each segment. If a retailer or wholesaler wants to improve
their return on capital employed, they typically focus on the
reduction of costs and liabilities concerning taxable income.
These cause-and-effect relationships show that minimal
changes in areas such as skills or work in process can have a
significant impact on profitability (Nielsen and Nielsen
2008). However, the producer always pays the most in taxes
because tangible capital is taxed at the highest rates and
because it is difficult to relocate the production.
Retailers and wholesalers pay less taxes because they can
move money earned in nontaxable forms into low tax
jurisdictions. This represents a significant advantage over
producers because production is fixed to a country and
certain geography. Taxing and regulations in the US
encourage businesses to offshore and outsource to avoid
direct taxes on tangible capital expenditures. Many other
corporations around the world have adopted variations on
these profit maximization strategies.
Applying the VAS equation to each corporation’s 10-K
quarterly statement is the first step in the process of evaluating the capital components in corporations’ financial
statements. The next step takes the process of analyzing
added value in a new direction by linking the supply chain to
the value-added equation. Rulers, presidents, ministers,
administrators, policy-makers, and managers have many
interests that intersect the accurate display of these economic
and financial activities. Leaders need to make wise decisions
based on valid data and interpretations of these transactions.
Policy-makers, regulation, agents, and ministers need to be
able to track, tax, and act upon the legitimate actions and
operations of businesses within their jurisdiction. Additionally, managers especially need to consider the consequences
of their decisions to create and implement strategy accordingly. This RVAA has many implications for corporations
considering Direct Foreign Investment (DFI), spinoffs, vertical integration, mergers, and acquisitions.
This model could be used by policy-makers to understand
the trend of the industries, considering the whole supply
chain, and to foresee a taxation inversely related to the
creation of work in the complex in order to reduce unemployment. A study like this could be replicated in any
industry to help managers, knowing the profitability of the
entire value chain, decide whether it is convenient to proceed
with vertical integration (considering the maximization of
profit for shareholders). The following literature review
provides the background and reasoning for the social
responsibility basis for the proposed empirical method of
accounting for value-added.
2 Literature Review
“Added value” happens at each step in the transformation
of raw materials into a product and its delivery to the
eventual end user. Value-added statements provide useful
information to identify, record, and note who created each
stage of value in a supply chain. This process is often used
to identify the role of intermediaries at each step in the
distribution of tangible products. Value-Added (VA) was
originally used by economists to explain how a service
offered will gain value for the user when it is improved
as compared with basic products or services of the same
kind.
At the core of Corporate Social Responsibility (CSR) efforts are social imperatives that consider the consequences of
business success where “clearly articulated and communicated policies and practices of corporations that reflect
business responsibility for some of the wider societal good.”
(Matten and Moon 2008). The added value that individual
business entities provide is linked to the value-added statement below.
Individual consumers make frequent purchases, often
buying goods and services for their household, and this
group is are the largest customer segment in the world
(Coviello and Brodie 2001). They respond predictably and
positively to Corporate Social Responsibility activities by
companies when making purchasing decisions regarding
their products (Fagerstrøm et al. 2015). Most consumers at
the bottom of the pyramid (BOP), those that earn less than
$2000 per year, spend up to 80% of their income on
necessities including food, clothing, and fuel alone (Gangopadhyay and Wadhwa 2004). Therefore, the decisions
made by corporations in each industry, especially those that
address consumer needs, will have a significant impact on
the quality of life of individuals, particularly in the developing world.
For many BOP consumers, electronic devices affect their
entertainment, mobility, and education. All of these are
related to productivity and self-esteem. Disposable batteries
or primary batteries which consist of alkaline, lithium, silver
oxide, zinc-air, zinc-carbon, and zinc-chloride are not
rechargeable. These portable sources of energy power many
devices from appliances and cameras to phones and video
game controllers. As of 2009, 70% of all primary batteries
are purchased by consumers and the world demand for primary and secondary batteries is forecasted to grow by 7.7%
annually, amounting to US$120 billion in 2019 (Tran et al.
2018).
