Key Themes in Management Decision Making

1
Key Themes in ManagementDecision Making
Customer Focus
Value Chain and Supply Chain Analysis
Key Success Factors Cost and Efficiency, Time,
Quality, Innovation
Continuous Improvement and Benchmarking
2
Customer Focus
The challenge facing managers is to
continue investing sufficient (but not
excessive) resources in customer
satisfaction such that profitable customers are
attracted and retained.
3
Value Chain andSupply Chain Analysis
This theme has two related aspects
1. Treat each of the business functions in the
value chain as an essential and valued
contributor.
2. Integrate and coordinate the efforts of all
business functions in addition to developing
the capabilities of each individual business
function.
4
Value Chain andSupply Chain Analysis
Supply chain describes the flow of
goods, services, and information from cradle to
grave, regardless of whether those activities
occur in the same organization or other
organizations.
5
Key Success Factors
These are operational factors that directly
affect the economic viability of the organization.
Cost organizations are under continuous pressure
to reduce costs.
Quality customers are expecting higher levels
of quality.
6
Key Success Factors
Time organizations are under pressure
to complete activities faster and to
meet promised delivery dates more reliably.
Innovation there is now heightened
recognition that a continuing flow of innovative
products or services is a prerequisite to the
ongoing success of most organizations.
7
Continuous Improvementand Benchmarking
Continuous improvement by competitors creates a
never-ending search for higher levels
of performance within many organizations.
8
Value Chain
The term value chain refers to the sequence
of business functions in which usefulness is
added to the products or services of an
organization.
The term value is used because as the
usefulness of the product or service is
increased, so is its value to the customer.
9
Value Chain
Management accountants provide decision support
for managers in the following six business
functions
10
Value Chain
R D
Design
Production
Management Accounting
Marketing
Distribution
Service
11
Value Chain Functions
Research and Development
It is the process that is conducted to
generate and experiment with ideas related to
new products, services, or processes.
12
Value Chain Functions
Design
It is the detailed planning and engineering of
products, services, or processes.
13
Value Chain Functions
Production
It is the acquisition, coordination, and assembly
of resources to produce a product or deliver a
service.
14
Value Chain Functions
Marketing
It is the manner by which companies promote and
sell their products or services to customers or
prospective customers.
15
Value Chain Functions
Distribution
It is the delivery of products or services to the
customer.
16
Value Chain Functions
Service
It is the after-sale support activities provided
to customers.
17
Key Guidelines
1. Cost-benefit approach
2. Full recognition of behavioral as well as
technical considerations
3. Using different costs for different purposes
18
Cost-Benefit Approach
A cost-benefit approach should be used in
order to spend resources if they promote
decision making that better attains organization
goals in relation to the costs of those resources.
19
Behavioral and TechnicalConsiderations
A management accounting system should have
two simultaneous missions for providing
information
1. To help managers make wise economic decisions
2. To help managers and other employees to aim
and strive for goals of the organization
20
Different Costs forDifferent Purposes
A cost concept used for the external
reporting purpose need not be the appropriate
concept for the purpose of internal routine
reporting to managers.
21
Line and Staff Relationships
Line management is directly responsible
for attaining the objectives of the organization.
Staff management exists to provide advice and
assistance to line management.
22
Line and Staff Relationships
23
Line and Staff Relationships
24
Professional Ethics
Integrity
Competence
Confidentiality
Objectivity
25
Ethical Guidelines
The Institute of Management Accountants (IMA) is
the largest association of management accountants
in the United States.
The IMA has issued a Standards of Ethical Conduct
for Management Accountant.