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Cadel Specialised Bicycle Management Accounting Systems ACCT2195 Brand: Nguyen Thailänder Son ID: S3296794 Lecturer: Keshav Dayalani Table of Contents Executive Summary3 Introduction4 I. Cadel Specialty Bicycles’ (CSB)5 A. Business mission5 B.

Imply of competitive advantage6 C. Key Success Factors (KSFs)8 II. Management Accounting Approach to CSB9? Personnel9? Scare resources10? Activities11 III. Performance measurement & Praise System (PMRS) and its roles11 1 . The factors being measured12 installment payments on your A specific efficiency target12. A reward attached to the performance target12 IV. Constraints of current PMRS14 A. Limitation14 N. Dysfunctional behavior15 V. Recommendation for new PMRS16 Conclusion17 References18 Appendix20 Business Summary Cadel Specialty Bike (CSB) is known as a successful organization of which character is made-to-order bicycles. Quite simply, each bicycle of CSB is set up in accordance with customer’s specification. The organization aims to focus on on the niche market in which nearly people are determined cycling fan.

Due the achievements of the first store located in Doncaster, Victoria, Australia, CSB has recently increase its organization by beginning two fresh stores located in Geelong & Black Rock and each shop has diverse potential inside the track of development. However , CSB has experienced problems of personnel & resources supervision because the organization had not applied the suitable strategies within the enlargement. Although, the company plans to implement a new management accounting system (MAS) to deal with these problems, there still will be weaknesses within the new MAS.

Hence, the purposes of the report will be analyzing the current system and suggesting new suitable PORÉM for the company. The first demonstration in the report can be Background & Current placement of CSB, which is used as being a foundation intended for developing appropriate MAS. The business enterprise mission of CSB, classified as “Question mark, is building and increasing the industry share. CSB creates it is competitive benefits based on the differentiation of product/service as well as the niche market. However , CSB hasn’t reached the Cost-cum-Differentiation benefits yet.

CSB may focus on the five key success factors (KSFs) including Appropriate decentralization & measurement of manager’s functionality, Good relationship with suppliers, Establishing ideal costing program & lessening cost, Preserving the highest degree of customer satisfaction and Product & Service Quality The second part of the report focus on evaluating the role and benefits of tools/techniques of current MAS in supporting the organization in term of of personnel, discourage resources and activities.

Following, the function of Performance measurement & Reward program (PMRS) in the business is usually clearly reviewed in relation to online & motivational influences in behavior. The report as well states the limitations of the current PMRS which in turn potentially causes dysfunction behaviours. Finally, the report will suggest the best PMRS pertaining to the business which might effectively & efficiently support CSB in the track of its success. Introduction One of the essential elements which guidebook organizations and businesses toward success is usually management accounting system (MAS).

It is always an intelligent decision for business to apply bundled MAS which supplies accurate analysis report simply by gathering monetary data by operations (sales, inventory & cost). Because of having PORÉM, business increases sufficient positive aspects in streamlining operations methods, reducing costs and building capital intended for expansion. Consider the case of Cadel Specialty Bicycle (CSB), the business mainly focus on advertising made-to-order bicycles and ensuring the product/service quality.

After the expansion (two new stores), the business appears to get into trouble with managing as well as procedure. This survey will show the business evaluation, evaluate the current MAS and also suggest fresh potential/appropriate CONTUDO. I. Cadel Specialty Bicycles’ (CSB) A. Business objective Business quest, “which generally reveals purpose of operation, value and focus of company (John&Richard 2009), can be considered being a fundamental element in conducting suitable MAS pertaining to the business.

The subsequent criteria will certainly clearly demonstrate the current quest of CSB (build, maintain, harvest, divest): * Significance of externalities 1 factor that significantly plays a part in the potential progress CSB is a external environment. Recently, bicycle paths are becoming popular around Melbourne as persons tend to lessen using cars. Therefore , there is a significant development in the market for mountain bikes. Utilizing the bike paths, CSB opened up two fresh stores (Black Rock & Geelong) which seem to have great possibility of development. 2. Market share requirement

Due to the very well establishment, Doncaster store (touring bikes) is highly demanded by simply customers that offer the store various opportunities to develop. Besides, Geelong store (mountain & touring bikes) also has great potential thanks to their advantageous location although the require is not as yet as high as in the Doncaster store. As a result of having great potential, the Market talk about expectations from the two shops seem to be large. Although CSB does not use a large part of the bicycle marketplace at the moment, the organization has a significant growth level.

