Ways in which Management Accounting contributes to Green Tourism that can add value to A Country’s Tourism Industry.

Management accounting refers to the processes and techniques that focus on the effective and efficient use of organizational resources, to support managers in their tasks of enhancing both customer value and shareholder value. (Langfield Smith & Kim, 2009:6). Conversely, Green tourism describes basic tourism focused on visiting wildlife sites, historical heritage and sustainable tourism which does not damage the sites and communities being visited and a travel which is environmentally friendly. The undesirable state of the natural environment contaminated with harmful substances as consequences of human activities in regards to air, land and water is called Pollution. It is vital the tourism industry thrives being Fiji’s main income earner. To maximize the customer and shareholder value, it is imperative for Fiji to promote Green tourism which can be achieved by reducing pollution. Business firms need relevant and timely information regarding their level of waste disposal. Therefore, the management accounting techniques assist the managers develop strategies to curtail the impact of their business operations on the environment namely, pollution, which would in turn contribute to green tourism attracting more visitor arrivals whilst adding value to Fiji’s tourism.

The tourism sector is vital for Fiji’s economy as it provides employment, earned over $850 million in 2008 in foreign exchange and is Fiji’s main income earner. Sadly, the tourism sector in Fiji faces a large threat today. The tourism sector is hindered by the startling rate of pollution and degradation of natural environment decreasing customer value, and this poses a major threat to Fiji’s tourism industry. To maximize shareholder value, Fiji needs to promote green tourism by reducing pollution. Major types of pollution affecting tourism are land, air and water. It is the hoteliers (service firms) and manufacturing firms that mainly cause this pollution. Focusing on the longer term, managerial accounting is imperative in making pollution-prevention investment decisions as its main roles include planning, implementing and controlling. These would aid managers to look ahead and create strategic objectives that the businesses must work towards to achieve organizational goals to work towards a sustainable future together with business objectives.
To do this organizations’ will need timely and relevant information about the level of pollution transpired by them. To meet the needs of the managers, a management accounting system (MAS) is designed. Thus achieving greater flexibility in providing information. Firms can now produce information on their waste disposal based on the data they collect. Sadly, the firms in Fiji are profit oriented thus their MAS mainly provides financial information. These firms are largely responsible for pollution. The way out to this obstacle could be to restructure the management accounting system so it integrates environmental information as well. Environmental management accounting (EMA) brings environmental costs to the attention of corporate stakeholders who may be able and motivated to identify ways of reducing or avoiding those costs while at the same time improving environmental quality and financial performance of the business. Therefore, EMA provides a broad range of information about financial and non-financial aspects of an organization’s environmental performance. When the managers receive timely and relevant information about the environmental distress caused by the firm, they could make appropriate decisions to reduce the pollution rate of the organization and the organization could also contributes to green tourism.
Furthermore, once the top level management receives information from the management accounting system, the top level management engages in effective preparation the organizations objective. For instance, the components of the tourism sector such as resorts, hotels and restaurants could have a collaborative objective of providing a pollution free environment for the tourists to experience and work towards sustainable development by trying to balance their economic, environmental and social needs, allowing prosperity for now and future generations. A very fine example is that of Sonaisali Island Resort. Their objective in 2007 was being committed to continually improve the environmental and social sustainability performance at our resort, striving to make appropriate yearly improvements focusing on achieving best practice in resource conservation and solid waste management, preserving and protecting the islands and the white sandy beaches by minimizing pollution. Following defining an organization’s objective, the organization engages in strategy formulation and implementation. The organization will formulate strategies to accomplish its objective and consequently, promote green tourism too.

In addition to, the strategies of an organization specify the direction that the company intends to take over the long term, to meet its mission and achieve its objectives. (Langfield Smith & Kim, 2009:14). It is the top level management who are responsible for plan out strategies for the firm. Keeping in mind the objectives of an organization, managers would formulate strategies. There are several types of strategies that could be adapted by firms regarding sustainable development, ecotourism and corporate social responsibility. Firstly, the organizations can change the production processes if it is not in line with environment conservatism and has a high level of scrap rate. For example, the tourism sector is largely condensed in the western parts of Fiji and one of the major manufacturing factories, Fiji Sugar Corporation, (FSC) is located there. FSC disposes off a huge amount of liquid and solid in the western parts of Fiji. If the organization strives to promote green tourism for Fiji, more efficient and effective machines which are environmentally friendly too could be introduced to change the production process to reduce the level of scrap rate. Secondly, the organization could use the famous “three R’s” which are reduce, reuse, recycle for waste they create. For example, in 2008 Nakia Resorts and Dive Fiji had a Future Goals of expecting to reduce 10% wastage by recycling and reusing their waste items where possible by 2009. The strategies used were use durable items, such as cups, buying of fresh and local to reduce packaging and transportation emissions, recycling paper, glass, plastic, aluminum, using biodegradable cleaning products and composting organic matter. Another type of strategy is whereby organizations can set up environmental protection societies or fund environmental activities such as clean up campaigns. For example, the resorts on the Island of Taveuni have set up an environmental protection society that protects the reef eco-system surrounding the group and monitor the level of wastage disposed by each resort. Also, organizations can make every effort to achieve internationally recognized certification such as such as International Organization of Standardization Certificate (ISO Certified) and Green Globe Certified Status. For instance, Sonaisali Island Resort in Fiji in 2007 achieved the prestigious Green Globe Certified Status for two consecutive years which recognized the Resort’s commitment to operating at the world’s highest environmental standard. To attain Certification Sonaisali Island Resort firstly had to successfully benchmark against a number of key environmental performance areas, including water usage, waste management and energy efficiency.

