In this Learning ?Project 1, you will select an organization, or a segment of an organization, and interview key employees in order to gather information concerning the organization’s cri

Criteria Ratings Points

Description 15 to >13 pts

Advanced

Description of the organization is well developed.

13 to >12 pts

Proficient

Description of the organization is not well developed.

12 to >0 pts

Developing

Organization is not clearly and explicitly described.

0 pts

Not Present

15 pts

SWOT Analysis Synthesis

25 to >22 pts

Advanced

SWOT chart is provided in proper format; chart contains several examples under each of the 4 headings.

22 to >20 pts

Proficient

SWOT chart is provided in proper format; chart contains a few examples under each of the 4 headings.

20 to >0 pts

Developing

SWOT chart is provided but not in chart format, and/or the chart is incomplete (e.g., not all of the headings are present).

0 pts

Not Present

25 pts

Balance Scorecard- Synthesis

25 to >22 pts

Advanced

Balanced Scorecard is provided; critical success factors are measurable; measurement for critical success factors is accurate.

22 to >20 pts

Proficient

Balanced Scorecard is provided; critical success factors are measurable; however, no description of how critical success factors would be measured is given, and/or measurement used is not accurate.

20 to >0 pts

Developing

Balanced Scorecard is provided; however, critical success factors are not measurable, and/or no description of how critical success factors would be measured is given.

0 pts

Not Present

25 pts

Critical Analysis Critical Success Factors

30 to >27 pts

Advanced

Critical success factors are discussed; selection of factors is explained; discussion of why the critical success factors are important to the company is provided.

27 to >24 pts

Proficient

Critical success factors are discussed; however, selection of factors is minimally explained; minimal discussion of why the critical success factors are important to the company is provided.

24 to >0 pts

Developing

Critical success factors are minimally discussed; however, no explanation for the selection of factors and/or why the critical success factors are important to the company is provided.

0 pts

Not Present

30 pts

Learning Project: Company Analysis and Evaluation Grading Rubric | BUSI601_D06_202340

Criteria Ratings Points

Evaluation/Creating Evaluation of Critical Success Factors

25 to >22 pts

Advanced

Organization is evaluated to determine if the company is meeting the critical success factors.

22 to >20 pts

Proficient

Organization is evaluated to determine if the company is meeting the critical success factors.

20 to >0 pts

Developing

Organization is minimally evaluated to determine if the company is meeting the critical success factors.

0 pts

Not Present

25 pts

Content Text and Journal Support

20 to >17 pts

Advanced

Textbooks and at least 2 scholarly sources are referenced for support in answering the questions; all opinion statements are substantiated by citations.

17 to >16 pts

Proficient

Textbooks and at least 1 scholarly source are referenced for support in answering the questions; a few opinion statements lack support via citations.

16 to >0 pts

Developing

Only the textbooks are referenced for support in answering the questions; several opinion statements lack support via citations.

0 pts

Not Present

20 pts

Format and Length And APA guidelines

30 to >27 pts

Advanced

Project is formatted in the prescribed manner (including biblical integrations) and order. No current APA format errors are present.

27 to >24 pts

Proficient

Prescribed format is attempted; however, not all portions are in the correct order. Project is not formatted in the prescribed manner including biblical integration and order.

24 to >0 pts

Developing

Only 1–2 minor current APA format errors are present.

0 pts

Not Present

30 pts

Grammar, Spelling, and Organization

30 to >27 pts

Advanced

Spelling and grammar are correct. Sentences are complete, clear, and concise. Paragraphs contain appropriately varied sentence structures. Where applicable, references are cited in current APA format.

27 to >24 pts

Proficient

Spelling and grammar have some errors. Sentences are presented as well. Paragraphs contain some varied sentence structures. Where applicable, references are cited with some APA formatting.

24 to >0 pts

Developing

Spelling and grammar errors distract. Sentences are incomplete or unclear. Paragraphs are poorly formed. Where applicable, references are minimally or not cited in current APA format.

