could be the case that other phenomena are related to the financial structure of the China Unicom while I only test for industry, profitability, growth opportunity.

2.5. Accounting and business techniques
Generally speaking, financial statement reports are the main financial information of a company. Accounting statement reports include three key reports and several attached lists. These three key reports are balance sheet，profit and loss statement and cash flow statement, which include the appendix of the contents and tables. Attached lists refer to the detailed statements to the items of the key three reports. For listed companies, we can get the information from their websites or the websites of the security committee. For unlisted companies, we can only get the information from the private companies, but we can not obtain these data from the public. As for China Unicom, as a listed company, whose data can be got from its website and the security committee website or other financial books?

“Financial ratios provide a quick and relatively simple means of examining the financial health of a business.” (Atrill & Mclaney 2005, p.198). Basically, a company’s financial performance can be measured through financial ratios in five areas. They are profitability, operational efficiency, liquidity, investment and cash flow. First of all, we can find out a company’s probability through the comparison between the return and the assets or equity.#p#分页标题#e#

In meanwhile, the company’s liquidity risk can be measured through the relationship between the assets and liabilities. Moreover, efficiency ratios help to examine the operating efficiency of a company. Additionally, investment ratios may be able to provide an investment guide for shareholders or investors. Last but not least, cash flow analysis gives shareholders the information, which they usually pay more attention to. This report will assess the financial performance of China Unicom, especially based on the financial ratios analysis.