By adopting these strategies, firms can achieve product differentiation by working towards green tourism, and thus attracting more tourist arrivals and in turn adding value to Fiji’s Tourism industry. Since the tourism industry is a service based industry, the presumption could be that the company is engaging in product differentiation rather than cost leadership. The service which is their commodity can be said to be different from other competitors to attract customers. Therefore, the organization seeks to achieve its financial goals and at the same time meeting environmental standards, hence promoting green tourism. These above mentioned strategies also encourage sustainable development and ecotourism as the above mentioned techniques encourages us to conserve and enhance our resource base, by gradually changing the ways in which we develop and use technologies. It provides tourism to unspoiled natural resources, with minimal impact on the environment being a primary concern. While these are achieved, the company paints a favorable picture in the minds of the society about their organizations and with the growing prevalence of environmental and social performance indicators being used as a basis for assessing an organization, the corporate social responsibility could seem like an investment as it would be promoting green tourism and also building a good reputable name for its company, thus adding value to Fiji tourism industry.

Following strategy formulation, strategies necessitate implementation. Strategy implementation is the process putting plans into place to implement and support chosen strategies. (Langfield Smith & Kim, 2009:15). All levels of managers need to share the responsibility to ensure that the desired objectives are achieved and various management activities such as to put strategy in motion, establish strategic controls that monitor progress, and eventually achieve organizational goals. Strategy implementation in various firms is crucial in order to achieve green tourism. Failure at this stage could result in an organizations failure to achieve its overall objective. Nevertheless, environmental performance of an organization is measured to assess how proficiently the organization has been working towards its objectives. Environmental performance indicators (EPIs) can be used as an evaluation technique. Indicator categories for product life cycle performance, environmental performance of manufacturing operations and environmental condition are suggested for use by organizations if they are to be able to measure their impact on the environment. Organizations can also use their budget as a tool for planning and controlling. However the organization needs to continually assess what it is achieving meaning the strategy in place can doesn’t minimize the costs, it could be inefficient and decisions would have to be made on supplementary courses of action.

To integrate EMS into MAS and work towards reducing their level of wastage and achieving green tourism on a national level, organizations incur significant costs. Some of the costs would be in relation to collection of data about their level of wastage, formulating and implementing strategies such as restructuring production process, funding environmental activities, research and development costs when designing new products. Some of the benefits are by attempting to reduce wastage in a manufacturing firm production process; they are successfully able to lower their own costs. By being environmentally friendly, the organization such as a resort therefore achieving what the customer wants (tourism experience that doesn’t harm the environment). Hence creating and enhancing customer value. Also good reputation means that the organization is able to maximize wealth in the long run as it attracts tourists and adds value to Fiji’s Tourism Industry. Hence creating and enhancing shareholder value. Therefore, it can be assumed that the prospective benefits are worth the costs.

To conclude, it should be appreciated that environmental management accounting can generate information about how the use of resources with environmentally-related impacts affects the financial position and performance of organizations. This allows organizations to promote sustainable development and at the same time create value for themselves. It could be said that management accounting techniques could become a vital tool to promote green tourism in Fiji and maximize customer value and shareholder value which follow up in escalating tourist arrivals and adding value to Fiji’s tourism industry.

BIBLIOGRAPHY 1. Langfield Smith Thorn Hilton, Management Accounting, 5th Edition, Australia, 2009, page 6,14,15. 2. Sonaisali Island Resort http://www.sonaisali.com/uploaded_documents/ACF13C5.pdf 3. Nakia Resort and Dive Fiji
http://www.nakiafiji.com/support-files/eco-tourism/Nakia-Sustainable-Plan.pdf