Base about facts of the case, “CSB make an effort to capture a substantial proportion with this growth inside the future. Boston Consulting Group Model Comparable Market Share (cash source) Quest = Keep Mission = Harvest Quest = Build “Dog Mission = Divest High Substantial Low Low “Star “Question mark “Cash cow Marketplace growth rate (cash user) Overall, CSB has substantial Market expansion rate although owning low market share. Therefore, the business could be classified directly into “Question mark and the business mission of CSB is usually building along with increasing the market share. B. Mean of competitive benefits

Competitive advantage is a particular characteristic that a business has over it is competitors, permitting the business to find greater product sales or profit within the competition. The two common competitive advantage options, that have been applied by simply CSB, happen to be Differentiation & Niche market. 2. Differentiation: CSB differentiates its products & companies based on selected criteria which can be Function & Customer service. * Function Unlike normal bicycle business, CSB primarily does apply the made-to-order function for a lot of three retailers which set up customized mountain bikes based on customer specifications.

In order to ensure the timing & success with this approach, a sizable inventory of various bicycle parts is kept by every single CSB stores. * Customer care CSB puts much hard work on the operating customer service as well as interacting with customers. Cadel- CSB owner usually spends significant amount of time in taking care of store’s day-to-day functions and often activates directly with customers to be sure that customers can purchase desirable cycles.

You examine ‘Mas-Cadel Specialty Bicycle’ in category ‘Essay examples’ CSB also sets a limit intended for the holding out time (time for customized bicycles to become available) which can be less than two days of the preliminary consultation.

The applied post-sale service is calling the consumer after a week of acquiring possession of CSB’s products to guarantee the customer’s satisfaction, and supplying free-of-charge changes if necessary. Additionally , free life-time after-sales assistance is also come in which buyers only have to purchase parts essential. * Niche area CSB targets on certain segment of market which is cycling enthusiast through the offer of custom-made bicycles. This kind of customer group willing to spend more intended for qualified & desirable item Business competitive advantage Family member Cost Situation Cost-cum-Differentiation Edge Stuck-in-the -middle Differentiation Advantage Low-cost-Advantage Excellent Inferior Inferior Superior Comparative Differentiation Placement Although CSB gains modest differentiation advantage, the business would not consider much about the costing system (estimating price without actual cost data). Therefore , CSB has not come to the Cost-cum-Differentiation advantage yet. C. Essential Success Elements (KSFs) To be able to construct appropriate & efficient MAS, business may consider the essence of important KSFs which in turn determine the success of the claims (cost and efficiency, quality, time, innovation).

Gaining satisfactory knowledge of KSFs will support the business to define the necessity for promoting talents and competencies that complement individuals factors in order to gain competitive edge and accomplish the business success (Jorge&Donald 1989). Refer to CSB- a growing organization with superb potential, specific KSFs can be as the following: * Product & Service Quality Cadel spends considerable time in teaching the store manager and often in person assembles & checks the customized bikes to ensure the Service & Item quality.

Therefore, CSB is currently well known like a business featuring high quality, personalized bicycle. 2. Maintaining the highest level of client satisfaction Giving consumers more than they expect is the basic idea of this issue. While Cadel believe specialized customer support is a KSF of CSB, he set many work in maintaining the consumer satisfaction such as calling the client after a week of possession, offering cost-free lifetime after-sales service & limiting the waiting period (2days). Establishing appropriate charging system & minimizing cost A weakness of CSB is that the business works without actual cost data. Hence, establishing suitable charging system has turned into a fundamental quest in the program reaching accomplishment. Besides, CSB has to consider cost minimization to achieve Cost-cum-Differentiation advantage. * Good relationship with suppliers Since the development, the demand for supplies of CSB has increased due to the dependence on more inventories for the 2 new shops. Therefore , getting and retaining good romantic relationship with suppliers is also vital. Proper decentralization & way of measuring of managers performance It is essential that Cadel distributes the authority to store managers properly because the business structure has become more complicated since the expansion and Cadel simply cannot play every roles of the business. 2. Management Accounting System of CSB In order to solve the problems developed from the expansion, Cadel’s brother has advised Cadel to build up a PORÉM which drastically supports the business management in term of personnel, frighten resources and activities. The following analysis will certainly demonstrate the roles & benefits of every tool included in the MAS: Workers * Dealer performance actions (SPM) SPM is a essential initiative for business dealing with multiple suppliers. The primary role of SPM is definitely integrating dealer quality which usually helps the company have appropriate visibility toward supplier delivery and avoid concealed cost motorists from poor quality. As a result, SPM directly decreases business risks and income losses Besides, SPM is actually a vital application for inspiring improvement and ensuring that goods meet the needed standards. SPM also facilitates in identifying good suppliers so that CSB can keep relationship with those suppliers.

