Cost Management

Business

Quiz 1 :

Cost Management and Strategy

Quiz 1 :

Cost Management and Strategy

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Identify what you think is a very successful firm and explain why. How did it become successful
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A firm is very successful or less successful is depend on its performance in the market. Success of any firm can be measured on some parameters financial or non-financial. If a firm fulfils its parameters of measurement, then we can call it a successful firm and the firm which is not able to fulfil its success parameters then it cannot be said as a very successful firm.
Financial measures of success includes a company's dividend growth, earning growth, sales growth, cash flow, growth in stock price and credit rating of any firm.
While non-financial measures of success includes customer satisfaction, market share and growth, customer services, brand recognition, high quality products, minimum waste, innovation, competence of managers.
So, we can say that a firm is very successful if it fulfils all these parameters mentioned above. We can also take an example like Google. We can say Google is a very successful company as it fulfils all its financial and non-financial parameters very well.
A firm becomes successful by utilising its resources very efficiently and effectively whether these are financial resources or human resources. So, to become successful, it will plan in such a way to utilise its resources so that it can achieve success that will remain alive for a long term period and implements such strategies in a very planned manner.
For formulating a strategy, firstly a firm needs objective or direction and for that it will prepare mission statement that lists are objectives and purpose of a company. After this effectively implementation of strategy and taking required actions to implement strategy, analysis of performance is done and results are found out. On the basis of results obtained, desired actions are taken to meet the parameters or to perform above the parameters. Again it will come back to point from where we started i.e. formulating strategy for enhancing further performance.
So, all you need to become successful is Competitive Strategy and implementing it successfully so that we can achieve what we dream for.

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Give three examples of firms you believe would not be significant users of cost management information and explain why.
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Normally, no doubt cost management information plays an important role in the firm and also for the industry in making plans and the strategy for the future and making various decision making process in order to win over the competitors. But there are certain areas where cost management information is irreverent for the firm and also not impact upon the industry as a whole.
If the firm not utilized their full capacity than information regarding cost is not significant on the ground that cost is ascertained on bases of full utilization of the capacity. So here cost management information is not complete and not useful for the decision making purpose.
Cost information is correct only when all the financial expense are to be considered but certain financial expenses are not included so exact cost is not determined and accordingly, management cannot provide proper information on the cost to the relevant or concerned authorities.
Cost management information is also feel helpless in those firm where work study, time study, motion study and the operation research are the key factor for the decision making process not in the present but also for the future.
There is need for continuous and improved cost information all the time but there is rigid in the information than management, and other related parties does not enjoyed the information which is rigid and is not useful.
Sometimes, it may misleads to the investor on the ground that fixed cost is not to be deducted from the revenue unless all the manufactured product are sold. And also data is to be misled by showing contribution margin of the firm rather than showing all the cost. Over absorption and the under absorption is also one of the major concerns for the proper information but this may lead to insufficient and also firm is not get benefit from the cost management information.

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What would you consider to be the strategy of the Coca-Cola company, cost leadership or differentiation, and why
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Cost leadership and differentiation are two different types of strategy used by a firm taking all the factors into consideration that may affect the strategy.
Cost Leadership strategy is a competition strategy that involves gaining a competitive advantage over its competitors by lowering or reducing the cost. It is considered as effective strategy as it helps in increasing company's market share which will enhance the popularity or goodwill of any firm.
Differentiation is also a competitive strategy that involves developing and maintaining a different or unique value product or service for the customer. It involves innovation so that company's product will differ from other products available in market.
The Coca-Cola company which is a very recognised brand, operates in a multiple countries which makes it a multinational company attained a remarkable growth and maintained a competitive positioning. The main generic strategy used by Coca- Cola company is cost leadership as this strategy helps in attaining large market share quickly and creating branding. This strategy allows to target middle class and making customer base by providing products and services at lower prices or affordable price. Middle class or lower class gives importance to pricing factor and due to cost leadership this segments can be served.
Coca-Cola focuses on accessibility along with affordability that made it a global brand and increased its market share at international level by which high brand awareness was developed among customers and achieved huge growth in sales.
As we all know that no organisation can survive or grow in isolation. Therefore, in order to survive in this competitive world, firm can't rely on any single strategy over the firm's life time duration. Therefore, it should use a mix of strategy. So Coca-Cola also uses differentiation along with cost leadership as it attained a remarkable growth and recognition and now to maintain and grow its value, it uses mix of strategy.
By using differentiation, Coca-Cola competes with its rivals like PepsiCo or other soft drink brands. For this, Coca-Cola introduced some other products like coffee, health drinks, juices etc. in different market segments to introduce itself in a different manner and to gain advantage of its trusted large custom base.
So, we can say that Coca-Cola use mix of both strategy but initially it started with cost leadership strategy and it is still main strategy for it but to survive and develop, it also uses differentiation in different markets with difference customer base.

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What type of professional certification is most relevant for the management accountant and why
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As firms move to the Internet for sales and customer service, how do you expect their competitive strategies will change
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Name three professional cost management organizations and explain their roles and objectives.
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Name the 13 contemporary management techniques and describe each briefly.
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List the four functions of management. Explain what type of cost management information is appropriate for each.
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In 2004 the drug VIOXX was removed from the market by the pharmaceutical giant, Merck Co. The drug was used to relieve arthritis pain and was especially beneficial for patients who needed a medication that was easy on the stomach. But research reports showed there was a risk of strokes and heart attacks after taking VIOXX for 18 months. Evaluate Merck's decision on business and ethics grounds.
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Give four examples of firms you believe would be significant users of cost management information and explain why.
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What are some factors in the contemporary business environment that are causing changes in business firms and other organizations How are the changes affecting the way those firms and organizations use cost management information
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Name a firm or organization you know of that you are reasonably sure uses cost management and explain why it does so. Does it use cost leadership or differentiation, and why
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What does the term cost management mean Who in the typical firm or organization is responsible for cost management
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Take as an example the bank where you have your account(s) and say whether you think it is a cost leader or a differentiator and why.
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As firms move to the Internet for sales and customer service, how do you expect their need for cost management information will change
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Identify the different types of business firms and other organizations that use cost management information, and explain how the information is used.
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What is a commodity Give some examples of what you consider to be commodities and explain whether you think the company making the commodity product or service is a cost leader or a differentiator and why.
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Contrast past and present business environments with regard to the following aspects: basis of competition, manufacturing processes and manufacturing technology, required labor skills, emphasis on quality, number of products, number of markets, types of cost management information needed, management organizational structure, and management focus.
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Do you think there is value to the firm and to its shareholders of a strong ethical climate in the firm a. Why or why not b. A recent survey showed that 29 percent of teenagers in the United States believe that "one has to bend the rules to succeed" in business. Comment on this result and discuss the implications.
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Which is the most important function of management Explain why.
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