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Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 6ISBN: 978-0078025532Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
Edition 6ISBN: 978-0078025532 Exercise 2
Contemporary Management Techniques Tim Johnson is a news reporter and feature writer for The Wall Street Review, an important daily newspaper for financial managers. Tim's assignment is to develop a feature article on target costing, including interviews with chief financial officers and operating managers. Tim has a generous travel budget for research into company history, operations, and market analysis for the firms he selects for the article.
Required
1. Tim has asked you to recommend industries and firms that would be good candidates for the article. What would you advise Explain your recommendations.
2. Assume that Tim's assignment is a feature article on life-cycle costing. Answer as you did for requirement 1.
3. Assume that Tim's assignment is a feature article on the theory of constraints. Answer as you did for requirement 1.
Required
1. Tim has asked you to recommend industries and firms that would be good candidates for the article. What would you advise Explain your recommendations.
2. Assume that Tim's assignment is a feature article on life-cycle costing. Answer as you did for requirement 1.
3. Assume that Tim's assignment is a feature article on the theory of constraints. Answer as you did for requirement 1.
Explanation
Verified
Verified
Competitive Strategies -
It is important for a firm to develop a competitive strategy to survive in the market. There are 2 types of strategies, Cost Leadership and Differentiation.
In Cost Leadership, firm focuses on producing products and services at the lowest cost, which reduces the growth of competition in the market.
In Differentiation, the focus is on producing a unique product or service, which ensures the survival of the company, even without a price advantage.
1.
For an article on target costing, firms in very competitive industries which employ this strategy would be good candidates. Other firms that might use target costing are firms with short product life cycles. This can be firms with products which are not expected to sustain in the market for a longer period. As the target time to recover the costs is short, it is important to adopt target costing and recover costs during that time.
2.
For an article on life cycle costing, the firms would stay the same as target costing. As firms adopting life cycle costing also have highly competitive markets and short product life cycles. The focus of the strategy is on achieving profitability in the product over its life cycle. The expenses might be higher with the introduction of the product but with the decrease in manufacturing costs in the later part of product life cycle, the profitability will arise.
3.
For an article on theory of constraints, he should pick firms dealing in manufacturing as well as firms dealing in services. The manufacturing firms will clearly show different processed employing theory of constraints based on resources available. This will be a great example for the readers. The higher the number of processes existing in the manufacturing, the more constraints would be applicable and will show better flow of the resources.
4.
For business intelligence, it is important to pick firms which focus on critical success factors. This strategy is employed by firms which need predictive values of core processes driving the business. The firm uses strategic tools to increase the value derived from the processes. This is mostly found in tech and data-based firms which employ analytical tools to gather data about customer satisfaction and behavior.
It is important for a firm to develop a competitive strategy to survive in the market. There are 2 types of strategies, Cost Leadership and Differentiation.
In Cost Leadership, firm focuses on producing products and services at the lowest cost, which reduces the growth of competition in the market.
In Differentiation, the focus is on producing a unique product or service, which ensures the survival of the company, even without a price advantage.
1.
For an article on target costing, firms in very competitive industries which employ this strategy would be good candidates. Other firms that might use target costing are firms with short product life cycles. This can be firms with products which are not expected to sustain in the market for a longer period. As the target time to recover the costs is short, it is important to adopt target costing and recover costs during that time.
2.
For an article on life cycle costing, the firms would stay the same as target costing. As firms adopting life cycle costing also have highly competitive markets and short product life cycles. The focus of the strategy is on achieving profitability in the product over its life cycle. The expenses might be higher with the introduction of the product but with the decrease in manufacturing costs in the later part of product life cycle, the profitability will arise.
3.
For an article on theory of constraints, he should pick firms dealing in manufacturing as well as firms dealing in services. The manufacturing firms will clearly show different processed employing theory of constraints based on resources available. This will be a great example for the readers. The higher the number of processes existing in the manufacturing, the more constraints would be applicable and will show better flow of the resources.
4.
For business intelligence, it is important to pick firms which focus on critical success factors. This strategy is employed by firms which need predictive values of core processes driving the business. The firm uses strategic tools to increase the value derived from the processes. This is mostly found in tech and data-based firms which employ analytical tools to gather data about customer satisfaction and behavior.
Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins
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