Manac plc, is a big company which produces and sells a range of standard electrical goods. It is a multinational company whose production and sales take place across a number of countries. Current the company is using the standard costing and absorption costing as part of its approach to strategic management accounting.
But now it is worried about that the company is not meeting its budgeted target profits. The reason for the lower than expected profits may be very complex and the report is produced to explain the flowing: i. The models and concepts affecting the pricing decision and their usefulness ii. The role of variance analysis in management accounting and its limitation. iii. The advantages and disadvantages of introducing an Activity Based Costing system to replace the current Absorption Costing system.
Pricing decision is crucial and tricky: if the prices of our goods are set too high, customers will not buy our product and will choose the products of other companies instead. But if the prices are set too low, our cost will not be covered and thus we will be losing money. The problem the company has now may be attributed to pricing decision, so firstly I will introduce two decision making models along with a wide range of concepts concerning pricing decisions. When making pricing decisions, many factors have to be taken into consideration. Basic economic concepts provide an important foundation for fundamental pricing strategies. (Hasty, Reardon, 1999:457). Then some certain psychological price concepts should be taken into consideration. At last, the decision maker should understand the mechanics of making pricing calculations. 1. Supply demand curve:
One of the usual approaches in pricing in to mark up cost. (Garison & Noreen, 2003:805). Mark up of a product is the difference between its selling price and cost. The approach to express mark up cost is called cost-plus pricing: Selling price= cost +(Make up percentage*cost). For example, current our company uses a markup of 50%, and the cost of one of our dishwasher is £1000, so selling price is then £1500. So when making a pricing decision, two factors are crucial, one is the cost of the product, the other is the markup of the certain product. Concerning this, there are several concepts : Supply is the amount of some good our company can and will provide sell at various prices, assuming all determinants of supply other than the price of the good including technology and the prices of factors of production do not change. Demand represents the amount of some good that buyers are willing and able to purchase at various prices, assuming all determinants of demand other than the price of the good including income, personal tastes, the price of substitute goods, and the price of complementary goods do not change. In the long run, the price of the product should be set at the point when supply of the certain product equals the demand. This is shown in appendix A. And when price rises, according to the supply-demand curve, the demand will fall, which will lead to a fall in trade volume. For example, if we increase the price of our dishwasher to £2,000, the sales of these dishwashers will fall .Under this circumstance, “pricing is a delicate act in which the benefits of higher revenue per unit are traded off against lower volume that results from higher prices.”(Garrison & Noreen, 2003:805). Thus we can see that the sales volume is quite sensitive to pricing decisions and such sensitivity is called elasticity of demand. This concept measures to which degree are the trade volumes affected by prices and is of great significance in pricing decision. For the electrical goods manufacturing industry, the market demand for our product is very elastic since the technological development is fast and the competition in the market is fierce. If we raise prices, customers will choose other companies, especially...
SOAS-University of London
International Foundation Courses and English Language Studies
INTERMEDIATE CERTIFICATE COURSE 2013-4
INTRODUCTORY BUSINESS STUDY
A short report on the organization and strategy of Barclays PLC
Barclays PLC is one of the celebrated multinational bank holding companies, which has had a comprehensive international commercial impact in the worldwide. The first Barclays Bank was established on Lombard Street, London in 1862 (Barclays PLC Annual Report 2009), the group total income attained 32.292 million pounds in 2011. This report mainly analyses the environment and strategies of Barclays plc.
Vision, Mission and value
Vision: Barclays wants to set up an integrated universal banking model, possess diversification by business, geography, client and funding, as well as maintain an unremitting focus on customers and clients.
Mission: Barclays Bank aims to “assistance people achieve their ambitions with right methods” (Barclays.com).
Value: As Antony Jenkins, Chief Executive of Barclays Group (Barclays.com) represented, their corporate goal is to become a ‘Go-To’ bank for all stakeholders by setting up their own mode of thinking, working and acting in order to guarantee that consumers’ and clients’ demands are the central of operations.
