Have a question?
Message sent Close

ACT 4191 Accounting Tiffany Bentley Rolex And Maytag Universiti Putra Malaysia

0
0 reviews
  • Description
  • Full Document
Blur-Preview

Universiti Putra Malaysia

ACT 4191 Accounting Tiffany Bentley Rolex And Maytag Universiti Putra Malaysia

CHAPTER 2: IMPLEMENTING STRATEGY: THE VALUE CHAIN, THE BALANCED
SCORECARD, AND THE STRATEGY MAP
QUESTIONS
2-1 The two types of competitive strategy (per Michael Porter, as explained in
chapter 1) are cost leadership and differentiation. Cost leadership is the
competitive strategy in which the firm succeeds by producing at the lowest cost in
the industry. Differentiation is the competitive strategy in which a firm succeeds
by developing and maintaining a unique value for the product, as perceived by
consumers.
2-2 Many possible examples would be correct here. Examples offered in chapter 1
include Walmart, Texas Instruments, and HP (Hewlett-Packard).
2-3 Many possible examples would be correct here. Examples offered in chapter 1
include Tiffany, Bentley, Rolex, and Maytag.
2-4 The four strategic resources are as follows. First the firm determines the critical
success factors using SWOT analysis, and then uses execution to excel on these
CSFs. The value chain is used to provide a more detailed understanding of the
strategy and CSFs, by activity. Finally, the balanced scorecard is used to
monitor and reward achievement of the CSFs and to provide a means for
continual feedback to SWOT analysis, for desired changes in the overall
strategy.
2-5 A strategy map is a framework for showing the relationships among the
perspectives of the balanced scorecard. Typically, the scorecard has the
following relationships. Achievement in the learning and growth perspective
contributes to successful performance in the internal processes perspective,
which in turn leads to success at the customer perspective, and then finally the
desired performance on the financial perspective.
2-6 SWOT analysis is a systematic procedure for identifying a firm’s critical success
factors: its internal strengths and weaknesses, and its external opportunities and
threats. It is used in the first of the three steps of identifying a competitive
strategy.
2-7 A management accountant is not focused on or limited to financial information
only, as in the traditional view of cost and management accounting. Instead, the
management accountant should focus on the firm’s critical success factors,
which might include such non-financial information as delivery speed and
customer satisfaction.
2-8 Critical success factors are strategic financial and non-financial measures of
success. Critical success factors are used to define and measure the means by
which a firm achieves a competitive advantage. Strategic cost management
2-1
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Chapter 02 – Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map
involves the development, understanding, and use of critical success factors to
manage business firms and other organizations. Examples of CSFs are shown
in Exhibits 2.1 and 2.5.
2-9 Several potential critical success factors for an industrial chemical manufacturer
might include:
1. Cost and price, since most chemicals are commodities which compete
principally on price
2. Speed of delivery, since many applications for these chemicals require prompt
delivery
3. Quality of the chemicals, so that they meet the required specifications of the
customers
4. Location and cost of storage, to enhance customer service and reduce overall
costs
5. Modernization of production and processing facilities, to produce the highest
quality chemicals at the lowest prices
6. Research and development, to introduce new and improved products
2-10 Several potential critical success factors for a large savings and loan institution
might include:
1. Spread between the cost of funds and the earnings on investments and loans
2. Amount of total deposits, number of depositors, number of new offices,
number of loans
3. Decrease in loan losses, number of bad loans, losses due to theft and fraud
4. Training hours per employee and employee turnover
5. Customer satisfaction as measured by phone survey or other means
2-11 Several critical success factors for a small chain of retail jewelry stores might
include:
1. Growth in sales, number of new customers, number of new products, number
of branch stores
2. Operating costs, by category
3. Customer satisfaction as measured by phone survey or mail survey
4. Identification and introduction of new products
5. Effective promotion and advertising using a variety of media
6. Competitive service policies
7. Identification of attractive store locations
8. Effective control of inventory to prevent fraud and theft
2-12 Several potential critical success factors for a large retail discount store might
include:
1. Growth in sales, number of new branch stores
2. Operating costs, by category