Related KSFs: Product top quality, Good relationship with provider * Responsibility accounting system (RAS) RAS is used since an internal system which increases cost control and organisation’s performance. It is main function is ensuring the responsibility of individual managers toward aspects of business overall performance in which that they gain control. In RA, each store/department will be assigned certain stated goals and relevant managers will be evaluated on how very well they satisfy the goals. Therefore, CSB will be able to detect the weak areas within the organization and generate correction correctly Related KSF: Proper decentralization & dimension of managers performance Terrify resources 2. Net Present Value (NPV) analyses NPV is a powerful method used in determining capital investment decisions. A potential task should be proceeded if their NPV worth is positive unless there is also a superior purchase option provided. NPV permits CSB for making proper investment decision and spend money on worthwhile assignments because NPV does not only calculate the net cash flow from the project although also considers various linked factors just like time benefit of money, opportunity cost & risk of potential cash. Related KSFs: Lessening cost Being system The main role Being system within MAs is usually collecting, studying & credit reporting the cost data that enables the proprietor and managers to keep an eye on cost intended for reducing wastage and wrong use of assets. Within the operation of organization, it is easy to identify direct costs which associate with particular activities. Yet , indirect costs are those incurred in accordance or joint objectives so it cannot be plainly identified with particular actions. In order to give indirect price to projects accurately, Activity base being system (ABCS) should be utilized.

ABCS can be an efficient technique which computes and reduces operating the charge by obtaining key activities and its expense drivers. As a result, the cost can be assigned accurately and the charging system can easily operate smoothly. General, costing program enables CSB to view almost all expenditures and manage its cost effectively Related KSFs: Building appropriate priced at system & minimizing cost * Price range preparation The core function of Budget within CSB is tracking all of the funds coming into the business enterprise along with all the money heading out.

The budget could be designed to become detailed enough to cover several streams of income & expense. Creating proper finances can significantly support the business in organizing the use of assets, motivating individuals to achieve performance & assisting forecast. 2. Activities 5. Inventory management system , Economic Order Volume (EOQ) The main role EOQ model provides the most cost-effective quantity of goods that CSB should certainly order to maximize value & minimize costs when re-stocking inventory.

Applying EOQ does not only help the business to lower Storage & Holding cost but also support in preserving sufficient inventory levels to satisfy customer demand. It seems that customer satisfaction can be better as inventory is available when needed. Related KSFs: Establishing suitable costing system & reducing cost, Maintaining the highest level of customer satisfaction * Profit and loss transactions (P&L) P&L is one of the main financial transactions which clearly demonstrate the profitability (revenue, expenses and profit) of the CSB during a specified time span.

Hence, the standard role of P&L is definitely indicating perhaps the business is profitable or not. Doing a proper P&L can allow CSB to see the areas seeking improvement and give an overall notion of how much the company owes in comparison to how much that owns. Besides, a truthful P&L survey can also support CSB in planning ahead to another financial period. III. Overall performance measurement & Reward System (PMRS) as well as its roles Overall performance measurement is actually a process of gathering & credit reporting nformation regarding the performance from the business & individuals. To be effective, Performance measurement must be put together with Reward system and the advantages provided derive from performance. The entire role of PMRS should be to periodically monitor performance to judge how very well the business is usually running and motivate the personnel’s performance by Prize system. Both performance assess and advantages provide online and motivational influence on behavior. Nevertheless , each element of PMRS possesses its own roles which complement the system.

PMRS includes three components: 1 . The factors to be measured| The first component clearly illustrates the factors which will be measured in order to speak important aspects of the business toward employees. As a result of that, workers are able to concentrate their work into educated aspects/areas| 5. “Directional affect on behaviour is mainly fulfilled by the functions of the 1st 2 components (Measured elements & Performance target). Within this method, staff are directed to achieve the desired behaviours. | 2 .

A unique performance target| The main quest of the second element is definitely narrowing the targeted factors into specific tasks/activities so that employees may focus, set effort and accomplish these types of tasks. Besides, the offered criteria in the system is the base to get owner/manager to supply feedback to improve future performances| | several. A reward placed on the efficiency target| The Reward strategy is based on the concept of attracting, retaining and encouraging people. While employees can be motivated simply by intrinsic (e. g. elf esteem) and extrinsic returns (e. g. bonus), economic reward can be not the only important component of the Reward system. You will discover other factors which in turn also proficiently encourage personnel in enhancing performance. Based upon Theoretical Framework (Khan KU, Farooq SU & Ullah MI, 2010), there are generally four main independent factors of incentive which are repayment, promotion, reputation and rewards. Promotion appears to be the most effective motivation since almost persons tend to have ambitiousness of getting better positions in the business/company.

In addition, different prize strategies may have a different mindset impact on various people. By giving attractive bonuses, Reward system encourages visitors to actually carry out the tasks with intensive inclined. According to Khan KU, Farooq SU & Ullah MI, 2010, “there is known as a statistical significant relationship between all of the impartial variables of reward with dependent changing employee work motivation, each of the independent parameters of reward have a good influence on employee function motivation.

General, Reward system plays position as a way of getting people function harder. | * “Motivational influence in behaviour, which means individuals are determined to purposely acquire the ideal behaviours, is primarily achieved by the role of the third factor which is Incentive system. | In this case, CSB applies incentive strategy in term of “bonus providing to each retail outlet manager up to 20% with their quarterly cash flow * Getting together with sales budget * Benefit of 2% of manager’s quarterly salary if they will meet the product sales budget for each quarter. 2. Meeting income budget Reward of 10% of manager’s quarterly income if they meet the earnings budget, ready at the start of every quarter * Achieving favourable cost variances: * Added bonus of 4% of manager’s quarterly cash flow if all favourable diversities are less than 10% from the initial budgeted cost, 5. Bonus of 8% of manager’s quarterly income in the event that all great variances will be 10% or more of the initial budgeted cost. * Online influence facilitates individuals in focusing on the targeted areas and duties. Besides, Mindset influence allows employees to perform the work voluntarily and put much effort to successfully complete it.

Furthermore, Motivational effect is almost constantly less invasive than Directional influence. As a result, the business’s personnel cannot be well managed with no combine of Directional effect & Mindset influence. IV. Limitations of current PMRS A. Limit B. Dysfunctional behavior 2. Dysfunctional tendencies means that people within the organization/business do not function properly in accordance with the company direction. Dysfunctional employee manners often arise due to the rapaciousness of individuals or perhaps conflict among employee’s interest and the company interest.

The overall purpose of Unable to start employee behaviours is getting benefits (either for personal or department) by organization’s spaces. * In this instance, as a result of not enough measurement in input and process level, managers have opportunities to embark on Dysfunctional patterns. It can be explained by the following circumstance: * If there is no mechanism for monitoring the consistency between input and output, managers may provide “unreliable report which shows that they have reached the performance target and should have rewards. Deficiency of input way of measuring also causes the problem that managers buy low quality material to reduce operation’s costs to be able to reach the defined cost target. Therefore, it’s very difficult to discover such Dysfunctional behaviors without proper way of measuring. V. Suggestion for new PMRS Besides the Efficiency measure, a number of common Prize strategies are also suggested under: Conclusion While MAS is essential for organisation’s operation, CSB cannot successfully expand it is business without right MAS. However , the new NO ENTANTO, which CSB has designed to put into action, still has several weaknesses.

Therefore , the main functions of this report are assessing the current placement (Business mission, Competitive benefit & KSFs) and current MAS (including PMRS). The report likewise suggests the actual PMRS to get the business. Sources ‘Competitive Advantage’, 2012, Investopedia US, looked at 28 September 2012, &lt, http://www. investopedia. com/terms/c/competitive_advantage. asp#axzz21h1qWFmY &gt,. Daniel, H, 2011, ‘Benefits of NPV’, BenefitOf, 27 Come july 1st, viewed twenty eight July 2012, &lt, http://benefitof. net/benefits-of-npv/&gt,.