2. Formal organization
Barclays PLC partitioned into four major areas....
In this case we get an entire scenario about how the Japan deflation set in, what were the effects of the deflation on the economy as well as on the people of Japan. It also mentions about the various reasons because of which Japan was in such a tight grip of Deflation, Depression, Demographics and Debts Guides us through the steps taken by the government in order to curb this deflation. Imparts a great knowledge to us about the various economic terms like deflation, self-liquidating credit, Non-Self Liquidating Credit and how the people and economy of a country is affected by these.
Free markets economies are subject to cycles. Economic cycles consist of fluctuating periods of economic expansion and contraction as measured by a nation's gross domestic product (GDP). The length of economic cycles (periods of expansion vs. contraction) can vary greatly. The traditional measure of an economic recession is two or more consecutive quarters of falling gross domestic product. There are also economic depressions, which are extended periods of economic contraction such as the Great Depression of the 1930s.
From 1991 through 2001, Japan experienced a period of economic stagnation and price deflation known as "Japan's Lost Decade." While the Japanese economy outgrew this period, it did so at a pace that was much slower than other industrialized nations. During this period, the Japanese economy suffered from both a credit crunch and a liquidity trap....
...The assignment - Background information You are the financial director of a large, ficticious company called Manacplc, which produces and sells a range of standard electrical goods. Production and sales take place across a number of countries. The company uses standard costing and absorption costing as part of its approach to strategic management accounting. The Board of Directors is concerned that the company is not meeting its budgeted target profits; the managing director takes the simple view that more sales mean more profits and that the products have not been priced to sell in sufficient numbers. While you are aware that this is a possibility you recognise that the real reason for the lower than expected profits may be more complex. You have therefore decided to conduct a full review of variances to identify those areas which have not met budgeted expectations. Assignment Requirements While this review is underway and to improve the board of directors understanding of the issues involved, you have decided to produce a report to the board of directors which addresses the following 3 topics: i. The models and concepts affecting the pricing decisions taken by organisations, critically reflecting upon their usefulness (maximum mark 33%).
ii. The role of standard costing and variance analysis in management accounting and a critically discussion of the value and limitations of variance analysis as a means of identifying key areas which have...
Mary Roberts had been with the company three years when she was promoted to manager of the tax department which was part of the controller’s division.Within four months she became a supervisor of ten staff accountants to fill a vacancy.Her superior believed her to be most qualified individual to fill the position.
Many senior employees resent her that she so young to fill the position and what made them more upsets was the fact tax managers did not discuss the promotion.
1.What can Mary Roberts do about the resentful senior employees?
Mary should tackle this head on she should be direct and assertive about her expectation and when people are crossing the line that means she need to be clear with people when their behavior doesn’t meet her standards and she need to be willing To set and enforce consequence if it doesn’t change
2. Can higher management do anything to help Roberts make the transitions to greater responsibility?
Yes, because they are the one who put her in that position of course they will help Mary interms of guiding it `.
3. Will her lack of technical knowledge hinder Mary’s managerial effectiveness?
No, because lacking on some aspects on technical knowledge cant bankrupt or destroy a company as long she have a guts to face and accepts failures
4. Should Mary’s superior have discussed the promotion with the senior employees before announcing it?
No, because its not their obligation...
...February of 1999. In the past four months, the NC design had developed
sustainability. The Bostrom alliance agreement for the truck market had been concluded. The
question about Elio's strategy for the entry into automobile still remained. Should Elio's joint
venture with Bostrom? Should it partner with a tier-one or a tier-two automotive supplier?
Was Elio's technology strategy aligned with the requirements for a successful entry into the
automotive market? Paul and Hari realized that they needed answers to these questions in
the coming days.