3. Customer satisfaction as measured by phone survey or mail survey
4. Identification and introduction of new products
5. Effective promotion and advertising using a variety of media
2-2
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Chapter 02 – Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map
6. Competitive service policies
7. Identification of attractive store locations
8. Effective inventory management, both to reduce employee theft and also to
reduce waste, overstocking and excessive out-of-stock conditions
9. Choice of merchandise mix, to attract customers
2-13 Several potential critical success factors for an auto-repair shop might include:
1. Reliability of service
2. fair pricing
3. Warranty for service, policies for satisfying customer complaints when they
occur
4. inventory management to reduce loss, waste, and to reduce the cost of
carrying inventory of parts
5. Proper location with sufficient parking and easy access
6. Effective marketing using the appropriate media
2-14 The balanced scorecard is an accounting report that includes the firm’s critical
success factors in four groups or “perspectives”: customer satisfaction, financial
performance, internal processes, and learning & growth . The primary objective
of the balanced scorecard is to serve as an action plan, a basis for implementing
the strategy expressed in the CSFs, by aligning performance of managers and
employees with the firm’s strategy.
2-15 The balanced scorecard is important to integrate both financial and non-financial
information into management reports. Financial measures reflect only a partial —
and short-term — measure of the firm’s progress. Without strategic non-financial
information, the firm is likely to stray from its competitive course and to make
strategically wrong product decisions — to choose the wrong products, the wrong
customers. The balanced scorecard provides a basis for a more complete
analysis than is possible with financial data alone.
2-16 Sustainability means the balancing of short- and long-term goals in all three
dimensions of the company’s performance – economic, social, and
environmental. The concept is used by firms to expand their strategy to include
social and environmental as well as economic goals. Some firms that have
included sustainability have found that it is also good for profits.
2-17 Value-chain analysis is a strategic analysis tool used to identify where value to
customers can be increased or costs reduced and to better understand the firm’s
linkages with suppliers, customers, and other firms in the industry.
2-18 There are a number of possible examples here. If you have trouble getting a
discussion going refer the class to chapter 1 and some of the firms that were
2-3
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Chapter 02 – Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map
discussed there as cost leaders. For example, Walmart, which has the
strengths of size, operating efficiency through innovative supply chain, and low
cost operations; weaknesses would include the recent negative publicity the
firm has had for its labor practices and for the negative economic consequences
to competing business in communities where a Walmart is located.
2-19 There are a number of possible examples here. If you have trouble getting a
discussion going, refer the class to chapter 1 and some of the firms that were
discussed there as differentiators, such as Target. A strength of Target is its
customer loyalty and its success in developing customer appreciation for the
style and quality of its products, and for the attractiveness of the stores. Survey
results reported in Chapter 1 show that particularly wealthy shoppers prefer
Target. Weaknesses include smaller size relative to Walmart, Sears/Kmart, and
other competitors, and to less efficient supply chain relative to Walmart.
2-20 Perhaps the easiest illustration of value chain analysis is in the manufacturing
industry because it is relatively easy for students to visualize the processes and
steps that take place in a typical manufacturing plant, from raw materials to
assembly and finishing. This is why the examples in the chapter use
manufacturers. The auto industry is a good additional example. Ask the class to
consider Walmart or Target (as large retailers) and consider the supply chain at
Walmart as an example of a very effective value chain.
2-21 Value chain analysis is a detailed look at the processes within the firm to
accomplish the ultimate strategic goals. Since the balanced scorecard
represents the CSFs that lead to strategic success, the two are definitely related.
The BSC is likely to be developed to the level of detail so that the CSFs of a
given activity are represented as the balanced scorecard for that activity. For
example, a hospital that uses the balanced scorecard will likely have a BSC for
the admission function, which is one key link in the value chain, or similarly, the
