Blocher 2nd Edition Chapter 3McGraw-Hill/Irwin
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(www.ford.com)
To be a low-cost producer of the highest quality products and services that provide the best customer value.
Mission Statements of Selected Firms
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(www.ge.com)
To become the most competitive enterprise in the world by being number one or number two in market share in every business the company is in.
International Business Machines
To be the most successful information-technology company in the world.
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Motorola
(www.motorola.com)
To complete the picture at home – integrating broadband with wireless services.
Johnson & Johnson
United Parcel Service
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The accountant as functional expert and financial scorekeeper
The Prior Business Environment
View of cost accounting as a tool for the development and implementation of business strategy
The accountant as a business partner
The Contemporary Business Environment
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Customer service
On-time delivery
Customer satisfaction
Brand recognition
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Morale and firm-wide culture
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Lack of clarity about direction and goals
Lack of a clear and favorable perception of the firm by customers and suppliers
Incorrect investment decisions; choosing products, markets, or manufacturing processes inconsistent with strategic goals
Inability to effectively benchmark competitors
Failure to identify more profitable products, customers, and markets
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Cost leadership – outperform competitors by producing at the lowest cost.
Differentiation – creating a perception among consumers that your products or services are unique in some important way, usually related to quality.
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Basis of competitive advantage
Unique product or service
Lowest possible cost with high quality and essential product features
Innovation in differentiating products
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Critical Success Factors
Step 1: Obtain a strategic competitive analysis of the firm using SWOT analysis. What are its strengths and weaknesses, opportunities and threats? Determine the firm’s overall strategy (cost/differentiation) and critical success factors.
Step 2: Develop relevant and reliable measures for the critical success factors identified in the first step.
Step 3: Develop a strategic cost information system for supporting the firm’s overall strategy and for reporting critical success factors to appropriate managers.
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Are the product offerings too wide or too narrow?
Are there important and distinctive technological advances?
Product lines
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Management
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What is the outlook for important new products and services?
Research and Development
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What plans are there for improvement in facilities and processes?
Manufacturing
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Marketing
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Strategy
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Pressure from substitute products
Bargaining power of customers
Bargaining power of suppliers
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Critical Success Factors
Step 1: Obtain a strategic competitive analysis of the firm using SWOT analysis. What are its strengths and weaknesses, opportunities and threats? Determine the firm’s overall strategy (cost/differentiation) and critical success factors.
Step 2: Develop relevant and reliable measures for the critical success factors identified in the first step.
Step 3: Develop a strategic cost information system for supporting the firm’s overall strategy and for reporting critical success factors to appropriate managers.
© The McGraw-Hill Companies, Inc., 2002
McGraw-Hill/Irwin
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McGraw-Hill/Irwin
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Critical Success Factors
Step 1: Obtain a strategic competitive analysis of the firm using SWOT analysis. What are its strengths and weaknesses, opportunities and threats? Determine the firm’s overall strategy (cost/differentiation) and critical success factors.
Step 2: Develop relevant and reliable measures for the critical success factors identified in the first step.
Step 3: Develop a strategic cost information system for supporting the firm’s overall strategy and for reporting critical success factors to appropriate managers.
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time deliveries improved?
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Develop a competitive advantage by reducing cost or adding value.
Identify competitive advantage (cost leadership or differentiation).
Identify opportunities for added value.
Identify opportunities for reduced cost.
Exploit linkages among activities in the value chain.
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Activities
Mining, development, and refining
Silicon, plastic, various metals
Step 3: Assembling materials into components
Converting raw materials into components and parts used in the manufacture of the computer
Desired components and parts
Chips, processors, other basic components
Stage 2
Completed computers
Moving products to retail locations and warehouses, as needed
Rail, truck, and air shipments
Step 6: Retail sales
Serviced and restocked computers
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Hierarchical Firm
Hierarchical Firm
Percentage of
products with
Viscosity of
Step 1: DesignResearch and developmentCompleted product design
Step 2: Acquire raw
the computer
Step 7: Customer service