Management & Cost Accounting: Implementing Strategies

Lecture 2: Implementing Strategies (Value Chain Analysis, Balanced Scorecard, Strategy Map) Professor Noel Cooperberg (Chapter 2) Learning Objectives: 0:33 Industry Analysis - Economic Attributes: 1:15 (Includes Supply & Demand, Manufacturing Marketing, Investing, Financing) Porter's Five Forces Model (flow-chart): 7:21 Implementing a Company Strategy: 10:51 Company Analysis - Economic Attributes: 11:12 Company Analysis - Critical Success Factors: 12:49 Question: 15:33 Questions Reviewed: 22:21 SWOT Analysis: 28:04 (Strength, Weakness, Opportunity, Threat) Execution (putting CSF's to use): 30:21 Value Chain Analysis: 31:01 Example of Value Chain Analysis: 34:48 Result of Value Chain Analysis: 37:05 Five Steps of Strategic Decision Making (applied): 39:58 Balanced Scorecard (BSC) and Metrics: 41:07 Strategy Map (with diagram): 45:06 Sustainability (including an example): 47:12 Sustainability Scorecard: 50:12 BSC and Not-For-Profit Organizations: 51:36 Industry analysis involves understanding key economic attributes. Demand involves price sensitivity, potential industry growth, and cyclicality. Supply involves the strength of your supply chain and distribution channels. Manufacturing involves capital intensiveness and processing complexity. Marketing involves brand recognition and susceptibility to advertising. Investing / financing involves financing requirements, profitability, growth rates, cash flow implications, and global implications. Critical success factors (CSF's) are those processes within the firm that deliver value to customers. Skills that a company employs particularly well are its core competencies. The combination becomes the basis for developing a successful strategy. The CSFs tied to strategy include product innovation, qu ality, and skill development. Quantitative measures for specified CSFs include number of design changes / new patents, number of defects / number of returns, and number of training hours or amount of skill performance improvement. A SWOT analysis involves understanding the company's strengths [internal], weaknesses [internal], opportunities [external], and threats [external]. CSFs depend on the strategy the firm operates with (cost leaders vs differentiating). Management accountants gather, analyze, and report on relevant information on CSFs. To better understand the details of the organization's competitive strategy, analyze the processes of the company that add value (processes that do not add value can be deleted or outsourced). CSFs must be implemented throughout operations. To better understand the competitive advantage of the company, include upstream (prior to manufacturing or operations) and downstream activities. Having a balanced scorecard provides many benefits. It is a means for measuring the implementation of a strategy (by cross referencing what is occurring with the predetermined criteria). It provides a tool to achieve organizational change. It can be used to determine management's compensation and rewards (and aligns managers' efforts with strategy). A properly constructed BSC can be used to infer a company's strategy. The emphasis placed on each performance perspective reflects the strategy of the firm. For a cost leader, the operations perspective might be most important; for a differentiator, the customer perspective is more important. A strategy map is a cause-and-effect diagram of the relationships embodied in a BSC. It shows how the achievemnt of CSSFs in one perspective should affect goals in another. The success in the financial perpsective is the ultimate goal. Success in the other perspectives should lead to improved financial performance and shareholder value. Environmental reports use environmental performance indicators (EPIs) to measure sustainability, with the focus on three areas: (1) operation [which measures stresses to the environment / regulatory compliance issues) (2) management [trying to reduce environmental affects], and (3) environmental condition [measure environmental quality]. Competitive strategy is different - it must satisfy funding authorities, political leaders, and the general public. The BSC can still be used to monitor CSFs related to internal processes, customer satisfaction, financial measures, and human resources measures. Value-chain analysis can still be used to determine at what points costs can be reduced or value added. To receive additional updates regarding our library please subscribe to our mailing list using the following link: http://rbx.business.rutgers.edu/subscribe.html