TLA4

Name:

1. Identify and explain the two types of competitive strategy.

Answer: Two types of competitive strategy are cost leadership and product differentiation.
Cost leadership focuses on the price of the product/service or the cost of the product or
service a company was intended to provide to the customers and the basis of cost leadership
strategy is providing a quality product or service at a low price. While product differentiation
competes on the ability to offer a unique product or service that is priced higher than the
products or services of competitors.

2. Identify three or four well-known firms that succeed through cost leadership.
Answer: Mcdonalds, Jollibee, Cebu Pacific Airlines, Pure Gold

3. Identify three or four well-known firms that succeed through product differentiation.
Answer: Coca Cola Company, Tesla, Famous fashion brands (Hermés, Louis Vuitton, Michael
Kors), Ferrari

4. Explain the process of identifying a sustainable competitive advantage for a firm.

Answer: The process of identifying a sustainable competitive advantage for a firm is to
understand the market and its segment. Successful companies strive to create an advantage
that continues to be competitive over time. One result of a well-developed and executed
strategic plan is to develop a unique competitive advantage. It is what you do best that draws
customers/constituents to use your products and services instead of those of others.
Throughout the planning process you will need to evaluate every part of your plan to
determine whether it supports or detracts from this.

5. What is the meaning of "getting stuck in the middle" in the context of competitive strategy, and
how does the situation arise?
Answer: The meaning of “getting stuck in the middle” is a firm that does not achieve at least
one strategy is not likely to be successful. Some firms fail to effectively pursue one of the
generic strategies. A firm is said to be if it does not offer features that are unique enough to
 convince customers to buy its offerings, and its prices are too high to compete effectively
based on price. The business that fails to develop its strategy in one of the directions; cost
leadership, differentiation, is a business that is ‘stuck in the middle’ and is in an extremely
poor strategic situation.

6. What is the role of the cost manager regarding nonfinancial performance measures such as
delivery speed and customer satisfaction?
Answer: Most organizations use a mix of financial and nonfinancial measures to evaluate
performance. The balanced scorecard approach uses a balanced set of measures separated
into four perspectives—financial, internal business process, learning and growth, and
customer. The last three perspectives tend to include nonfinancial measures, such as hours of
employee training or number of customer complaints, to evaluate performance. The goal is to
link financial and nonfinancial measures to the company’s strategies and goals. A nonfinancial
performance measure expresses performance in a measure other than money. For example,
airlines use on-time performance, percent of bags lost, and number of customer complaints
as nonfinancial performance measures. Such measures are often used to evaluate the time,
quality or quantity of a business activity.

7. Explain the difference between short-term and long-term performance measures and give two
or three examples of each.
Answer: Performance measurement is the monitoring of budgets or targets against actual
results to establish how well the business and it's employees are functioning as a whole and
as individuals. Performance measurements can relate to short term objectives such as cost
control or longer term measures like customer satisfaction. What these businesses have in
common is that they will have long term (strategic) goals or objectives. These long term goals
will be broken down into tactical and operational targets which will need to be monitored. In
order to achieve cost savings and to boost annual profit there are a limited number of things
that a manager can do easily. One of these is to cut back on discretionary costs such as
advertising and marketing, training, maintenance. Cut advertising and future sales may fall,
cut training and staff may leave or become less efficient, cut maintenance and plant and
machinery will become less productive.

8. What is a critical success factor, and what is its role in strategic management and in cost
management?
Answer: Critical Success Factors (CSF) are specific elements or action areas a business,
team, or department must focus on and successfully implement to reach its strategic
objectives. Successful execution of these success factors should generate a positive outcome
and create meaningful value for the business. CSFs are important because each one works
as a guiding compass for a company. When they are explicitly clarified to everyone at the
 company, they function as a reliable point of reference for focus and for determining success.

9. Identify four or five potential critical success factors for a small auto-repair shop.
Answer:

10. What is a balanced scorecard? What is the primary objective when using a balanced
scorecard?
Answer: A balanced scorecard is a strategic management performance metric used to identify
and improve various internal business functions and their resulting external outcomes.
Balanced scorecards are used to measure and provide feedback to organizations. A balanced
scorecard puts into perspective the measures and objectives that can help the business run
more effectively. Also, the scorecard helps evaluate the company’s products or services and
determine whether they conform to the standards that customers desire.