0 pts

Not Present

30 pts

Total Points: 200

Learning Project: Company Analysis and Evaluation Grading Rubric | BUSI601_D06_202340

10/27/23, 10:11 AM Contemporary Management Techniques: The Management Accountant’s Response to the Contemporary Business Environment

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Contemporary Management Techniques: The Management Accountant’s Response to the Contemporary Business Environment

LO 1-3

Explain the contemporary management techniques and how they are used in cost management to respond to the contemporary business environment.

Management accountants, guided by a strategic focus, have responded to the six changes in the contemporary business environment with 13 methods that are useful in implementing strategy in these dynamic times. The first 6 methods focus

directly on strategy implementation: the balanced scorecard and strategy map, value chain, activity-based costing and

management, business analytics, target costing, and life-cycle costing. The next 7 methods help to achieve strategy implementation through a focus on process improvement: benchmarking, business process improvement, total quality

management, lean accounting, the theory of constraints, sustainability, and enterprise risk management. Each of these

methods is covered in one or more of the chapters of the text.

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The Balanced Scorecard (BSC) and Strategy Map Strategic information using critical success factors provides a road map for the firm to use to chart its competitive course and serves as a benchmark for competitive success. Financial measures such as profitability reflect only a partial, and frequently

only a short-term, measure of the firm’s progress. Without strategic information, the firm is likely to stray from its

competitive course and to make strategically wrong product decisions—for example, choosing the wrong products or the wrong marketing and distribution methods.

To emphasize the importance of using strategic information, both financial and nonfinancial, accounting reports of a firm’s

performance are now often based on critical success factors in four different perspectives. One perspective is financial; the

other three are nonfinancial:

An accounting report based on the four perspectives is called a balanced scorecard (BSC). The concept of balance

captures the intent of broad coverage, financial and nonfinancial, of all factors that contribute to the firm’s success in achieving its strategic goals. The balanced scorecard provides a basis for a more complete analysis than is possible with

financial data alone. The use of the balanced scorecard is thus a critical ingredient of the overall approach that firms take to

become and remain competitive. An example of a balanced scorecard is shown in Exhibit 1.4.

EXHIBIT 1.4 The Balanced Scorecard: Financial and Nonfinancial Measures of Success

Financial Measures of Success Nonfinancial Measures of Success

Sales growth Customer Satisfaction

Earnings growth Market share and growth in market share

Dividend growth Customer service (e.g., based on number of complaints)

Bond and credit ratings On-time delivery

Cash flow Customer satisfaction (customer survey)

Increase in stock price Brand recognition (growth in market share)

Internal Processes

Product quality

Manufacturing productivity

Cycle time (the time from receipt of a customer’s order to delivery)

Product yield and reduction in waste

Learning and Growth

Competence of managers (education attained)

Morale and firmwide culture (employee survey)

Education and training (training hours)

Innovation (number of new products)

The strategy map is a diagram that links the various perspectives in a balanced scorecard. For many companies, high

achievement in the learning and growth perspective contributes directly to higher achievement in the internal process

1. Financial performance. Measures of profitability and market value, among others, as indicators of how well the firm satisfies its owners and shareholders.

2. Customer satisfaction. Measures of quality, service, and low cost, among others, as indicators of how well the firm satisfies

its customers.

3. Internal processes. Measures of the efficiency and effectiveness with which the firm produces the product or service.

4. Learning and growth. Measures of the firm’s ability to develop and utilize human resources to meet its strategic goals now

and into the future.

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perspective, which in turn causes greater achievement in the customer satisfaction perspective, which then produces the

desired financial performance. The strategy map is therefore a useful means in understanding how improvement in certain critical success factors contributes to other goals and to the ultimate financial results. We cover the balanced scorecard and

strategy map throughout the text, particularly in Chapters 2, 12, 18, and 20.

