chapter 18 emerging management practices
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Cost Accounting Foundations and Evolutions Kinney, Prather, Raiborn . Chapter 18 Emerging Management Practices. Learning Objectives (1 of 3). Explain how business process reengineering affects the way that firms execute processes - PowerPoint PPT PresentationTRANSCRIPT
Chapter 18Emerging Management Practices
Cost AccountingFoundations and Evolutions
Kinney, Prather, Raiborn
Learning Objectives (1 of 3)
• Explain how business process reengineering affects the way that firms execute processes
• Describe the competitive forces that encourage downsizing and restructuring
• Explain why operations are becoming more diverse
Learning Objectives (2 of 3)
• Describe how diverse operations affect the accounting system
• Describe the purpose of enterprise resource planning (ERP) systems and explain the benefits of adopting an ERP.
• Describe strategic alliances and the different forms they take
Learning Objectives (3 of 3)
• Explain why firms engage in strategic alliances
• Describe open-book management and how it requires changes in accounting methods and practices
• List three generic approaches used to control environmental costs
Managing Change• Recognize the importance of
organizational culture• Adopt only those innovations that support
current strategies• Do not try to implement innovations
during downsizing• Dedicate as much time to managing the
human side of change as the technical side
Managing Change• Educate all employees about the change• Use medium and long-term performance
measures to gauge success• Generate useful and understandable
reports to illustrate the effects of change• Make explicit agreements regarding when
old information systems should be turned off once new one is in place
Business Process ReengineeringExamine processes to identify and then eliminate, reduce, or replace functions and processes that add little customer value to
products or services• Handling or storing materials and components• Issuing checks• Packaging finished goods for shipment to customers• Recording journal entries• Developing an organizational strategic plan
Business Process Reengineering
• Associated with– radical change– employee layoffs– outsourcing– technology
acquisitions
• Enabled by– advanced
technology– pursuit of increased
quality– increase in price
competition due to globalization
Business Process Reengineering
• Define objectives of the project• Identify processes to reengineer• Determine how to measure success• Identify technology levers (innovation,
increased quality, increased output, decreased costs)
• Develop a prototype of the reengineered process and then refine it
Creativity
Downsizing• Reduces costs and improves profits in
conjunction with substantial investments in advanced technology
• Changes mix of inputs used to produce outputs
• Increases emphasis on technology-based conversion processes
• Reduces the emphasis on manual conversion processes (reduces the labor requirement)
Why Diversify?• Legal requirements• Business initiatives to employ minorities• Organizational self-interest
– diverse workforce connects to diverse markets– increased diversity leads to lower employee turnover– heterogeneous groups are more creative– diverse employee pool yields more management talent– need large employee pools for future workers
Enterprise Resource Planning (ERP)
• Automate and integrate business processes• Share common data and practices across the
entire enterprise• Produce and access information real-time• Links the customer end of the supply chain
through production and delivery to the supplier
Enterprise Resource Planning
• Financial professionals– Help to select and install ERP software– Analyze the data repository to support
management decisions– Maintain the integrity of the data
Strategic AlliancesAn agreement, involving two or more firms
with complementary core competencies, to jointly contribute to the supply chain
• Joint ventures• Equity investments• Licensing arrangements• Joint R&D arrangements• Technology swaps• Exclusive buyer/seller agreements
Strategic AlliancesOutput produced reflects a joint effort between
(or among) independent firms and the rewards of that effort are split between (or
among) the allied firms• Blurs boundaries between supplier and
customer• Typical strategic alliances
– Exploit partner knowledge– Have partners with access to different markets– Allow sharing of risks and rewards
Strategic Alliances and the Finance Function
• When forming a strategic alliance, finance professionals– Assess risk– Develop strategies for parent company
management– Design the financial structure– Develop management control systems– Install accounting and other information
systems
Open-Book ManagementIncreasing a firm’s performance by involving all workers and by ensuring
that all workers have access to the operational and financial information
necessary to achieve performance improvements
• Disclose financial information to all employees
• Train employees to interpret and use financial information
• Empower employees to make decisions• Tie a portion of employee pay to
the company’s bottom lineFinancialResults
Open-Book Management
• Open-Book Management works best in the following types of firms – Small size– Decentralized management– History of employee empowerment– Trust between employees and management
FinancialResults
Open-Book Management
Environmental Issues• Measure business performance with regard
to environmental issues and management of environmental costs
• Span the entire value chain– amount of scrap and by-products produced– materials used - are they recyclable?– actions of suppliers who produce inputs– customer habits in consuming and disposing of
products and packaging
Questions
• How does business process reengineering affect the way that firms execute processes?
• What are the benefits of adopting an enterprise resource planning system?
• Why do firms form strategic alliances?