Managerial accounting by garrison noreen (13th ed ) chap001

Managerial Accounting and the
Business Environment
Chapter 1

McGraw­Hill/Irwin

   Copyright © 2010 by The McGraw­Hill Companies, Inc. All rights reserved.


Customer Value Propositions
Customer
Intimacy
Strategy

Understand and respond to
individual customer needs.

Operational
Excellence
Strategy

Deliver products and services
faster, more conveniently,
and at lower prices.

Product
Leadership
Strategy

Offer higher quality products.

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Organizational Structure
Decentralization
Decentralization is
is the
the delegation
delegation of
of decisiondecisionmaking
making authority
authority throughout
throughout an
an organization.
organization.

C o r p o r a te O r g a n iz a tio n C h a r t
B o a r d o f D ir e c t o r s
P r e s id e n t
P u r c h a s in g

P e rso n n e l

V ic e P r e s id e n t
O p e r a t io n s

C h ie f F in a n c ia l
O f f ic e r

T re a su re r

C o n t r o lle r
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Process Management
A business
process is a series of
steps that are followed in order to
carry out some task in
a business.

R&D

Product
Design

Customer
Manufacturing Marketing Distribution Service

Business functions making up the value chain
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Traditional “Push” Manufacturing Company
Traditional “push”
manufacturing
Raw
materials

Large
inventories
Work in
process

Finished
goods

Materials waiting
Completed products
to be processed.
awaiting sale.
Partially completed products
requiring more work before
they are ready for sale.
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Lean Production
 Identify value
in specific
products/services.

 Identify the
business process
that delivers value.

The lean thinking
model is a five
step approach.

 Organize work
arrangements around
the flow of the
business process.

 Continuously pursue
perfection in the
business process.

 Create a pull
system that responds
to customer orders.
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Lean Production
The five step process results in a “pull” manufacturing system
that reduces inventories, decreases defects, reduces
wasted effort, and shortens customer response times.

Customer places
an order

Create Production
Order

Generate component
requirements

Goods delivered
when needed

Production begins
as parts arrive

Components
are ordered
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Theory of Constraints
A constraint (also called a bottleneck) is anything that
prevents you from getting more of what you want.
The Theory of Constraints is based on the observation that
effectively managing the constraint is the key to success.

The constraint in a system is determined
by the step that has the smallest capacity.

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Theory of Constraints
Only actions
that strengthen
the weakest link
in the “chain”
improve the
process.

2. Allow the
weakest link to
set the tempo.
3. Focus on
improving
the weakest
link.

1. Identify the
weakest link.

4. Recognize that
the weakest link
is no longer so.
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Six Sigma
A
A process
process improvement
improvement method
method relying
relying on
on customer
customer
feedback
feedback and
and fact-based

fact-based data
data gathering
gathering and
and analysis
analysis
techniques
techniques to
to drive
drive process
process improvement.
improvement.
Refers
Refers to
to aa process
process that
that
generates
generates no
no more
more
than
than 3.4
3.4 defects
defects per
per million
million
opportunities.
opportunities.

Sometimes

Sometimes
associated
associated
with
with the
the term
term zero
zero
defects.
defects.

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Six Sigma

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IMA Guidelines for Ethical Behavior
Recognize
Recognize and
and
communicate
communicate professional
professional
limitations
limitations that
that preclude
preclude

responsible
responsible judgment.
judgment.
Maintain
Maintain
professional
professional
competence.
competence.

Competence

Follow
Follow applicable
applicable
laws,
laws, regulations
regulations
and
and standards.
standards.

Provide
Provide accurate,
accurate, clear,
clear,
concise,
concise, and
and timely
timely decision

decision
support
support information.
information.
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IMA Guidelines for Ethical Behavior
Do
Do not
not disclose
disclose confidential
confidential
information
information unless
unless legally
legally
obligated
obligated to
to do
do so.
so.
Do
Do not
not use
use
confidential
confidential
information
information for

for
unethical
unethical or
or illegal
illegal
advantage.
advantage.

Confidentiality
Confidentiality
Ensure
Ensure that
that subordinates
subordinates do
do
not
not disclose
disclose confidential
confidential
information.
information.
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IMA Guidelines for Ethical Behavior
Mitigate
Mitigate conflicts
conflicts of
of
interest

interest and
and advise
advise others
others
of
of potential
potential conflicts.
conflicts.
Refrain
Refrain from
from
conduct
conduct that
that
would
would prejudice
prejudice
carrying
carrying out
out
duties
duties ethically.
ethically.

Integrity
Abstain
Abstain from
from activities
activities that
that

might
might discredit
discredit the
the
profession.
profession.
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IMA Guidelines for Ethical Behavior
Communicate
Communicate information
information
fairly
fairly and
and objectively.
objectively.

Credibility
Credibility

Disclose
Disclose delays
delays or
or
deficiencies
deficiencies in
in information
information
timeliness,

timeliness, processing,
processing, or
or
internal
internal controls.
controls.

Disclose
Disclose all
all relevant
relevant
information
information that
that could
could
influence
influence aa user’s
user’s
understanding
understanding of
of reports
reports
and
and recommendations.
recommendations.
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Corporate Governance
The system by

which a company is directed
and controlled.

Board of
Directors

Incentives and
monitoring for

Top
Management

To pursue
objectives of

Stockholders
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Enterprise Risk Management

A process used
by a company to
proactively identify
and manage risk.

Should I try to avoid the risk,
share the risk, accept the
risk, or reduce the risk?

Once
Once aa company
company identifies
identifies its
its risks, perhaps the
the
most
most common
common risk
risk management
management tactic
tactic is
is to
to reduce
reduce
risks
risks by
by implementing
implementing specific
specific controls.
controls.
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Corporate Social Responsibility
Corporate social responsibility (CSR) is a concept
whereby organizations consider the needs
of all stakeholders when making decisions.

Customers

Employees

Suppliers

Communities

Stockholders

Environmental
& Human Rights
Advocates

CSR extends beyond legal compliance
to include voluntary actions that satisfy
stakeholder expectations.
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End of Chapter 1

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