The Value Chain The value chain is an analysis tool organizations use to identify the specific steps required to provide a competitive product

or service to the customer. In particular, an analysis of the firm’s value chain helps management discover which steps or

activities are not competitive, where costs can be reduced, or which activity should be outsourced. Also, management can use the analysis to find ways to increase value for the customer at one or more steps of the value chain. For example, companies

such as General Electric, IBM, U-Haul, and Harley-Davidson have found greater overall profits by moving downstream in the

value chain to place a greater emphasis on high-value services and less emphasis on lower-margin manufactured products. A key idea of value-chain analysis is that the firm should carefully study each step in its operations to determine how each step

contributes to the firm’s profits and competitiveness. The value chain is covered in Chapters 2, 13, and 17.

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Activity-Based Costing and Management Many firms have found that they can improve planning, product costing, operational control, and management control by

using activity analysis to develop a detailed description of the specific activities performed in the firm’s operations. The

activity analysis provides the basis for activity-based costing and activity-based management. Activity-based costing (ABC) is

used to improve the accuracy of cost analysis by improving the tracing of costs to products or to individual customers. Activity-based management (ABM) uses activity analysis and activity-based costing to help managers improve the value of

products and services and increase the organization’s competitiveness. ABC and ABM are key strategic tools for many firms,

especially those with complex operations or diverse products and services. ABC and ABM are explained in Chapter 5 and then applied in several of the chapters that follow.

Business Analytics  Business analytics (BA) (also called predictive analytics) is an approach to strategy implementation in which the

management accountant uses data to understand and analyze business performance. Business analytics often uses statistical

methods such as regression or correlation analysis to predict consumer behavior, measure customer satisfaction, or develop models for setting prices, among other uses. BA is best suited for companies that have a distinctive capability that can be

derived from measurable critical success factors. BA is similar to the BSC because it focuses on critical success factors; the

difference is that BA uses analytical tools to develop predictive models of core business processes.

Emerging key types of BA include blockchain and artificial intelligence. Blockchain is a technology that allows all

parties to a transaction to know with certainty what happened in that transaction (www.fool.com/investing/2018/01/10/the-ba sics-of-blockchain-technology-explained-in-p.aspx). Artificial intelligence seeks to build machines and software that act

intelligently (www.forbes.com/sites/cognitiveworld/2019/02/25/artificial-intelligence-hype-is-real/#52ce2b9525fa). BA is

covered in Chapter 8.

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Target Costing Target costing is a method that has resulted directly from the intensely competitive markets in many industries. Target costi

ng determines the desired cost for a product on the basis of a given competitive price, such that the product will earn a

desired profit. Cost is thus determined by price. The firm using target costing must often adopt strict cost reduction measures

or redesign the product or manufacturing process to meet the market price and remain profitable.

Target costing forces the firm to become more competitive, and, like benchmarking, it is a common strategic form of analysis in intensely competitive industries where even small price differences attract consumers to the lower-priced product. The

camera manufacturing industry is a good example of an industry where target costing is used. Camera manufacturers such as

Canon know the market price for each line of camera they manufacture, so they redesign the product (add/delete features, use less expensive parts and materials) and redesign the production process to get the manufacturing cost down to the

predetermined target cost. The automobile industry also uses target costing. Target costing is covered in Chapter 13.

Life-Cycle Costing Life-cycle costing is a method used to identify and monitor the costs of a product throughout its life cycle. The life cycle

consists of all steps from product design and purchase of materials to delivery and service of the finished product. The steps

typically include (1) research and development; (2) product design, including prototyping, target costing, and testing; (3) manufacturing, inspecting, packaging, and warehousing; (4) marketing, promotion, and distribution; and (5) sales and

service. Cost management has traditionally focused only on costs incurred at the third step, manufacturing. Thinking

strategically, management accountants now manage the product’s full life cycle of costs, including upstream (research and development, design) and downstream (marketing, sales and service) costs as well as manufacturing costs. This expanded

focus means careful attention to product design because design decisions lock in most subsequent life-cycle costs. See

Chapter 13 for coverage of life-cycle costing.

