Managerial accounting by garrison noreen (13th ed ) chap001

Process ManagementBusiness functions making up the value chain Product Customer R&D Design Manufacturing Marketing Distribution Service A business process is a series of steps that ar

Managerial Accounting and the

Business Environment

Chapter 1

Customer Value Propositions

Understand and respond to individual customer needs

Understand and respond to individual customer needs

Customer Intimacy Strategy

Operational

Excellence Strategy

Deliver products and services faster, more conveniently, and at lower prices

Deliver products and services faster, more conveniently, and at lower prices

Product Leadership

C o r p o r a t e O r g a n i z a t i o n C h a r t

P u r c h a s i n g P e r s o n n e l V i c e P r e s i d e n t

O p e r a t io n s

T r e a s u r e r C o n t r o l le r

C h i e f F in a n c i a l

O f f i c e r

P r e s id e n t

B o a r d o f D i r e c t o r s

Organizational Structure

Decentralization is the delegation of

decision-making authority throughout an organization.

Decentralization is the delegation of

decision-making authority throughout an organization.

Process Management

Business functions making up the value chain

Product Customer

R&D Design Manufacturing Marketing Distribution Service

A business process is a series of steps that are followed in order to

carry out some task in

a business.

Traditional “push”

manufacturing

Traditional “Push” Manufacturing Company

Large inventories

Finished goods

Raw

materials

Work in process

Materials waiting

to be processed.

Materials waiting

to be processed Completed products Completed products awaiting sale awaiting sale

Partially completed products requiring more work before they are ready for sale.

Partially completed products requiring more work before they are ready for sale.

Lean Production

The lean thinking

model is a five

step approach.

The lean thinking

model is a five

step approach.

 Identify value

in specific products/services

 Identify value

in specific products/services

 Identify the business process that delivers value

 Identify the business process that delivers value

 Organize work arrangements around

the flow of the business process

 Organize work arrangements around

the flow of the business process

 Create a pull system that responds

to customer orders

 Create a pull system that responds

to customer orders

 Continuously pursue

perfection in the

business process

 Continuously pursue

perfection in the

business process

Customer places

an order

Create Production

Order

Generate component

requirements

Production begins

as parts arrive

Goods delivered

when needed

Components are ordered

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

The five step process results in a “pull” manufacturing system

that reduces inventories, decreases defects, reduces

wasted effort, and shortens customer response times

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 smallest capacity

Theory of Constraints

4 Recognize that the weakest link

is no longer so.

4 Recognize that the weakest link

is no longer so.

1 Identify the weakest link.

1 Identify the weakest link.

2 Allow the weakest link to set the tempo.

2 Allow the weakest link to set the tempo.

3 Focus on improving the weakest

link.

3 Focus on improving the weakest

link.

Only actions

that strengthen

the weakest link

in the “chain”

improve the

process.

Theory of Constraints

Six Sigma

A process improvement method relying on customer

feedback and fact-based data gathering and analysis

techniques to drive process improvement

A process improvement method relying on customer

feedback and fact-based data gathering and analysis

techniques to drive process improvement

Refers to a process that

generates no more

than 3.4 defects per million

opportunities

Refers to a process that

generates no more

than 3.4 defects per million

opportunities

Sometimes associated

with the term zero

defects.

Sometimes associated

with the term zero

defects.

Six Sigma

Competence Follow applicable laws, regulations

and standards

Follow applicable laws, regulations and standards

Maintain

professional

competence

Maintain

professional

competence

Provide accurate, clear, concise, and timely decision

support information

Provide accurate, clear, concise, and timely decision

support information

IMA Guidelines for Ethical Behavior

Recognize and communicate professional limitations that preclude responsible judgment.

Recognize and communicate professional limitations that preclude responsible judgment.

Do not disclose confidential information unless legally

obligated to do so

Do not disclose confidential information unless legally

obligated to do so

Ensure that subordinates do not disclose confidential

information

Ensure that subordinates do not disclose confidential

information

Do not use

confidential

information for

unethical or illegal

advantage

Do not use

confidential

information for

unethical or illegal

advantage

IMA Guidelines for Ethical Behavior

Mitigate conflicts of interest and advise others

of potential conflicts

Mitigate conflicts of interest and advise others

of potential conflicts

Abstain from activities that

might discredit the

profession.

Abstain from activities that

might discredit the

profession.

Refrain from

conduct that

would prejudice

carrying out

duties ethically.

Refrain from

conduct that

would prejudice

carrying out

duties ethically.

Integrity

IMA Guidelines for Ethical Behavior

Communicate information

fairly and objectively.

Communicate information

fairly and objectively.

Disclose all relevant

information that could

influence a user’s understanding of reports

and recommendations.

Disclose all relevant

information that could

influence a user’s

understanding of reports

and recommendations.

Credibility

IMA Guidelines for Ethical Behavior

Disclose delays or deficiencies in information timeliness, processing, or

internal controls.

Disclose delays or deficiencies in information timeliness, processing, or

internal controls.

Corporate Governance

The system by which a company is directed

and controlled.

Board of

Directors

Board of

Directors

Top Management

Top Management

Stockholders Stockholders

To pursue objectives of Incentives and

monitoring for

Enterprise Risk Management

A process used

by a company to

proactively identify

and manage risk.

Once a company identifies its risks, perhaps the

most common risk management tactic is to reduce

risks by implementing specific controls.

Once a company identifies its risks, perhaps the

most common risk management tactic is to reduce

risks by implementing specific controls.

Should I try to avoid the risk, share the risk, accept the risk, or reduce the risk?

Corporate Social Responsibility

CSR extends beyond legal compliance

to include voluntary actions that satisfy

stakeholder expectations

CSR extends beyond legal compliance

to include voluntary actions that satisfy

stakeholder expectations

Corporate social responsibility (CSR) is a concept

whereby organizations consider the needs

of all stakeholders when making decisions

Corporate social responsibility (CSR) is a concept

whereby organizations consider the needs

Environmental & Human Rights Advocates

End of Chapter 1