11. Name the ten contemporary management techniques and describe each briefly.
Answer:
1. Benchmarking, a process by which a firm identifies its critical success factors, studies the
best practices of other firms (or other units within a firm) for these critical success factors, and
then implements improvements in the firm's processes to match or beat the performance of its
competitors.
2.Total Quality Management, a technique in which management develops policies and
practices to ensure that the firm's products and services exceed the customer's expectations.
3.Continuous Improvement, a management technique in which managers and workers
commit to a program of continuous improvement in quality and other critical success factors.
4.Activity-based Costing and Management: Activity-based costing is used to improve the
tracing of manufacturing costs to products and therefore the accuracy of product costs.
Activity-based management (ABM) uses activity analysis to improve operational control and
management control.
5. Reengineering, a process for creating competitive advantage in which a firm reorganizes its
operating and management functions, often with the result that jobs are modified, combined,
or eliminated.
6. The Theory of Constraints, a strategic technique to help firms to effectively improve the rate
at which raw materials are converted to finished product.
7. Mass Customization, a management technique in which marketing and production
processes are designed to handle the increased variety of delivering customized products and
services to customers.
8. Target Costing, a management technique that determines the desired cost for a product
upon the basis of a given competitive price, such that the product will earn a desired profit.
 9. Life-Cycle Costing, a management technique used to monitor the costs of a product
throughout its life cycle.
10. The Balanced Scorecard, an accounting report that includes the firm’s critical success
factors in four areas: customer satisfaction, financial performance, internal business
processes, and innovation and learning (human resources).

12. How do managers implement strategy?

Answer: Strategy Implementation is the process through which a chosen strategy is put into
action. It involves the design and management of systems to achieve the best integration of
people, structure, processes and resources in achieving organizational objectives.
Management training in leadership and in technology implementation, if necessary, and in
other areas associated with the innovation and changes that you have introduced.
Problem-solving groups and teams are created to address any issues you are experiencing in
the implementation.

13. What should managers do to compete effectively?

Answer: A manager has to be able to set priorities and motivate your team members. This
involves self-awareness, self-management, social awareness, and relationship management.
The manager needs to radiate energy, empathy, and trust. Building a team enables other staff
to collaborate more effectively with each other. People feel as if they have become
more—more effective, more creative, more productive—in the presence of a team builder. Be
willing to sit down and problem solve when teamwork or team tasks are not on target and
working effectively.

14. How do companies add value?

Answer: Companies with strong branding can add value to their products or services simply
by using the company’s logo to sell a product. The art of creating added value starts with the
ability to see your business through the eyes of your customers. Consider what’s important to
your target market and how your product or service will benefit them. What problem does it
solve, how will it help them overcome obstacles or do their jobs better?

15. What does the phrase "what gets measured gets done" mean? Provide an IB example of a
negative consequence for an organization If this phrase is taken literally.
Answer: It means regular measurement and reporting keeps you focused because you use
that information to make decisions to improve your results. Your most critical measurements
are called Key Performance Indicators. It ensures that you stay focused by measuring and
reporting on a regular basis because you use the information to make decisions about how to
 boost the performance.

16. What are some new measures of performance that management accountants are beginning
to consider as part of their domain?
Answer:

17. Is customer satisfaction a qualitative or a quantitative measure of performance? Or, is it a

combination of both measures?
Answer: When conducting customer support services surveys, there are two forms of
questions you could include, which are qualitative and quantitative questions. Qualitative
questions are considered “open-ended” questions, where respondents are free to respond
and are not constricted to specific choices or options. Quantitative questions, on the other
hand, are “closed-ended” questions and limit how respondents can answer by presenting
them with a list of potential answers.

18. Define competitive benchmarking and continuous improvement.

Answer: Benchmarking is a process of continuous improvement in search for competitive
advantage. It measures a company’s products, services and practices against those of its
competitors or other acknowledged leaders in their fields. Benchmarking is a systematic and
continuous measurement process. Implementing steps necessary for filling gaps in
performance. Benchmarking does not provide a solution to all the problems rather it analyses
the situations and processes and helps in improving the performance. It is a continuous
improvement process.

19. Define value-added and nonvalue-added activities. Which of the following would be
value-added for an automotive manufacturer?

Value-added (Yes or No) Nonvalue-added (Yes or No)

a. painting automobiles Yes

b. moving auto parts from the No

warehouse to the plant

c. inspection of final product No

d. assembling the engines Yes

e. costs to store finished No Yes

goods

f. costs to store raw materials No

g. production of bumpers No

h. production of headlights No

i. inspection of intermediate No
product

j. production of spark plugs No

for automobile