This casestudy discusses the start-up, origins and strategic options facing an innovative set up
and start up in automotive market and in the seat design. With the domination of the
incumbent large suppliers serving the top 3 leading tier-one automakers of U.S.,
Engineering faces several challenges as it seeks to introduce its new seating technology to the
market. The case can serve as vehicle to discuss important themes such as technology and
business strategy, invention and innovation, bringing technology to market and profiting from
Elio's should make a joint venture with Bostrom. Elio's has made a seat design naming "No
Compromise" with progress on cost, weight and performance compared to the conventional
design and also the existing all-belt-to-seat (ABTS). After many functional prototypes and
computer aided structural analysis, a perfect design...
...Assessment Task 1
a) The named organization that is being discussed in this casestudy is FirstGroup PLC which is a transport company based in the UK. It generates revenues of approximately 5 billion pounds every year and employs staff of over 137,000 over the UK and North America. The estimated amount of passengers that this company transports is about 2.5 billion per annum. That was a brief overview of the organization that is being dealt in thecasestudy. Moving onto PESTEL which is the brief analysis of any organization’s political, economic, social, technological, environmental, and legal factors. Basically, these factors are taken into consideration by managers to manipulate their decisions of their organization in the macro environment. After conducting a PESTEL analysis, the conclusion is:-
Political Factors –
• Government policy states that school children must be encouraged to use buses rather than cars to travel to school which can reduce a great deal of CO2 (Carbon Dioxide) emissions which is one of the main causes of global warming.
• Government started to privatize bus services in the UK in during the 1980s to keep prices low and ensure that customers are satisfied with their transportation services.
• The standard for bus transportation emissions was a law that was implemented by government and satisfied its policy.
Economic Factors –
• High tax on fuel has supported customers...
...8 January 2013
INTERIM MANAGEMENT STATEMENT
Debenhams plc, the leading international, multi-channel brand, today announces its interim
management statement covering the 18 weeks to 5 January 2013.
Good sales momentum: 18 weeks LFL sales up 2.9%
Highest ever December sales: five weeks to 5 January LFL sales up 5.0%
Online sales ahead of expectations: 18 weeks up 39.0%
Michael Sharp, Chief Executive of Debenhams, said:
“I am pleased with our performance in the first four months of our financial year. The trading
environment was extremely challenging but we focused on meeting the needs of our customers and
executing the four pillars of our strategy. I would like to thank the whole of the Debenhams team for
their tremendous efforts in delivering this performance.
“We continue to believe that whilst consumers have become acclimatised to the new economic
reality, we don’t anticipate a significant change in consumer confidence in the remainder of
the year. We remain committed to prudent investment in key areas of the business to
deliver long-term sustainable growth as well as driving shareholder value.”
Debenhams continued to see good sales growth during the 18 week period, building on the
momentum with which we exited last year. Group gross transaction value increased by 3.5% for the
period whilst Group like-for-like sales grew by 2.9%.
With Christmas falling on a Tuesday this year, it was...
The factors affecting the demand for the lines of Washburn guitars are:
a. Bought by a first time guitar buyer :
i. Price – price is the major factor for the first time guitar buyers. Increase in the price can lower the demand while the decrease in the price can increase the demand.
ii. Good value – good quality for the price is also a major consideration for the buying the guitar. Good workmanship will play a significant role in the buyer’s purchase decision.
iii. Brand name-- A recognized brand name is important.
iv. Resale value – If the buyer wants to resale the guitar for some reason, it should have a good resale value.
b. Bought by sophisticated musician:
i. Prestige of the musician associated with the guitar is an important consideration.
ii. Workmanship, design, physical appearance, sound quality are the factors affecting the demand.
iii. Price is not that important.
a. The example of shifting the demand curve to the right to get a higher price for a guitar line occurs with the signature guitars. It establishes an inelastic, price insensitive demand for the product. Demand is generated through internationally known musicians, who lend their names to lines of Washburn guitars.
b. Setting the guitar price at $349 for the new lines of company’s guitar is an example of moving along a demand curve. With the purchase of Parker guitar Washburn believes to reduce the...