Changes in Business Environment

1. Increase in global competition

2. Advances in manufacturing technologies
3. Advances in information technologies, the Internet and e-commerce
4. Greater focus on the customer
5. New forms of management organization
6. Changes in the social, political, and cultural environment of business
Contemporary Management Techniques:
1. Just In Time (JIT) – is the philosophy that activities are undertaken only as needed or
demanded.
- It is a production system also known as pull-it-through approach, in which
materials are purchased and units are produced only as needed meet actual
customer demand.
FOUR characteristics of JIT:
1. Elimination of all activities that do not add value to the product or service
2. Commitment to a high level of quality
3. Commitment to continuous improvement in the efficiency of an activity
4. Emphasis on simplifications and increased visibility to identify activities that do not add
value
2. Total Quality Management (TQM) – is a technique in which management develops policies and
practices to ensure that the firm’s product and services exceed customer’s expectations.
- Some TQM programs are referred to as continuous quality improvement
programs.
TWO (2) major characteristics:
a. Focus on serving customers
b. Systematic problem-solving using teams made up of front-line workers
3. Process Reengineering
Reengineering is a process for creating competitive advantage in which a firm reorganizes its
operating and management functions. It has been defined as the “fundamental rethinking and
radical redesign of business processes to achieve dramatic improvements in critical,
contemporary measures of performance, such as cost, quality, service, and speed.

Process Reengineering- an approach where a business process is diagrammed in detail, questioned and
then completely redesigned in order to eliminate unnecessary steps, to reduce opportunities for errors and
to reduce costs.
Business Process - any series of steps that are followed in order to carry out some task in business.
 The main objective of this approach is the simplification and elimination of wasted effort.
This process can yield the following anticipated results:
 Process is simplified
 Process is completed in less time
 Costs are reduced
 Opportunities for errors are reduced
Process reengineering has one basic recurrent problem that is employee resistance.
4. Benchmarking – a process by which a firm
 determines its critical success factors
 studies the best practices of other firms (or other units within a firm) for
achieving these critical success factors, and
 then implements improvements in the firm’s processes to match or beat
the performance of those competitors.
5. Mass Customization – is a management technique in which marketing and production processes
are designed to handle the increased variety that results from delivering customized products and
services to customers.
6. Balanced Scorecard – an accounting report that includes the firm’s critical success factors in
FOUR (4) areas
a. Financial performance
b. Customer satisfaction
c. Internal business process
d. Innovation and learning
7. Activity-based Costing and Management
Activity Analysis – is used to develop a detailed description of the specific activities performed
in the operation of the firm.
Activity-based Costing (ABC) – is used to improve the accuracy of cost analysis by improving
the tracing of costs to products or to individual customers.
Activity-based management (ABM) – uses activity analysis to improve operational control and
management control.
8. Theory of Constraints (TOC) – is a sequential process of identifying and removing constraints
 in a system
- Emphasizes the importance of managing the organization’s constraints or
barriers that hinder or impede progress toward an objective.
 The Theory of Constraints approach is a perfect complement to Total Quality Management and
Process Reengineering – it focuses improvement efforts where they are likely to be most
effective.
9. Life Cycle Costing – is a management technique to identify and monitor the costs of product
throughout its lifecycle. It consists of all steps from product design and purchase of raw material
to delivery of and service of the finished product. The steps include
1. Research and development
2. Product design including prototyping, target costing and testing
3. Manufacturing, inspecting, packaging, and warehousing
4. Marketing, promotion, and distribution
5. Sales and service
10. Target Costing – involve the determination of the desired cost for product or basis of given
competitive price so that the product will earn a desired profit.
Target Costing = Market determined price – Desired profit
The entity using TC must often adopt strict cost-reduction measures to meet the market
price and remain profit.
11. Computer-Aided Design and Manufacturing
Computer-aided design (CAD) – is the use of computers in product development, analysis, and
design modification to improve the quality and performance of the product.
Computer-aided manufacturing (CAM) – is the use of computers to plan, implement, and
control production.
12. Automation
TWO (2) integration approaches:
1. Flexible manufacturing system (FMS) is computerized network of automated
equipment that produces one or more groups of parts or variations of product in
flexible manner.
2. Computer-integrated manufacturing (CIM) is a manufacturing system that totally
integrates all office and factory functions within a company via a computer based
information network to allow hour-by-hour manufacturing management
13. E-Commerce
 This E-Commerce business model adopted by amazonc.com and eBay has also attracted
many investors to pursue the use of Internet in conducting business.
14. The Value Chain – is an analysis tools that firms use to identify the specific steps requires to
provide a product or service to the customer.
- The firm studies each step in its operation to determine how each activity
contributes to the firm’s competitiveness and profits.
Internal Value Chain – set of activities required to design, develop, produce, market and deliver
products or services to customers.

Key Success Factors

Cross Functional Teams
Production Managers – focused on how best to manufacture a product or produce a service
Marketing Managers – concentrated on selling the product or service
Design Engineers – often emphasized engineering elegance rather than designing a product for
manufacturability.

Managerial Accounting – provided information for decision making, planning, control, and
performance evaluation

Computer-Integrated Manufacturing
A CIM process is fully automated, with computers controlling the entire production process.

Product Life Cycles and Diversity

One impact of highly automated manufacturing systems has been to enable manufacturers to
produce an ever-more diverse set of products.
To be competitive, manufacturers must keep up with the rapidly changing marketplace. Managers
must have timely information about production cost and other product characteristics in order to respond
quickly and effectively to the competition.

Time-based Competition
A company can gain an important edge over it competitors by reducing the time it takes to
develop a new product and transporting the product in the market more quickly.
15. Response time, lead time, on time and downtime are among the many time-based phrases that
 crop up in conversations of today’s market.

Global Competition
For firm to become world-class, it should be able to plan, direct, control its operation and make
decisions using n effective management accounting system that provide the relevant data it needs.

Information and Communication Technology Management

In the face of the increased global competition, firms around the world are adopting new
manufacturing and information technologies to remain competitive.

Cost Management System

Some entities would use cost management to describe the activities of managers in short-run and
long-run planning and control of costs.

Continuous Improvement and Competitive Strategy

To stay competitive, companies must concentrate on continuously improving the different spects
of their own operations.

Continuous Improvement – is the constant effort to eliminate waste, reduce response time, simplify the
design of both products and processes, and improve quality and customer service. The continuous
improvement targets are often set by benchmarking in measuring the quality of products, services and
activities of the company

Competitive Strategy – involves determination and implementation of a set of policies, procedures and
approaches to business that produces long-term success.