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Benchmarking Benchmarking is a process by which a firm identifies its critical success factors, studies the best practices of other firms (or other business units within a firm) for achieving these critical success factors, and then implements improvements in the

firm’s processes to match or beat the performance of those competitors. Benchmarking was first implemented by Xerox

Corporation in the late 1970s. Today, many firms use benchmarking. Some firms are recognized as leaders, and are therefore benchmarks, in selected areas—for example, Nordstrom in retailing, Ritz-Carlton in service, the 3M Company in

manufacturing, and Apple in innovation, among others.

Benchmarking efforts are facilitated today by cooperative networks of noncompeting firms that exchange benchmarking

information. For example, the International Benchmarking Clearinghouse (www.apqc.org) and the International Organization for Standardization (ISO) (www.iso.org) assist firms in strategic benchmarking.

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Business Process Improvement

“Whether you think you can or whether you think you can’t—you’re right.”

Henry Ford

Henry Ford realized that the right attitude is important to success. That belief is what continuous improvement is all

about. Business process improvement (BPI) is a management method by which managers and workers commit

to a program of continuous improvement in quality and other critical success factors. Continuous improvement is very often associated with benchmarking and total quality management as firms seek to identify other firms as models to learn how to

improve their critical success factors. While BPI is an incremental method, business process reengineering (BPR) is more

radical. BPR is a method for creating competitive advantage in which a firm reorganizes its operating and management functions, often with the result that positions are modified, combined, or eliminated.

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Total Quality Management Total quality management (TQM) is a method by which management develops policies and practices to ensure that the firm’s products and services exceed customers’ expectations. This approach includes increased product functionality,

reliability, durability, and serviceability. Cost management is used to analyze the cost consequences of different design

choices and to measure and report the many aspects of quality, including, for example, production breakdowns and production defects, wasted labor or materials, the number of service calls, and the nature of complaints, warranty costs, and

product recalls.

Lean Accounting Firms that have adopted lean manufacturing, which is one of the six key aspects of the contemporary business environment,

will also typically use lean accounting. Lean accounting uses value streams to measure the financial benefits of a firm’s progress in implementing lean manufacturing. Lean accounting places the firm’s products and services into value streams,

each of which is a group of related products or services. For example, a company manufacturing consumer electronics might

have two groups of products (and two value streams)—digital cameras and video cameras—with several models in each group. Accounting for value streams can help the firm to better understand the impact on profitability of its lean manufacturing

improvements. TQM and lean accounting are covered in Chapter 17.

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The Theory of Constraints The theory of constraints (TOC) is a methodology that improves profitability and cycle time by identifying the bottleneck in the operation and determining the most profitable product mix given the bottleneck. TOC helps to eliminate bottlenecks—

places where partially completed products tend to accumulate as they wait to be processed in the production process. In the

competitive global marketplace common to most industries, the ability to be faster than competitors is often a critical success factor. Many managers argue that the focus on speed in the TOC approach is crucial. They consider speed in product

development, product delivery, and manufacturing to be paramount as global competitors find ever-higher customer

expectations for rapid product development and prompt delivery. TOC is covered in Chapter 13.

Sustainability Sustainability means the balancing of the organization’s short- and long-term goals in all three dimensions of performance

—social, environmental, and financial. We view it in the broad sense to include identifying and implementing ways to reduce

cost and increase revenue as well as to maintain compliance with social and environmental regulations and expectations. This can be accomplished through technological innovation and new product development as well as commonsense

measures to improve the social and environmental impacts of the company’s operations. Ford Motor Company saves money

through improvements in its stormwater draining system at its River Rouge, Michigan, plant; other leaders in sustainability include Toyota, Honda, McDonald’s, and Walmart, among many others. The Dow Jones Sustainability Indices (www.sustain

ability-indices.com/) identify and rank companies according to their sustainability performance. Sustainability is a key topic

and is covered in each chapter; a special focus on sustainability is shown in Chapter 2 in connection with the balanced scorecard. Look for the sustainability icon next to problems involving this management technique.

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