Managerial Accounting and the Business Environment

Transcription

1 Managerial Accounting and the Business Environment Chapter 1 McGraw-Hill/Irwin Copyright 2010 by The McGraw-Hill Companies, Inc. All rights reserved.

2 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

3 Organizational Structure Decentralization is the delegation of decision- making authority throughout an organization. Corporate Organization Chart Board of Directors President Purchasing Personnel Vice President Operations Chief Financial Officer Treasurer Controller 1-3

4 Process Management A business process is a series of steps that are followed in order to carry out some task in a business. Product Customer R&D Design Manufacturing Marketing Distribution Service Business functions making up the value chain 1-4

5 Traditional Push Manufacturing Company Traditional push manufacturing Large inventories Raw materials Work in process Finished goods Materials waiting to be processed. Partially completed products requiring more work before they are ready for sale. Completed products awaiting sale. 1-5

6 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

7 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

8 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

9 Theory of Constraints Only actions that strengthen the weakest link in the chain improve the process. 1. Identify the weakest link. 2. Allow the weakest link to set the tempo. 3. Focus on improving the weakest link. 4. Recognize that the weakest link is no longer so. 1-9

10 Six Sigma 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. Sometimes associated with the term zero defects. 1-10

11 Six Sigma Stage Define Measure Analyze Improve Control The Six Sigma DMAIC Framework Goals Establish the scope and purpose of the project. Diagram the flow of the current process. Establish the customer's requirements for the process. Gather baseline performance data related to the existing process. Narrow the scope of the project to the most important problems. Identify the root cause(s) of the problems identified in the Measure stage. Develop, evaluate, and implement solutions to the problems. Ensure that problems remain fixed. Seek to improve the new methods over time. 1-11

12 IMA Guidelines for Ethical Behavior Recognize and communicate professional limitations that preclude responsible judgment. Maintain professional competence. Competence Follow applicable laws, regulations and standards. Provide accurate, clear, concise, and timely decision support information. 1-12

13 IMA Guidelines for Ethical Behavior Do not disclose confidential information unless legally obligated to do so. Do not use confidential information for unethical or illegal advantage. Confidentiality Ensure that subordinates do not disclose confidential information. 1-13

14 IMA Guidelines for Ethical Behavior Mitigate conflicts of interest and advise others of potential conflicts. Refrain from conduct that would prejudice carrying out duties ethically. Integrity Abstain from activities that might discredit the profession. 1-14

15 IMA Guidelines for Ethical Behavior Communicate information fairly and objectively. Credibility Disclose delays or deficiencies in information timeliness, processing, or internal controls. Disclose all relevant information that could influence a user s understanding of reports and recommendations. 1-15

16 Corporate Governance Board of Directors Incentives and monitoring for The system by which a company is directed and controlled. Top Management To pursue objectives of Stockholders 1-16

17 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 a company identifies its risks, perhaps the most common risk management tactic is to reduce risks by implementing specific controls. 1-17

18 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

19 End of Chapter