hospital will likely have a BSC for the housekeeping function, or the dietary
function, each a key part of the hospital’s value chain.
2-22 This is a potentially great application for value chain analysis. By identifying the
two firms’ value chains and then comparing relative strengths and weaknesses
across the two value chains, it would be possible to see how the combined firm
might be more competitive than the two separate firms. For example, consider
the merger of Disney and ABC; the combination brought together a great
synergy – one firm (Disney) with great content and the other (ABC) with the
media network to distribute it most effectively.
2-23 The answer should be the same. The merger of Tyson Foods and Hillshire
Brands in August 2014 is a good example.
2-4
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Chapter 02 – Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map
2-24 To be implemented effectively, the balanced scorecard should:
 Have the strong support of top management
 Accurately reflect the organization’s strategy
 Communicate the organization’s strategy clearly to all managers and employees,
who understand and accept the scorecard
 Have a process that reviews and modifies the scorecard as the organization’s
strategy and resources change
 Be linked to reward and compensation systems; managers and employees have
clear incentives linked to the scorecard
 Include processes for assuring the accuracy and reliability of the information in
the scorecard
 Ensure that the relevant portions of the scorecard are readily accessible to those
responsible for the measures, but that the information is also secure, available
only to those authorized to have the information
2-25 Normally there are fewer than 100 measures, but sometimes more than 100.
The median number of measures is between 20 and 50.
Source: Raef Lawson, Toby Hatch and Denis Desrouches, Scorecard Best
Practices, Wiley, 2008.
2-26 1. Commodity producers are likely to compete as cost-leaders because the
product is difficult to differentiate.
2. Professional service firms are usually differentiators, as consumers are likely
to choose their doctors, lawyers, and accountants, etc., on the basis of proven
expertise, licensure, and experience.
2-27 The growth of contract manufacturers in the electronics industry has had
important effects in the competition within this industry. For example, in the TV
business, it is now possible for a small firm to develop its own design and
marketing organization and outsource all of its production to the contract
manufacturers, thereby avoiding all of the manufacturing-related development
costs that had represented a barrier to entry to the industry in prior years. Many
contract manufactures also provide design and marketing services, so that a
small firm can enter the market with a relatively small investment. This is what
Vizio, a Los Angeles-based TV manufacturer, has done and the firm has become
very successful in competing against some of the larger brands.
2-5
Copyright © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Chapter 02 – Implementing Strategy: The Value Chain, the Balanced Scorecard, and the Strategy Map
BRIEF EXERCISES
2-28 SWOT analysis is a useful tool for
a. evaluating the performance of an organization.
b. identifying the organization’s critical success factors.
c. developing the organization’s strategy map.
d. developing the organization’s value chain.
Answer: b
Learning Objective: 02-01
Feedback: Answer b is correct. SWOT analysis is used to develop and
implement an organization’s strategy, and the key role played by the SWOT
analysis is to help identify the organization’s critical success factors that are then
used in the BSC, strategy map, value chain analysis, and other cost management
methods such as budgeting and performance evaluation..
2-29 The following strategy implementation technique can be particularly enhanced by
using benchmarking, as for example, participating in the Malcolm Baldrige National
Quality award program
a. the value chain.
b. the balanced scorecard (BSC).
c. the strategy map.
d. Execution.
Answer d
Learning Objective: 02-02
Feedback: While all the above listed implementation methods can benefit from
benchmarking, execution of goals is the one that most relies on benchmarking in
setting goals and evaluating progress to meeting these goals.
2-30 The balanced scorecard is related to the strategy map in a similar way as
a. the value chain is related to product differentiation.
b. SWOT analysis is related to execution.
c. the organization’s key activities are related to the value chain.
d. sustainability can be related to financial reporting.
Answer c
Learning Objective: 02-04
Feedback: Answer c is correct because both provide linkages. The strategy map
links the goals in the various BSC

Preview

ACT 4191 Accounting Tiffany Bentley Rolex And Maytag Universiti Putra Malaysia

NOTE: Please check the details before purchasing the document.

error: