Managerial accounting by garrison noreen (13th ed ) chap001

Managerial Accounting and the Business Environment Chapter McGraw­Hill/Irwin    Copyright © 2010 by The McGraw­Hill Companies, Inc. All rights reserved Customer Value Propositions Customer Intimacy Strategy Understand and respond to individual customer needs Operational Excellence Strategy Deliver products and services faster, more conveniently, and at lower prices Product Leadership Strategy Offer higher quality products 1-2 Organizational Structure Decentralization Decentralization is is the the delegation delegation of of decisiondecisionmaking making authority authority throughout throughout an an organization organization C o r p o r a te O r g a n iz a tio n C h a r t B o a r d o f D ir e c t o r s P r e s id e n t P u r c h a s in g P e rso n n e l V ic e P r e s id e n t O p e r a t io n s C h ie f F in a n c ia l O f f ic e r T re a su re r C o n t r o lle r 1-3 Process Management A business process is a series of steps that are followed in order to carry out some task in a business R&D Product Design Customer Manufacturing Marketing Distribution Service Business functions making up the value chain 1-4 Traditional “Push” Manufacturing Company Traditional “push” manufacturing Raw materials Large inventories Work in process Finished goods Materials waiting Completed products to be processed awaiting sale Partially completed products requiring more work before they are ready for sale 1-5 Lean Production  Identify value in specific products/services  Identify the business process that delivers value The lean thinking model is a five step approach  Organize work arrangements around the flow of the business process  Continuously pursue perfection in the business process  Create a pull system that responds to customer orders 1-6 Lean Production The five step process results in a “pull” manufacturing system that reduces inventories, decreases defects, reduces wasted effort, and shortens customer response times Customer places an order Create Production Order Generate component requirements Goods delivered when needed Production begins as parts arrive Components are ordered 1-7 Theory of Constraints A constraint (also called a bottleneck) is anything that prevents you from getting more of what you want The Theory of Constraints is based on the observation that effectively managing the constraint is the key to success The constraint in a system is determined by the step that has the smallest capacity 1-8 Theory of Constraints Only actions that strengthen the weakest link in the “chain” improve the process Allow the weakest link to set the tempo Focus on improving the weakest link Identify the weakest link Recognize that the weakest link is no longer so 1-9 Six Sigma A A process process improvement improvement method method relying relying on on customer customer feedback feedback and and fact-based fact-based data data gathering gathering and and analysis analysis techniques techniques to to drive drive process process improvement improvement Refers Refers to to aa process process that that generates generates no no more more than than 3.4 3.4 defects defects per per million million opportunities opportunities Sometimes Sometimes associated associated with with the the term term zero zero defects defects 1-10 Six Sigma 1-11 IMA Guidelines for Ethical Behavior Recognize Recognize and and communicate communicate professional professional limitations limitations that that preclude preclude responsible responsible judgment judgment Maintain Maintain professional professional competence competence Competence Follow Follow applicable applicable laws, laws, regulations regulations and and standards standards Provide Provide accurate, accurate, clear, clear, concise, concise, and and timely timely decision decision support support information information 1-12 IMA Guidelines for Ethical Behavior Do Do not not disclose disclose confidential confidential information information unless unless legally legally obligated obligated to to do so so Do Do not not use use confidential confidential information information for for unethical unethical or or illegal illegal advantage advantage Confidentiality Confidentiality Ensure Ensure that that subordinates subordinates do not not disclose disclose confidential confidential information information 1-13 IMA Guidelines for Ethical Behavior Mitigate Mitigate conflicts conflicts of of interest interest and and advise advise others others of of potential potential conflicts conflicts Refrain Refrain from from conduct conduct that that would would prejudice prejudice carrying carrying out out duties duties ethically ethically Integrity Abstain Abstain from from activities activities that that might might discredit discredit the the profession profession 1-14 IMA Guidelines for Ethical Behavior Communicate Communicate information information fairly fairly and and objectively objectively Credibility Credibility Disclose Disclose delays delays or or deficiencies deficiencies in in information information timeliness, timeliness, processing, processing, or or internal internal controls controls Disclose Disclose all all relevant relevant information information that that could could influence influence aa user’s user’s understanding understanding of of reports reports and and recommendations recommendations 1-15 Corporate Governance The system by which a company is directed and controlled Board of Directors Incentives and monitoring for Top Management To pursue objectives of Stockholders 1-16 Enterprise Risk Management A process used by a company to proactively identify and manage risk Should I try to avoid the risk, share the risk, accept the risk, or reduce the risk? Once Once aa company company identifies identifies its its risks, perhaps the the most most common common risk risk management management tactic tactic is is to to reduce reduce risks risks by by implementing implementing specific specific controls controls 1-17 Corporate Social Responsibility Corporate social responsibility (CSR) is a concept whereby organizations consider the needs of all stakeholders when making decisions Customers Employees Suppliers Communities Stockholders Environmental & Human Rights Advocates CSR extends beyond legal compliance to include voluntary actions that satisfy stakeholder expectations 1-18 End of Chapter 1-19 ... reduce risks risks by by implementing implementing specific specific controls controls 1-17 Corporate Social Responsibility Corporate social responsibility (CSR) is a concept whereby organizations... effectively managing the constraint is the key to success The constraint in a system is determined by the step that has the smallest capacity 1-8 Theory of Constraints Only actions that strengthen... of reports reports and and recommendations recommendations 1-15 Corporate Governance The system by which a company is directed and controlled Board of Directors Incentives and monitoring for Top