Management Accounting: Performance Evaluation

The Corporate Environment:

Corporations are a conglomeration of people with a common purpose.

The individuals seek to attain goals for the corporation, with the ultimate goal
being profitability over a sustained period of time. Managers will always consider
the consequences of their management decisions in light of their own personal
utility.

Management performs a variety of activities.

1)

2)

3)

All three of the key management activities inherently revolve around decision-
making and in each activity the management accountant plays a critical role.

_______________________ is management.

Titan | America's Best Since 1898

How serious is the issue for Titan? What might be the link to the
performance evaluation system?

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Sauder School of Business, UBC © 2009
Forzani Group Ltd. | Home

The Forzani Group Ltd. (FGL) is the largest and only national sporting goods
retailer in Canada. The Company sells a vast assortment of sports-related
products - from athletic footwear to athletic/leisure apparel to the equipment
required for performing a favourite sport. FGL's merchandise mix includes brand
name products together with a large complement of private-branded products.

Our Company's attributes can be summarized as emanating from one principal

thing - scale. Our size, and our strategy of using that size to our advantage,
influences everything we do. Our banners provide unparalleled value to the
Canadian consumer because of our extensive product mix and great price
points. We truly have a banner and product offering to suit everyone in Canada.

Our strategic focus is a simple one that is easy for all of our 14,000 corporate
and franchise employees to embrace. We have a focus on being the best store
in town - with a passion for exceptional merchandise, superior customer service
and extensive marketing. Welcome to The Forzani Group Ltd.

Bob Sartor
Chief Executive Officer

What is the hard sell approach? If they drop it what does this imply for the
performance evaluation system?

E-reading: On the folly of rewarding A while hoping for B

What is the essence of this article, how does it relate to business?

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We need to learn to ask the right questions so we can gather the right
information.

Hudson's Bay Company

As management accountants we are intimately involved with making decisions.

Would you support the idea of using commissions at the Bay?

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Sauder School of Business, UBC © 2009
Management accounting in a Corporation
How does management accounting fit into the corporate world? What is its
purpose?

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Management Accounting Roles:

1)

2)

What do we mean by “control” within the management accounting context?

Can a corporation have “perfect control”?

What can a corporation do to achieve or improve its control?

1)

2)

3)

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Sauder School of Business, UBC © 2009
What or who are Fannie Mae and Freddie Mac?

Home Page - Foreclosure Prevention and Mortgage Assistance | Fannie Mae

Freddie Mac's Homepage

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Agency Theory

What is it?

Examples of agency relationships:

The rise and fall of Carly Fiorina: an ethical case study.

HP Sued over Fiorina's Severance - - CFO.com

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When an agency relationship exists how does the corporation align the goals of
the individual with those of the firm?

http://www.radioshack.com/home/index.jsp

Organizational Architecture
Designing organizations to create ... - Google Books (Read Pages 1-17)

Zimmerman’s organizational architecture

1)

2)

3)

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What is Wal-Mart’s strategy?

What are some of the incentives in Wal-Mart’s system which helps them execute
their strategy?

As of 2008, sales were now $400 billion, profit is $20 billion, # of stores over
6,000, average wage is $9.98 for its 1,300,000 employees. For class, please
consider what you might want to change in their system, if you were the human
resource manager or store manager?

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How do firms mitigate these agency costs?

http://money.cnn.com/2003/10/23/news/companies/walmart_worker_arrests/

250 arrested at Wal-Mart

Workers nabbed on immigration charges; executives facing
subpoenas, U.S. official says.
October 23, 2003: 5:16 PM EDT

WASHINGTON (CNN) - Federal officials raided Wal-Mart stores across

the United States Thursday, arresting about 250 illegal immigrants
working on cleaning crews at 61 stores in 21 states.

How could this have happened?

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The Settlement!
http://www.nytimes.com/2005/03/19/business/19walmart.html

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From a performance evaluation system perspective what concerns/adjustments
might need to be considered with this “all day, all night” strategy?

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Sauder School of Business, UBC © 2009
 Xerox Corporation “Leadership through Quality”

http://www.xerox.com/

Over the decades, Xerox has effectively utilized “traditional, financially-based

performance measures”. Clearly, they have been very successful as a company.

Required
Use the space below to provide your response in point form.
Be prepared to communicate these ideas in class.

1) Identify and discuss two examples of financially based performance

measures that Xerox may have used.

2) Why were these measures deemed to be inadequate in recent years?

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 Xerox performance measures:

3) What are the key elements (metrics, measures etc) of Xerox’s MCS and
how do these relate or support Xerox’s corporate strategy?

4) Identify one metric (performance measure) that Xerox should add to its
MCS in order to help Xerox compete in 2009.

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 Motorola Inc.
1) Briefly identify and discuss the top two key success factors for Motorola,
as per the case in the text.

2) Evaluate the traditional standard cost system by identifying and discussing

several strengths and weaknesses.

Weakness 1

Weakness 2

Weakness 3

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 Motorola Loses Cell Phone Market Share to
Samsung and Nokia

How would the MCS be different for the division responsible for cell phones
versus the circuit division (ASIC)?

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 Southwest Airlines Inc.

Southwest Airlines Careers

A) Southwest has a remarkable performance record in an extremely turbulent

industry. How has Southwest remained competitive in this environment, (KSF’s)?

B) Identify the top three specific items, in order of importance, in their MCS or
personnel policy, that have been the catalysts to their success!

1)

2)

3)

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Does the management control system of
Southwest Airlines need to adjust to the changes
in the economic environment? Why, or why not?

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Why are the old stores more “profitable”? If you
were in charge of designing the MCS for Canadian
Tire how would you incorporate this reality?

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