product cost analysis icwa + c.com
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Product Cost Analysis
Pavan Kumar VijayPresident, the ICSI
The Key Developments Effecting Costing Decisions
Technological Advances Globalisation – WTO and Free Economies Changing Focus from Production to Customer
– Going back to Mahatma Gandhi School of Thought
Changing Organisational Structures Social, Political and Cultural Changes Corporate Governance and Rethinking Ethics
Corporate Governance and Ethics
Creditability and Trust lead to Customer Loyalty - People prefer trusted products and companies
Transparency in Costing - leading to development of industry best practices
The Cost of Capital is lowest for well governed companies (Mckinsey Survey)
Wealth Sharing leads to growing society - thus increasing market demand and economy of scales
Reduction is Wastage saves costs as well as Natural Resources
Strategic Costing Decisions
SWOT Analysis Identifying Critical Success Factors Value Chain Analysis Cost of Adhering and Not Adhering Ethics Use of Appropriate Tool to Analyse Costs Assumptions to be made in Product Costing
Developments in Cost Analysis
QCT Based Decisions – Quality, Cost and Time Life Cycle Costing – Analyse the costs of activities
that occur over the life cycle of the product Target Costing than Cost Plus Costing – Target
Costing is the product cost that must be achieved for a product to be viable in the long term
Activity Based Costing/ Management - analysing activities, cost drivers and performance so that customer value and profitability are improved
Developments in Cost Analysis… Contd.
Value Engineering –an organized approach to the identification and elimination of unnecessary cost
Business Process Reengineering – Fundamental rethinking and redesign of critical processes
Increasing Importance to Quality Costs – – Prevention Costs– Quality Control Costs– Cost of Poor Quality
Risk Management and Pricing
The Costing Strategy
No single method is used in ISOLATION to analyse costs
There is always possibility to reduce costs and add value, so continue research
Involve employees at all levels in generating more ideas to reduce cost
Knowledge Management is key to reducing costs Ethics pay in long run so be transparent and
accountable
The Role of Professionals - CS, CWA and CA
Company Secretaries
• Corporate Governance
• Corporate and Securities Laws
• Secretarial Audit
Cost Accountants
• Cost Management
• Cost Accounting
• Cost Audit
Chartered Accountants
• Financial Management and Accounts
• Taxation Laws
• Financial Audit
isThe Company Secretary
For Strong Corporate Citizenry
Company Secretary is Vital Link
CS
BOARDMEMBERSSOCIETY
LENDERSREGULATOR
EMPLOYEESINDUSTRY
SUPPLIERSGOVTCUSTOMERS
Company Secretary at Centre Stage
Company Secretary
CORPORATE COMMUNICATION STRATEGY
SECRETARIALAND LEGAL
FINANCIAL
HRMINFORMATION TECHNOLOGYMARKETING
R&D AND PRODUCTION
Company Secretaries and Product Cost Analysis
Company Secretaries specialise in corporate governance, legal and ethical dimension of Product Costing
Company Secretaries advice Board on Strategic Costing Decisions due of multi-disciplinary Knowledge
Being Secretary to the Board and Audit Committee company Secretary consolidates all information and takes necessary approvals
Company Secretaries have access to confidential information that may be critical for Product Costing
The Future Ahead
Survival of the Fittest is punch line The WTO – Opportunities and Challenges Ahead Customer is more educated and demanding than
ever No Compromise on Quality and Ethics Shift from ‘Divide and Rule’ to ‘Unite and Rule’ Tough time ahead for Small Consulting Firms of
CSs, CWAs, CAs and Lawyers – few takers for their limited expertise
Globalisation of
Professional Services
Beyond Borders
Bor
ders
YEAR 2005
Opening of the Services Sector
Under WTO
Pessimism
Threat of Invasion of Service Sector by
145 Member Countries of WTO in India
Threat Threat
Thr
eat
Threat
Optimism
Opportunity to Invade Service Sector of
145 Member Countries of WTO by India
OpportunitiesOpportunities
Opp
ortu
nitie
s
Opportunities
YEAR 2015
We will see
Global Business Law (GBL)
Global Corporate Governance Standards (GCGS)
Global Accounting Standards (GAS)
Freedom from Economic Boundaries
Global Cost Accounting Standards (GCAS)
Global Benefits
Access to Global Markets Access to Global Suppliers Access to Global Financial Resources Access to Global Manpower Access to Global Best Practices Access to Global Research
Global Challenges
Quality of Service with Time Commitment International Operational Infrastructure High degree of competition among professionals Enhanced responsibility towards international
community International language and cross-cultural issues Key Relationships in Foreign Countries
Coming Together is Beginning
Meeting Together is Progress
and
Working Together is Success
Henry Ford
Success can be achieved globally by synergising on core competencies i.e
BrandKnowledge
InfrastructureCapital
Think C-Commerce i.e Collaborative Commerce
How about CS, CA, CWA, Lawyers, MBA and IT professionals coming together to create
multinational mega firms?
CorporateLaws
EconomicLaws
TaxationLaws
WTO & IPR
InternationalTrade Law
IT & BPOManagementConsulting
Quality of
Service
Finance and Accounting
Commerce
BrandSynergy
InfrastructureSynergy
CapitalSynergy
Collaborative Consulting Model
SingleWindowInterface
KnowledgeSynergy
GlobalPresence
Growing Revenues
Growing Customers
Growing Nations
CS + CA + CWA + LLB +
IT + MBA
Multinational Mega Firms
Global Reach of Professionals Wider Area of Expertise Active Networking and Public Relations Global Infrastructure Sharing Best Practices/ Expertise in Management of Firm
Speed of Service Delivery
Quality of Service
Make Global Brands
Effective Customer Relationship
Global Presence
Big Size of Firm
Ethics
Let Us Come Together
to
Grow Together
THANK YOU
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