Steve, AP II & Rich, BR 2009, ‘Strategic managing: Formulation, Rendering, and Control’, 11thedn., McGraw Hill, Singapore. Jorge, AS & Jesse, CH 1989, ‘Key accomplishment factors: Test of a general theory in the mature commercial “product sector’, Strategic Supervision Journal, volume. 10, no . 4, pp. 367-382. Khan, KU, Farooq, SU & Ullah, MI, 2010, ‘The Relationship among Rewards and Employee’, Research Journal of Internat? onal Stud? ha sido, May, Concern 14, pp. 37-42. Kumar, V, 2011, ‘Costing System’, Accounting Education, 14 March, viewed 28 July 2012, http://www. vtuition. org/2011/02/costing-system. html,. Meer, NVD, 2010, ‘The Importance of Competitive Advantage’, Industry views, doze September, viewed 28 This summer 2012, http://www. sharenet. company. za/marketviews/mv_view_article. php? id=1650,. Morris, K, 2012, ‘What can be described as Management Accounting System’, eHow Money, seen 28 July 2012, http://www. ehow. com/facts_5460765_management-accounting-system. html,. ‘Motivational Influences about Attendance inside your Organization’, 2011, HR BLR, 1 January, viewed 28 July 2012, http://hr. blr. om/HR-news/Performance-Termination/Attendance/Motivational-Influences-on-Attendance-in-Your-Orga/,. Piasecki, D, 2012, ‘Optimizing financial order volume (EOQ)’, Inventoryops, viewed twenty seven July 2012, http://www. inventoryops. com/economic_order_quantity. htm,. Reyna, SM, 2012, ‘Key Success Factors of Your Small Business’, Power Home Biz, viewed twenty-seven July 2012, http://www. powerhomebiz. com/vol95/key. htm,. ‘Supplier Functionality Management’, 2012, Metric Stream, viewed twenty eight July 2012, http://www. metricstream. com/solutions/supplier_performance. tm,. The college or university of Tx, 2012, ‘Performance Reward’, tmc. edu, looked at 27 Come july 1st 2012, http://hr. uth. tmc. edu/Training_Development/perplan/reward. html,. ‘Value Measurement’, 2004, Functionality measurement, seen 27 Come july 1st 2012, http://www. performance-measurement. net/news-detail. asp? nID=28,. ‘What is actually a Costing System’, 2012, Sensible Geek, viewed 28 September 2012, http://www. wisegeek. com/what-is-a-costing-system. htm,. ‘What Is Responsibility Accounting’, 2012, Wise Geek, viewed twenty-eight July 2012, http://www. wisegeek. om/what-is-responsibility-accounting. htm,. Appendix * Porter’s Five Forces model for helping an analysis of exterior environment Threats of New Traders Bargaining Benefits of Suppliers Negotiating Power of Consumers Rivalry between Industry Competition * Porter’s value chain analysis pertaining to supporting an analysis of internal environment Design Creation Marketing Circulation Support Activities: Finance, HOURS, Legal, IT Motivational impact on A number of essential motivational influences playing a strong role in encouraging worker include: * Job range.

Improving or perhaps enriching the nature of a job greatly reduces absenteeism. * Tension and turmoil. Levels of absenteeism are higher in situations of job pressure, anxiety, stress, and not enough role clearness. * Management style. The leadership design affects thinking that influence absenteeism. 5. Co-worker associations. Mutual tolerance and the lack of tensions amongst co-workers have a positive effect on attendance. 2. Pressures to attend. The economy and job disadvantages will affect a person to be even more conscientious regarding job presence. * Function group norms.

When associates of a remarkably cohesive group view coming to work to assist co-workers being a desirable work ethics, job presence is attractive. 5. Personal work ethic. A high consider for are a personal value positively impacts job attendance. * Company commitment. Whether it is compatible with mission, desired goals, and values of the corporation has a impact on attendance. You can influence most of these motivational factors drastically by the way you manage your department and supervise your employees. By encouraging open communications, by causing employees truly feel needed and appreciated, by looking into making their jobs as

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