24
J. Darville and A. Faccia
their return on capital employed, they typically focus on the
reduction of costs and liabilities concerning taxable income.
These cause-and-effect relationships show that minimal
changes in areas such as skills or work in process can have a
significant impact on profitability (Nielsen and Nielsen
2008). However, the producer always pays the most in taxes
because tangible capital is taxed at the highest rates and
because it is difficult to relocate the production.
Retailers and wholesalers pay less taxes because they can
move money earned in nontaxable forms into low tax
jurisdictions. This represents a significant advantage over
producers because production is fixed to a country and
certain geography. Taxing and regulations in the US
encourage businesses to offshore and outsource to avoid
direct taxes on tangible capital expenditures. Many other
corporations around the world have adopted variations on
these profit maximization strategies.
Applying the VAS equation to each corporation’s 10-K
quarterly statement is the first step in the process of evaluating the capital components in corporations’ financial
statements. The next step takes the process of analyzing
added value in a new direction by linking the supply chain to
the value-added equation. Rulers, presidents, ministers,
administrators, policy-makers, and managers have many
interests that intersect the accurate display of these economic
and financial activities. Leaders need to make wise decisions
based on valid data and interpretations of these transactions.
Policy-makers, regulation, agents, and ministers need to be
able to track, tax, and act upon the legitimate actions and
operations of businesses within their jurisdiction. Additionally, managers especially need to consider the consequences
of their decisions to create and implement strategy accordingly. This RVAA has many implications for corporations
considering Direct Foreign Investment (DFI), spinoffs, vertical integration, mergers, and acquisitions.
This model could be used by policy-makers to understand
the trend of the industries, considering the whole supply
chain, and to foresee a taxation inversely related to the
creation of work in the complex in order to reduce unemployment. A study like this could be replicated in any
industry to help managers, knowing the profitability of the
entire value chain, decide whether it is convenient to proceed
with vertical integration (considering the maximization of
profit for shareholders). The following literature review
provides the background and reasoning for the social
responsibility basis for the proposed empirical method of
accounting for value-added.
2 Literature Review
“Added value” happens at each step in the transformation
of raw materials into a product and its delivery to the
eventual end user. Value-added statements provide useful
information to identify, record, and note who created each
stage of value in a supply chain. This process is often used
to identify the role of intermediaries at each step in the
distribution of tangible products. Value-Added (VA) was
originally used by economists to explain how a service
offered will gain value for the user when it is improved
as compared with basic products or services of the same
kind.
At the core of Corporate Social Responsibility (CSR) efforts are social imperatives that consider the consequences of
business success where “clearly articulated and communicated policies and practices of corporations that reflect
business responsibility for some of the wider societal good.”
(Matten and Moon 2008). The added value that individual
business entities provide is linked to the value-added statement below.
Individual consumers make frequent purchases, often
buying goods and services for their household, and this
group is are the largest customer segment in the world
(Coviello and Brodie 2001). They respond predictably and
positively to Corporate Social Responsibility activities by
companies when making purchasing decisions regarding
their products (Fagerstrøm et al. 2015). Most consumers at
the bottom of the pyramid (BOP), those that earn less than
$2000 per year, spend up to 80% of their income on
necessities including food, clothing, and fuel alone (Gangopadhyay and Wadhwa 2004). Therefore, the decisions
made by corporations in each industry, especially those that
address consumer needs, will have a significant impact on
the quality of life of individuals, particularly in the developing world.
For many BOP consumers, electronic devices affect their
entertainment, mobility, and education. All of these are
related to productivity and self-esteem. Disposable batteries
or primary batteries which consist of alkaline, lithium, silver
oxide, zinc-air, zinc-carbon, and zinc-chloride are not
rechargeable. These portable sources of energy power many
devices from appliances and cameras to phones and video
game controllers. As of 2009, 70% of all primary batteries
are purchased by consumers and the world demand for primary and secondary batteries is forecasted to grow by 7.7%
annually, amounting to US$120 billion in 2019 (Tran et al.
2018).
24
J. Darville and A. Faccia